It costs money to make money. This applies to most entrepreneurs.
That is why many entrepreneurs work in a situation where they have little liquidity. Whether it concerns the exploitation of finances or investments in new machines, buildings, staff, etc. In such cases a business loan will help. However, it can quickly become an expensive business to borrow money. That is why Portia.nl has made a comparison of the market, making the search for the best and cheapest company loans in the Netherlands more transparent.
Compare and find the cheapest business loan
Most people who start their own business outside their comfort zone. You say goodbye to the safety of a fixed monthly salary and suddenly you only have a limited idea of what tomorrow will bring. This is also the reason why the start-up phase is such a good learning period, this period brings both negative and positive experiences. The same applies when you search for the best and cheapest business loan for the first time.
That’s why businesslening.nl has created a manual for you so that you can find the business loan that best fits your business needs for the right price.
This is how you find the cheapest business loan
Searching for the cheapest and best business loan – whether you are doing this for the first time or if you already have experience with this – is simply not something you can take lightly. A loan that has a low interest rate in the first instance does not necessarily have to be the cheapest.
The loan can still be subject to high rates, taxes and other hidden costs. A low interest rate does not automatically mean the cheapest loan.
- Master the concept of the interest rate
The interest is the compensation you pay so that you can receive a loan. Normally, the nominal annual interest is specified in the loan agreement. However, the nominal annual interest rate can not include all costs, because interest can be charged on interest, or “compound interest”. In addition, the interest on a loan can also be variable or fixed. A better measure that you can use to compare loans is the effective interest rate, also known as the “annual percentage rate” or APR.
Read more about the different forms of interest and what they mean
- Check all rates and taxes
When you want to find the cheapest business loan, it is not enough to compare only the interest rates. A loan can have a low interest rate but high closure costs, advisory costs and / or other costs. Your business loan with low interest rates can easily turn out to be more expensive than a loan with a higher interest rate just because of the costs.
- Annual cost percentage
The annual percentage rate (APR), also known as effective interest, indicates the total cost of a loan. When calculating the effective interest rate, any compound interest, various settlement moments and extra costs of a loan are taken into account, all elements that are not shown in the nominal interest rate. It is legally required in the Netherlands to include the APR in the loan agreement
- Compare the total costs
Although the APR is an excellent indication of what the loan costs per year, if you want to compare the total expenses for different loans, you will also have to take the duration. The rule of thumb is, the longer the term, the higher the price will be for a loan. You can therefore save considerably if you opt for a loan with a shorter term.
- Short term
The sooner you pay off your business loan, the cheaper it will be for you. This means that you can, among other things, benefit from a temporary loan if, for example, you have a short-term liquidity problem (such as when financing operational affairs or when starting up new companies). That is why it is important that you, while reading the terms and conditions of the business loan, examine whether you can redeem your loan prematurely at no extra cost. There are lenders in the industry that will charge you all the above costs, even if, for example, you repay the loan three months early.
Finally, the best advice is for anyone looking for a business loan: Never lend more than you really need!
If you can not repay your loan within the agreed term, the loan will become an expensive business. In that case, the lender has the right to charge you for delay fees and any collection costs.