We find value in you where others can't.
Because our proprietary credit model (Credit IQ) understands how businesses in the public works space operate, bid on projects, and deliver work, we evaluate risk far more effectively than generalist lenders. The result is lower rates for you!
Open-ended line of credit with no fixed end date or fee to open the line; draw funds as you need them up to a set limit.
Monthly reassessments of credit limits and interest rates to match your current financial status.
Each draw converts to a term loan with fixed repayment over 6, 9, or 12 months.
Recast existing draws at a lower rate when making new draws — small fee applies.
Existing draws maintain original rates and schedules, even if interest rates rise.
No commitment fees; no penalties for early repayment.
(No hard credit pull and no impact to your credit score.)
After extensive discussions with business leaders in the public works sector we consistently heard about the struggle to secure financing from traditional banks. Consequently, businesses are forced to turn to online lenders who charge exorbitant, predatory rates. Our mission is to provide you financing that is significantly more affordable.
By exclusively focusing on businesses participating in public works projects, our proprietary credit model (Credit IQ) predicts risk far more accurately than generalist lenders. Consequently, we find value in you where others can't. The result is much lower rates for you!
As a small business owner seeking working capital, it's crucial to understand your true cost of borrowing money. This guide will help you calculate the true Annual Percentage Rate (APR) and avoid common pitfalls in loan offers.
APR (Annual Percentage Rate) represents the annualized cost of borrowing money, including interest and all other fees, expressed as a percentage.
It provides a comprehensive view of your total loan costs over a year, allowing for easier comparison between loan offers.
1. To determine the true APR, gather all loan details, including principal amount, the loan term, payment frequency, interest rate, and fees
2. Take the monthly (or weekly) payment quoted by the loan provider and multiply it by the total number of payments you need to make to pay off the loan. For example, if you take a $10,000 loan that is repayable over a six-month term with equal payments of $2,100 per month, your calculation would be 6 (payments) x $2,100 (amount per payment) = $12,600.
3. Add all additional fees. For example, most lenders charge an origination fee. $500 (origination fee) + $12,600 (total sum of your monthly payments) = $13,100.
4. Subtract the loan principal from the sum of total payments + fees. $13,100 (total payments + fees) - $10,000 (loan principal) = $3,100 (the total amount, over-and-above the loan principal, you will end up paying).
5. Divide that number by the loan principal. $3,100 / $10,000 = .31.
6. Divide by the number of days in the loan term. .31 / 180 = .0017222 (the number of days in the loan term equals 180 because there are roughly 180 days in a 6-month period)
7. Multiply by 365 days. .0017222 x 365 = .6286
8. Multiply by 100 to arrive at a percentage. .6286 x 100 = 62.86% APR
9. So, under this scenario, your annual percentage rate (APR) is 62.86%.
For the scenario described above, some lenders will quote you a 31% interest rate because that's the rate you will pay over the six-month loan term. Other lenders will quote you a monthly interest rate of 5.16%. In both cases, the true APR is 62.86%. Other lenders won't include the additional "fees" they charge in their rate calculation. The amount a lender charges you in fees can make a big difference to your annual percentage rate. By not including all fees within an APR they quote you (or don't quote you) is a deceptive loan practice. You're smarter than that. Don't be duped.
1. Rates quoted for periods shorter than a year
Some lenders quote rates for short-term loans without annualizing them. A 25% rate on a 6-month loan translates to a 50% APR. An interest rate of 5% per month translates to a 60% APR (if it's not compound interest), and a 79.58% APR (if it's compound interest).
2. Hidden fees
Many online lenders charge service fees not included in the quoted interest rate. Always ask for a breakdown of all fees and include them in your APR calculation
3. Prepayment penalties
Some loans include penalties for early repayment, which can significantly impact the overall cost. These penalties typically range from 1% to 5% of the remaining balance, and can be much higher than that in certain cases. More commonly, online lenders don't offer any option to pay off a loan early. They require borrowers to continue with their scheduled payments over the original term, despite having the funds to retire the loan early.
4. Deceptive marketing practices
Be wary of lenders using terms like "no interest" or "0% APR" while requiring "tips" or "donations." These can substantially increase the true cost of borrowing. Also be wary of lenders that quote rates that seem too low to be true. For example, many lenders will include a statement like "rates as low as 7%". While that would be a wonderful rate for an unsecured small business loan, it's just not realistic. That's the going rate for a 30-year mortgage secured against a valuable asset: your home. Simply use your common sense, follow these and other helpful guidelines, apply for several loans to compare rates (ensuring that you're calculating the true APR for all loan offers), and you'll secure the best deal for your company!
1. What is the total amount of money I will have to repay, including all fees and interest, from the time I am approved for the loan to the time the loan is fully paid off?
2. What is my annual percentage rate (APR) on this loan, including all fees?
3. Are there any prepayment penalties?
4. How is the interest calculated (simple or compound)?
5. What is the loan's term, and how does it affect the APR?
• Pressure to make quick decisions
• Lack of clear, upfront disclosure of all terms and fees
• Promises of guaranteed approval
• Requests for upfront fees before loan approval
1. Compare offers from multiple lenders
2. Read all loan documents carefully
3. Calculate the true APR yourself using the method we've provided in this guide
4. Consider the total cost of borrowing, not just the interest rate
5. Be cautious of "too good to be true" offers
Understanding the true cost of borrowing is essential for making informed financial decisions for your business. By calculating the true APR, and being aware of common pitfalls, you can choose the most cost-effective financing option for your specific needs. Remember, a reputable lender will always be transparent about their terms and willing to answer your questions. If something seems unclear or too good to be true, it's best to seek clarification or consider other options.
We're ready to help.
