Frequently Asked Questions

Overview

Navigating the world of business loans can feel complex, especially when it comes to understanding interest rates, fees, and what makes your business eligible for the best terms. At Contigo, we believe in empowering small and medium-sized businesses with clear, transparent information. This FAQ guide is designed to answer your most common questions about business loan rates, how they're determined, and what factors influence your eligibility for competitive financing. We're here to help you compare effectively and make informed decisions for your business's future.

How it works

Understanding Business Loan Rates

What exactly are business loan interest rates, and how do they function for small and medium-sized businesses?

Interest rates represent the cost of borrowing money, usually expressed as a percentage of the loan amount. When you repay your business loan, you pay back the principal (the original amount borrowed) plus interest. You'll often encounter terms like APR (Annual Percentage Rate), which includes not just the interest rate but also other fees associated with the loan, giving you a more comprehensive picture of the total borrowing cost. Rates can be fixed, meaning they stay the same throughout the loan term, or variable, meaning they can fluctuate based on market conditions. Understanding the difference is crucial for your financial planning and managing your business finance effectively.

Contigo's Rate & Term Assessment

How does Contigo assess and determine the interest rates and specific loan terms for business financing applications?

At Contigo, our goal is to offer fair and competitive rates that reflect the unique profile of your business. We assess several key factors to determine your interest rate and loan terms, ensuring they align with your business's financial health and our lending criteria. These factors typically include: Your Business Credit Score: A strong credit history for both your business and, in some cases, the business owner, indicates responsible financial management. Business Operating History: The longer your business has been successfully operating, the more stable it appears to lenders. Annual Revenue and Cash Flow: Consistent and healthy revenue demonstrates your capacity to repay the business loan. Industry and Risk Profile: Certain industries may carry higher or lower inherent risks, which can influence rates. Loan Type and Amount: The specific loan product you apply for (e.g., working capital, equipment financing) and the loan amount can also impact the rate. We use a comprehensive approach to provide a tailored offer that suits your business finance needs, ensuring transparency every step of the way.

Other Business Loan Fees

Beyond just the interest rate, what additional fees and costs should I consider when comparing business loan offers?

While the interest rate is a significant factor in business loan comparison, it's not the only cost to consider. To truly compare loan offers, you must look at the full picture. Other common fees that can impact the total cost of your business loan include: Origination Fees: A one-time fee charged by the lender for processing the loan, often a percentage of the total loan amount. Underwriting Fees: Costs associated with evaluating your loan application. Closing Costs: Fees paid at the loan's closing, similar to real estate transactions. Service or Administration Fees: Recurring fees for managing the loan account. Late Payment Fees: Penalties for missing a payment deadline. Prepayment Penalties: Some lenders charge a fee if you pay off your loan early, as they lose out on potential interest. Contigo prioritizes flexibility, and our loan specialists will clearly outline any such fees, if applicable, during your discussion. Always ask for a detailed breakdown of all potential fees to get the true cost of borrowing for your business financing. This holistic view is essential when comparing offers.

Comparing Loan Offers

What is the most effective approach to compare business loan offers from various lenders, including services provided by Contigo?

Comparing business loan offers requires a diligent approach to ensure you're getting the best deal for your business. Here’s how we recommend you compare: Look at the APR, Not Just the Interest Rate: The APR gives you the most accurate representation of the total annual cost of the loan, including most fees. Understand All Fees: As mentioned above, get a clear breakdown of every fee associated with the loan. Review the Loan Terms: Compare the repayment schedule (monthly, weekly), loan duration, and any flexibility in repayment. A lower rate on a shorter term might result in higher monthly payments. Consider Lender Transparency: Is the lender upfront about all costs and terms? At Contigo, we pride ourselves on clear communication and no hidden surprises. Evaluate Customer Service & Support: Beyond numbers, consider the lender's reputation for customer service. Will they be a partner in your growth? Read about Contigo's commitment to our clients. Read the Fine Print: Understand any covenants, collateral requirements, or specific conditions attached to the loan. We encourage you to bring us any competitive offers you receive. Our team is always ready to walk you through our proposal and highlight the value and transparency Contigo brings to your business financing.

Contigo's Competitive Advantage

What factors make Contigo's business loan rates competitive, and what unique value do you offer beyond just the financial figures?

At Contigo, we're more than just a lender; we're a partner dedicated to your business's success. Our competitiveness stems from several key differentiators: Personalized Solutions: We don't believe in one-size-fits-all. Our team takes the time to understand your unique business needs and tailor business financing solutions accordingly. Streamlined Process: We leverage technology and expertise to make the application and approval process as efficient as possible, getting you the funds you need faster. Explore our simple application process. Transparent Pricing: We are committed to clarity. All rates, fees, and terms are explained upfront, so you always know what to expect. Dedicated Support: Our experienced loan specialists are here to guide you, answer questions, and support you throughout the life of your business loan. Focus on Small Businesses: As a specialized lender for SMEs, we understand the specific challenges and opportunities your business faces, allowing us to offer more relevant and flexible terms. Choosing Contigo means choosing a partner committed to your growth, not just a transaction for your business finance needs.

Credit Score & Interest Rates

Does my business's credit score significantly impact the interest rate I will receive for a loan from Contigo?

Yes, your business's credit score, along with your personal credit score (especially for smaller businesses or newer ventures), is a significant factor in determining the interest rate you'll receive from Contigo for your business loan. A higher credit score generally indicates lower risk to lenders, often leading to more favorable interest rates and better loan terms. We consider your credit history as part of our comprehensive evaluation to assess your business's creditworthiness. While a less-than-perfect score might not disqualify you, it could result in a higher interest rate to offset the perceived increased risk. We recommend regularly monitoring your business credit score and taking steps to improve it, such as paying bills on time and managing your debt effectively, to secure better business financing options.

Required Documents for Quote

What specific documents and financial information will Contigo require to provide an accurate business loan rate quote?

To provide you with an accurate and competitive rate quote for a business loan, Contigo will typically require a few key documents and pieces of information about your business. This helps us fully understand your financial health and accurately assess risk. Common requirements include: Business Financial Statements: Such as profit & loss statements and balance sheets, usually for the last 1-3 years. Bank Statements: Recent business bank statements (typically 3-12 months) to show cash flow. Business Tax Returns: For the past 1-2 years. Personal Tax Returns: For the business owner(s), if applicable. Business Legal Documents: Such as incorporation papers or LLC agreements. Credit Information: Both business and personal credit scores will be reviewed. Providing these documents promptly allows us to conduct a thorough assessment and offer you the most suitable business financing solution. Learn more about our eligibility requirements.

Fixed vs. Variable Rates

Does Contigo offer both fixed and variable interest rates for business loans, and how do these options differ?

Contigo offers both fixed and variable rate options, depending on the specific business loan product and your business's needs. Understanding the difference is crucial for managing your budget: Fixed Rates: Your interest rate remains constant throughout the life of the loan. This means your monthly payments for principal and interest will be predictable, making budgeting easier for your business. Fixed rates offer stability and protection against rising interest rates. Variable Rates: Your interest rate can fluctuate based on a benchmark rate (like the prime rate). This means your monthly payments could go up or down over time. Variable rates can be lower than fixed rates initially, but they come with the risk of increased costs if interest rates rise. Our loan specialists will discuss both options with you, explaining the pros and cons relative to your business's financial situation and market outlook, helping you choose the best fit for your business financing.

Pre-Qualification Process

Is it possible to pre-qualify for a business loan with Contigo to assess potential rates without negatively affecting my credit score?

Yes, at Contigo, we understand that you want to explore your business financing options without commitment. We offer a pre-qualification process that typically involves a "soft credit pull." A soft credit pull allows us to get an initial look at your creditworthiness and provide you with potential loan amounts and estimated interest rates without impacting your credit score. This is a great way to gauge your borrowing power and compare potential offers for business loans before committing to a full application, which would involve a "hard credit pull." We encourage you to start with our pre-qualification to get a clearer picture of what Contigo can offer your business.

Securing Lower Interest Rates

What concrete steps can I implement to increase my chances of securing a lower interest rate for my business loan through Contigo?

Securing a lower interest rate can significantly reduce the total cost of your business loan. Here are key steps you can take to position your business for more favorable terms with Contigo and other lenders: Improve Your Credit Score: Both your business and personal credit scores are vital. Pay bills on time, reduce existing debt, and address any errors on your credit reports. Strengthen Your Financials: Demonstrate consistent revenue growth, healthy cash flow, and strong profitability. Lenders look for stability and an ability to comfortably repay the loan. Provide Collateral: Offering collateral (such as real estate, equipment, or accounts receivable) can reduce the lender's risk, potentially leading to lower interest rates on your business finance. Increase Business Longevity: Lenders often prefer businesses with a proven track record. The longer your business has been operational and profitable, the better. Develop a Robust Business Plan: A clear, well-articulated business plan demonstrates your vision and ability to manage funds effectively. Optimize Debt-to-Income Ratio: A lower debt-to-income ratio (for personal finances) or debt-to-equity ratio (for business) indicates less financial strain. By proactively addressing these areas, you can significantly enhance your eligibility for the most competitive rates available from Contigo. When you're ready, reach out to our team at Contact Contigo, and let's discuss how we can support your business's financial growth.