While the majority of business processes of looking for a business loan, one of the first things to occupy their mind first is the price of the loan – interest rates to who pays.

As you know, is still considered in its infancy from a lender to apply to your business loans hard enough these days – but for your company to access capital at a price you think is most beneficial for your business is quite impossible to put down.

Every day I get requests from businesses (start-ups or established entrepreneurs), who know what they want a business loan at low prices.

My answer is always the same – define cheap.

No credit is cheap, but on the other hand, is not a loan is expensive, either – if it comes to proper use.

The difference between a few percentage points for a loan is not as significant as what is done with the loan. Business loans to the advantage of leverage – meaning that your current cash flow to get the loans then this loan to generate more new revenue than the cost of credit.

Thus, a loan was an asset to a company in his business or quest for more income and wealth are used.

A simple example:

You and another local hero has a niche market that could lead to the identification of new applications for existing products. Although this market is not yet proven, you both think it has enormous potential.

Go to your lender to find a commercial loan of $ 100,000 for three years. The lender required and quoted a rate of 10%, making your monthly loan payment of about $ 3227.

You think this percentage is too high, the long relationship you had with the lender and the money they paid over the years have given. In addition, we have a couple of hours of research online than the average business loans by about 8%.

Your lender said it would measure your rate of 8% to obtain, but you must wait for their next credit committee within two weeks to get approval.

a month or $ 93 per $ 3,351 savings over the life of the loan at 10% for the same amount – 8%, the amount of your monthly payment would be about $ 3134.

Meanwhile, your opponent gets the same lender and a loan to provide the same amount equal to 10%. Your opponent is wrong.

When the committee approves your loan rate of 8% – your opponent has already realized their marketing plan for this new market has created demand for its products and is now setting up an additional $ 10,000 per month new revenue this niche.

Once your loan is funded, you should try to implement your marketing plan, but a little too late and your company is only capable of generating up to $ 4,000 extra income per month (your product is to find a copy cat saw the new leader – your competitors).

Although these new revenues to pay for the credit – the new sources of revenue for your business generates about $ 6,000 per month is lower than your competitors.

Look at the difference. Over three years, the total amount you repay the loan of $ 112.811 ($ 3,134 times 36 months). Your company puts in $ 4000 per month for the same 36 months and $ 144 000 to earn a net income of $ 31,189.

Your opponent spends more on its loans – $ 116,162 – but he earned $ 360,000 or net income of $ 243,838 or 782% more than your business because you wanted it all for a cheap loan.

The key is that the actual cost of the loan does not matter. The price your company pays for not going into this niche before your opponent is much larger (a loss of about $ 6,000 a month income), then $ 93 per month you saved.

(- $ 10,000 monthly payment) – If the 10% rate on profits is compared to a $ 6.773 per month, the loan was actually cheaper.

And it does not matter if you actually tried a competitor just beat the market. This is an opportunity cost of not obtaining a commercial loan or when the time came.

Even if you only have a few weeks have been slow in the fight for a lower price – the amount of revenue that you lose hold (the amount that you never do, that time will not reverse) the amount would be higher then you try to store the goods – in this case (if you do not have an opponent on the niche), two weeks costs about $ 5,000 in new revenue to expect, while only a saving of $ 3351 have was presented to the lower interest.

Now I’m not saying you should not try to get a better deal or to get a lower interest rate, but make sure you do not, you try to save.

So while you’re on a budget percentage points short search for loans called commercial, taking the price paid for your loan on time is not much higher than the potential savings.