MY BUSINESS LOAN

By Cheyenne McMillin

THE THREE LOAN CHOICES

SBA Business Loan

Start-up Loan

Term Loan

SBA BUSINESS LOAN

Is a loan for a small businesses from a private-sector lenders (banks, etc.) which

are guaranteed by the SBA. The SBA has no funds for direct lending or loans to small

businesses with long-term, fixed-rate financing for major fixed assets, such as

land and buildings. CDCs work with the SBA and private-sector lenders to provide the

financing.

START-UP LOAN

It’s pretty self-explanatory, it is a loan to start-up a business.

TERM LOANIs a loan that has monthly principal and

interest payments. The outstanding principal amount decreases each month. Generally, term loans are established to

assist in financing long term assets such as computers or equipment. The amortization period should closely match the useful life

of the asset purchased (a term loan for computers should have an amortization period of not more than 3 years). Most

term loans have an amortization period of 5 years or less (but there are exceptions).

MY FIRST OPTION

Value of Loan - $20,000

Interest Rate - 10.99%

Monthly Payment - $516.81

Term 48 months - 4 years

MY SECOND OPTION

Value of Loan - $20,000

Interest Rate - 9.99%

Monthly Payments- $645.25

Term 36 months – 3 years

MY THIRD OPTION

Value of Loan - $20,000

Interest Rate – 8.5%

Monthly Payment - $631.35

Term 36 months – 3 years

THE ONE I CHOSEI chose the third interest loan because it

has the lowest interest rate of all three of my loan options, and the monthly payment is also lower than my other options as well.

THE TOTAL

This is the total amount of money I would have to pay back for each of the three loans.

First Option - $24,807.08

Second Option - $23,197.21

Third Option - $22,715.34

CHANGE IN THE INTEREST RATE

My interest rate is 8.5%

Decreasing the interest rate to 7.5% would bring my total interest rate down by about $9.23

Increasing the interest rate to 9.5% would bring my total interest rate up by about $9.31

EXTRA LOAN PAYMENTS

If I would pay an extra $100 for a total of 6 months my loan could be paid of in 34 months instead of 36.

It doesn’t matter if I pay the extra $100 in the beginning, middle, or end of the term.

THE PROFIT

Monthly La Bella Vita made a profit of about $17,085. Paying the monthly

payment of $631.35, I would still make a profit of about $16,453.65.