What it is
Financing for a registered business to buy stock, pay suppliers or cover the gap between paying out and getting paid. Larger and longer than a micro-loan, with more paperwork. Rates can be lower because there is revenue to show.
Who it suits
Registered MSMEs with at least 12 months of revenue and records to show for it.
What it usually costs
You borrow $2,500 for 12 months at 1.2% a month on the remaining balance, plus 1% admin. You repay $224.94 a month, $2,724 in total. The profit on the stock has to exceed $224 or the loan does not pay.
See what it costsWhen not to use it
- If the business is not yet profitable. A loan cannot fix a business that loses money.
- If you are borrowing to cover personal costs.
- If the lender wants a land title as collateral for a small loan.
Questions to ask
- 1.What is the total I repay in dollars, including every fee?
- 2.Is there collateral or a guarantor? What happens if business is slow?
- 3.Can I repay early without a fee?
- 4.Can the schedule match my selling season?