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You’ve been on pins and needles waiting for word about your small business loan. You’ve waited weeks. Maybe months. Finally, get you the official thumbs-up. Hallelujah! Until you realize that the loan is too expensive after all. Arrrgh! Your business needed that money. You had hoped small business loans were the answer.And they probably are. Maybe you applied for the wrong business loan. Every small business needs money to grow. But borrowing options are not all alike. And your business is different from others. If the business loan you applied for is too expensive, you may have other options. Especially if your business is qualified for a bank loan.

Each type of business financing has pros and cons as a borrowing tool. Naturally you want the least expensive option. But the truth is, “expensive” can mean many things to your small business.


There’s more to a business loan than the interest rate. That’s why funding that may be “best priced” for another business is too expensive for you. For example, you should consider the annual percentage rate. Beyond the stated interest rate, APR includes other fees associated with your business loan. That might be application fees, origination fees, service charges or closing costs. Then the total is figured on an annual basis. That’s why many experts say APR is more realistic. APR is also useful to determine “real” interest on a short-term business loan.

Prepayment penalties can also make your small business loan more expensive down the road.

SBA 7(a) loans are usually considered the least expensive small business loans. That’s in terms of interest rate. But even they have fees. And although SBA loans are a federal program, details differ from one state to another. So an SBA loan in your state could be more expensive than somewhere else.

But there are other types of costs.


As you’ve already learned first-hand, applying for small business loans can be a slow process. It requires a lot of paperwork. Assembling all that documentation is time-consuming. It takes you away from your essential work. And while you’re waiting for an answer, your plans are on hold. That’s not only inconvenient. It’s costly.

That said, assembling financial paperwork is not all bad. It shows lenders you’re a competent business manager. It also give them a more detailed picture of your small business. Here at United Capital Source, we recognize the value of financial facts. And we’re committed to learning about your business. What sets us apart from our competitors is our personal relationships with our clients. No amount of facts and figures can replace one-on-one interaction. That’s why each of our clients has a dedicated account rep to work with long term.


Time can also be a critical factor when a surprise opportunity appears. Often, you have to act fast to take advantage. Otherwise, the opportunity is lost. What if it was the Big One? Opportunity is what builds your business, no matter what you do. A chance to capture discounts on needed supplies or inventory. Or buy out a faltering competitor. Take on a big new job. Or a great new employee.

What if you needed the money to correct a problem? Emergency repairs. Or replacing a piece of equipment. Machines always fail at the worst times. The longer your business is down, the more your bottom line suffers. That’s a cost no small business owner wants to pay.


Cost is only one factor to consider when it comes to small business financing. Sometimes paying more now can bring a bigger payoff later. For instance, businesses that have bad credit will pay higher interest rates. But a good payment history on that new loan can help improve your business credit. Next time, you could get better terms. Small business loans become less expensive.

Business and finance industry watchers say money is more available now. Small business loans abound. At least compared to recent years. But as you have just learned, they can still be too expensive. So what are some alternatives?

  • Peer-to-peer loans from other business sources
  • Alternative lenders such as United Capital Source — usually no collateral or personal guarantees needed, bad credit may not be a problem, and you can be funded within a week or so
  • Specialized equipment financing just for this purpose, because equipment is often very expensive
  • Invoice factoring, also called accounts receivable loans, for fast working capital
  • Merchant cash advances, for working capital based on your electronic transactions
  • Inventory financing – for purchasing new inventory or using existing inventory as collateral for a short-term loan
  • Business credit cards
  • Business line of credit

As always, why do you need the money? How much do you need? And do you know why your business loan turned out to be too expensive? Find out. What you learn will help improve your chances next time.

As I mentioned above, the most recent Private Capital Access (PCA) Index shows small businesses have more access to capital now. That includes access to bank loans. But small businesses still rank below average when it comes to bank approval. And access to asset-based financing. So many small business owners still resort to personal credit to fund their business.

This worries me. My goal in founding United Capital Source has always been to help small businesses grow and thrive. On their own merits. Continuing to rely on personal credit to fund business growth is a dangerous strategy. It is expensive, in a different way. It keeps you from establishing a separate business credit profile. And you need that to acquire less expensive small business loans.


When you partner with us, you’ll know up front you’re getting the best-cost small business loans. We reduce your expenses by saving you time and hassle. By matching you with the financing that best fits your current need. And by getting you funded quickly, so your business doesn’t miss a beat. We know that lost opportunity is something your small business cannot afford.

We will help you grow
your small business.

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