Financial tools & management

After payment history, your overall debt is the second most important factor in your credit reports. When thinking about your debt in relation to your credit score, you might focus on the total amount of debt you owe. But credit scoring models often work somewhat differently.

As you navigate business financing, it may be tempting to use your personal finances to help out when your business needs a boost, but that is not always the best solution in the long run. Separating your personal and business finances can help ensure you treat your business like the independent entity it is, while safeguarding your personal finances.

You pay your bills on time, you don’t have any credit card debt, and overall, you consider yourself fairly responsible when it comes to spending. You’re ready to apply for a credit card or loan to help you get your future business off the ground, and all of a sudden, you hit a road block. Your request is denied and, upon further research, you find that you have a “thin credit file.”

Bank loans are usually the least expensive way to finance a small business. However, it is not easy to get a bank loan, as banks have strict standards for lending. As a general rule of thumb, banks will require a borrower to put up collateral for a loan. The only exception to this rule is for clients who have a long-term relationship with banks and whose business has proven to be profitable over a multi-year period.

When you get a term sheet for a term loan, you will likely be quoted an interest rate, repayment term (between 1-5 years), and other associated fees, such as an origination fee or monthly administration fee. First calculate the dollar amount of the added fees, then plug your terms into the calculator below to find out the true cost of your loan offer.