Bad Credit business loans are paid off quickly, most often with daily or weekly payments.
Where you source the capital, will determine your cost. Make the Wise decision with Upwise.
These loans also often come with factor rates instead of interest rates: a factor rate is a number that, when multiplied by your total loan amount, gives you how much you’ll be paying back.
A factor rate is a set cost of capital of the given term approved by the short term loan lender such as Upwise.
See the below example of a sample Upwise short term advance.
Bad Credit Short-Term Business Loans & Factor Rates
Some lenders will structure the contract as a purchase and sale of your future receivables..
Say you’ve taken out a $100K short-term business loan and the Upwise offer has a 1. 18 factor rate.
1.18 multiplied by $100K will determine the total amount you’ll need to pay back to maturity = $118K.
For this specific customer, underwriting approved this file for a 12 month term, which is a common approved term amongst small business owners searching for short term business loans.
Given that there are 21 payment days or business days in a month, since payments are taken Monday through Friday, never on weekends or holidays. That equals 252 payments per year on a daily payment program.
To calculate your payment, divide the number of payments (252) by the total payback to maturity $118k.
The amount of each of those business day payments would be $486.25.
Payments are broken down into micro daily or weekly payments. You’re paying a higher rate than a longer term loan for the quick and easy approval and funding process.
If you wish to begin preparing your Bad Credit Business Loan application, you can click the link below to start the application or reach out to one of our funding advisors at (646) 837-5522 or email [email protected] to get started.