{"id":11014,"date":"2022-05-02T13:23:34","date_gmt":"2022-05-02T13:23:34","guid":{"rendered":"https:\/\/www.lendified.com\/?p=11014"},"modified":"2022-05-02T13:24:21","modified_gmt":"2022-05-02T13:24:21","slug":"are-small-business-loans-fixed-or-variable","status":"publish","type":"post","link":"https:\/\/www.lendified.com\/are-small-business-loans-fixed-or-variable\/","title":{"rendered":"Are Small Business Loans Fixed or Variable?"},"content":{"rendered":"

Most lenders offer <\/span>small business loans<\/span><\/a> that can have either a fixed rate or variable rate to appeal to a wider clientele of borrowers. A loan\u2019s interest rate is often a major deciding factor when owners are looking for suitable financing for their situation. Choosing between a fixed and variable interest rate loan requires an assessment of various factors unique to the business.<\/span><\/p>\n

Some lenders will charge a high standard rate to each borrower, regardless of their personal circumstances. When you apply to Santander, we offer fixed-rate loans customized to your business profile. Our loan process is faster than that of a bank, and we don\u2019t need any collateral or charge hidden fees. Getting a small business loan should be a simple, straightforward process, so we make it that way!<\/span><\/p>\n

Below, we explain the differences between fixed and variable-rate loans to help you make an informed decision for your business.<\/span><\/p>\n

\"monthly<\/p>\n

What is a Fixed-Rate Loan and a Variable-Rate Loan?<\/h2>\n

Payments can remain the same or change throughout the life of a loan. A fixed-rate loan has an interest rate that does not change over time. Payments are determined by the loan amount and interest rate provided by the lender, meaning that monthly payments will suddenly increase.\u00a0<\/span><\/p>\n

With a variable-rate loan, the borrower makes payments that have a different interest rate each time during the life of the loan. It can be beneficial since the borrower can get a better interest rate over time as the market interest rates change.<\/span><\/p>\n

Fixed-Rate Loan<\/span><\/h3>\n

Fixed-rate business loans can be cost-efficient if you lock in a low interest rate. However, a variable-rate loan would be the better option if the rate decreases after you\u2019ve locked in a fixed-rate loan. With longer loan terms, borrowers face more interest rate risk, so fixed-rate loans offer less risk compared to variable-rate loans.<\/span><\/p>\n

The biggest benefit of fixed interest rates is that your small business\u2019s monthly payments won\u2019t change each month. It provides stability, predictability, and peace of mind that some owners value more than variable interest rates. You will save time from consistently adjusting your budget and projections.<\/span><\/p>\n

Variable-Rate Loan<\/span><\/h3>\n

Variable-rate loans usually have a lower introductory rate than fixed rate loans, making them more cost-effective, so long as interest rates remain low. However, variable-rate loans are riskier than fixed-rate loans, especially if the loan has a long term.<\/span><\/p>\n

\"woman<\/p>\n

How Small Businesses Can Choose the Right Loan<\/h2>\n

You know the loan options available to you. Now, you need to weigh a few factors to help you decide the best course of action for your business and finances. These factors include:<\/span><\/b><\/p>\n