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2.6 Loan Summary Analysis

Andy and Jose of Lights On Electrical are looking to secure a term loan in the amount of $60,000 from a large national lender that has a local presence. They are estimating that the duration of the loan will be five years. Andy and Jose think that a three year loan term would result in a high monthly payment which they would rather not take on given that they are getting started. Since both Andy and Jose have good credit histories and given that the interest rate environment is relatively low, it is anticipated that they will be able to secure a loan with an interest rate of 6.75%.

A 5 year term loan at 6.75% interest, will result in a estimated monthly payment of $1,181 and annual interest expense of $14,172 for Lights On Electrical. If is possible however that the loan from the lender will not come through or may may be approved at a higher rate of interest. Boy Andy and Jose have prepared for this contingency. If the loan is not approved, Andy and Jose will be contributing additional capital from their savings. Additionally if the loan is approved an interest rate that is very high, Andy and Jose may choose to simply borrow the funds from home equity loans on their respective primary residences. These home equity loans typically carry a lower rate of interest.

Quick Links:

  1. Go to the Corresponding Template section for this industry.
  2. Go to the Corresponding Questionnaire section for this industry.

Small Business Owner Resource Center


Articles on the Small Business Financing Sources, the Small Business Loan Basics, small business loans Checklist and SBA Loans are incredible sources of knowledge for the small business owner.



Credit Report and Credit Score Analysis, how to Read a Personal Credit Report and all about Business Credit cover the intricacies of credit and are required reading for everybody.



The Foundation Grant Directory is a free listing of sources for grants by state. Why not look if there is some free money out there for your business. Hey - you never know!



The Business Loan Application covers every item you will need in your loan package and tells you how to get approved for business loans.



Fire your loan broker and use our Free Business Loans Bank / Lender Directory to find every bank in the country lending to small businesses.



If you are looking to start a business - look no further.  Check out the Free Incorporation Guide discussion and the State Incorporation Resource Directory.

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