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Back in May we posted some advice about small business loan terms and rates and, when looking for quotes, to “always get it in writing”.

A recent study by a think tank down in the US clearly highlights that same advice. They got their hands on 15 different loan contracts from 14 different companies in the US  – many of them also provide loans in Canada.

The Woodstock Institute from Chicago poured through all the fine print in these contracts and summarized the total cost in the table below.

Interest rates range from 26% to 367% and as you can see are all over the board,

There are no Canadian Companies on this list  

Source: Woodstock Institute Chigago
Source: Woodstock Institute Chigago


Although most of these companies advertise much lower rates on their websites, it’s the additional or “hidden fees” that drive up the cost.

Here’s a list of some of those hidden fees

  • On Deck charged a $450 origination fee or 2.5% of the loan amount
  • BizFunds charged a $10 per month admin fee
  • CanCapital charged $100 admin fee
  • CBSG charged a $395 origination fee, $399 ACH fee, $249 risk assessment fee, and a $195 UCC fee
  • Direct Capital charged a $200 upfront fee
  • Mantis Funding Services charged a $295 origination fee, a $399 ACH fee, a $299 risk assessment fee, and a $199 UCC termination fee.

What the hell is a UCC termination fee?

In some cases the extra fees amounted to an additional 14% over the “advertised” interest rate.

Fortunately it’s not like this in Canada – as usual Canadian Financial Service providers are far more conservative and far more transparent. For example, at Company Capital you can get a 6 month business loan for 14%  – all in. No additional fees – ever.

If you’re searching for a small business loan you’ll always be better off with a Canadian Company.

click here for the complete report from the Woodstock Institute 




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