topic Re: Square Loans and Cost of Loan question in Business Credit

Square Loans and Cost of Loan question

Creditaddict — Wed, 28 Sep 2022 22:46:26 GMT

I'm feeling really stupid about how I calculate the cost of the loan:

$19,000.00

Loan fee

$2,480.00

Total owed

$21,480.00

Repayment

20% daily sales

Re: Square Loans and Cost of Loan question

SoloG — Thu, 29 Sep 2022 02:39:56 GMT

Cost of the loan is $2480. The end!

The repayment happens at 20% of your total sales until the $21480 is paid in full.

I've used them a few times for business purchases. It has no effect, good, or bad, on your credit.

Re: Square Loans and Cost of Loan question

Creditaddict — Thu, 29 Sep 2022 02:45:18 GMT

I've used in the past but isn't there a formula to basically translate that fee into an interest rate... that's what I was looking for... maybe I should just keep it simple and take

Re: Square Loans and Cost of Loan question

wasCB14 — Thu, 29 Sep 2022 03:18:55 GMT

@Creditaddict wrote:
I've used in the past but isn't there a formula to basically translate that fee into an interest rate... that's what I was looking for... maybe I should just keep it simple and take

Assuming this is like other situations I've seen with CC sales-based advances, you can't calculate an interest rate because you (presumably) don't know how long it will take you to get $107,400 in sales.

Re: Square Loans and Cost of Loan question

Kforce — Thu, 29 Sep 2022 03:39:07 GMT

@Creditaddict wrote:
I've used in the past but isn't there a formula to basically translate that fee into an interest rate... that's what I was looking for... maybe I should just keep it simple and take

An approx way would be to take your average monthly sales * 20% as your average monthly payment.

Enter the original loan 19k in an amortization calculator and adjust interest up-down until your the interest lost = fee amount

Very,very rounded, just an example:

Sales of 2,000 = 400 = 5.5%

4,000 = 800 = 11%

8,000 = 1600 = 22%

The more you make the larger payments you make making the equivalent interest rate larger because it is a fixed fee.

Same as fee for BT, if you make larg payments and pay off early