Reply from BriteCap FinancialMay 22, 2015
Thank you for your review.
ForwardLine merchant loans are designed to be repaid quickly, and thus use a fixed-fee—a set percentage to repay over the life of your loan. For example, on a 12-month loan, the fixed fee is 12.99%, which means if that customer were to borrow $10,000, they are going to repay $11,299, or $1,299 in interest.
APR calculates the amount of interest paid as an annual rate relative to the average loan balance during that annual period.
For example, if you borrowed $100,000 for 1 day, and repaid the $100,000 plus $1,000 in interest after that one day, that represents a fixed-fee of 1%, but an APR of 365%. That’s because an APR calculation annualizes the interest amount and therefore states that you paid 1% interest per day, which translates into 365% interest over a year. The APR calculation is not wrong, but it can cause confusion.
It’s important to recognize that smaller loans as well as shorter term loans will tend to have higher APRs because there are minimum transaction costs in originating any loan that must be priced into the repayment, regardless of how big the loan is, or how long it is outstanding.
Ultimately it’s up to business owners like yourself to determine if access to funds will provide a meaningful return versus the cost of funds.
ForwardLine prides itself on being the low-cost industry leader for short-term alternative financing. We strongly believe that pricing should be transparent, and we hope that you found that to be true with your experience with ForwardLine.
Regards,
Kate
Manager, ForwardLine
