What’s the Distinction Between APR and Cents on the Greenback?

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From SBA loans and small enterprise financial institution financing, to on-line lenders and various collectors, small enterprise house owners might have a number of choices to borrow cash. However with so many various funding sources and varieties of loans obtainable, it’s comprehensible to need to be taught extra about funding phrases that you could be encounter earlier than selecting a particular mortgage or lender.

If you happen to’re evaluating totally different funding choices, two widespread points to check embody APR and cents on the greenback.


What Is APR?

APR refers to annual proportion charge. An APR represents the fee you pay every year to borrow cash, expressed as a proportion. The APR contains curiosity plus all necessary charges you pay, reminiscent of an origination payment. Whereas, a metric like cents on the greenback, often solely incorporates the overall curiosity you’ll pay, and excludes different charges or prices.

Relying on components just like the lender, your enterprise’s borrowing historical past and your income, APR for small enterprise funding can range extensively, from roughly 2.58% – 250%.  An internet small enterprise mortgage might fall round roughly 70.49% APR.

Utilizing 70.49% APR for this instance, let’s see the overall curiosity paid on a $10,000 small enterprise mortgage with the timeline beneath:

Total Interest Paid by Month


What Is Cents on the Greenback?

One other technique to evaluate loans and decide the price of borrowing is to make use of a metric known as cents on the greenback. Cents on the greenback displays the ratio of curiosity to each greenback borrowed, except financing charges, and/or different prices associated to the mortgage.

Utilizing the identical $10,000 mortgage instance, let’s take a look at the borrowing prices with a price of 40 cents on the greenback:

Cents on the Dollar for a Loan


Which Determine Ought to I Use to Examine Small Enterprise Loans? 

Each figures may help potential debtors when reviewing funding choices. If you happen to’re in search of a small enterprise mortgage with the perfect charges and phrases obtainable to you, it could assist to make use of a number of monetary metrics, together with APR and cents on the greenback, to check funding choices. APR is a metric offered by most lenders and could also be one of the simplest ways to check a uniform metric throughout product choices. Cents on the greenback is helpful as a result of it offers you a greater understanding of how a lot the mortgage will truly price you however it could not at all times embody charges exterior of regular curiosity. Although small enterprise lenders work in a different way, together with their charges, rates of interest and different prices related to the kind of funding, utilizing these two metrics may help you evaluate small enterprise loans from totally different lenders extra simply.


Notice: Mortgage particulars, charges and charges are offered for illustrative functions solely. Precise figures might range.





1Tune, J. (2021). Common Small Enterprise Mortgage Curiosity Charges in 2021: Evaluating High Lenders.




About Bonnie P

Bonnie is a Chicago transplant who’s dedicated to seeing the world on a dime. As an avid information junkie with a fascination with finance, she loves to assist others do extra with much less.

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