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Fixed Interest Rate
Most businesses that are applying for financing request to receive fixed interest rate financing. This is because the fixed interest rate loan is easier to budget for. Fixed interest rate loans have the same interest rate throughout the life of the loan agreement, no matter what national interest rate trends happen to be.
The opposite of a fixed interest rate is an adjustable rate. At the outset of a loan, adjustable rate loans are often at a significantly lower interest rate. The problem with adjustable rate loans is that they change, often increasing over the life of the loan. If you intend to have a long-term loan agreement, there is no telling how high an adjustable rate loan will go. That is why many small business owners opt to apply for loans with fixed interest rates. Over the life of the loan, they usually end up paying less interest than they would have with an adjustable rate loan.
More Glossary Terms Explained here
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