The B.A. Fund

Survey Finds Major Discrepancies in Business Loan Pricing in South Florida

It's not who-you-know but where-you-go that might determine the loan pricing you get on a business loan. This article finds some surprising differences in business loan pricing within the South Florida Market.


Stuart, FL -- (ReleaseWire) -- 11/09/2015 --A new website finds that the price you pay for a commercial loan in South Florida can vary greatly depending on where you are getting the loan.

The website collected and reviewed the pricing sheets from more than 20 Banks in the South Florida area and they reveal a seemingly random variation in prices for the most common types of commercial loans.

For a machinery or equipment loan the charges range from 4.5% (fixed rate for 10 years) at a bank in Martin County to 5.5% (adjustable rate for 10 years) at a bank in Palm Beach County.

The disparity exists even at Banks right across the street from each other.

In Saint Lucie County, one major banks is charging 5.5% (fixed rate for 5 years) for commercial real estate financing while right across the street a Bank United is only charging 3.99% (fixed rate for 15 years). On a $500,000 loan this difference in interest rates adds up to $37,750 in additional fees after 5 years. If the borrower is lucky and interest rates don't go up, at the end of 15 years the business owner will have spent over $113,000 in additional fees.

Even on SBA loans there is a large difference in cost. For this same $500,000 real estate loan a community bank is offering an SBA loan at 6% (adjustable rate for 25 years) vs a national bank with a local presence that is offering this same exact SBA loan at 4.9% fixed rate for 25 years. The consequences of a business owner not doing their due-diligence on this scenario could be $137,500 or much higher if interest rates rise.

Discrepancy in pricing is multiplied when you compare pricing for unsecured working capital loans. The interest rate on working capital loans can be as low as 0% for 12 months (2 area banks are offering credit cards with this pricing). For a traditional unsecured working capital loan the interest rates goes from 5.5% (fixed for 5 years) to 6% variable (for an SBA loan over $50,000). When you bring in non-traditional lenders the interest rate can easily jump in the 10%+ range with some interest rates being as high as 35%.

"The data doesn't show that there's any better service as the prices go up" notes John Patterson CFP® and Co-Founder of The Best Business Loans in Town ( Patterson advocates for business owners and is also a Commercial Loan Broker.

Like many things, business owners are able to negotiate lower fees…To a degree.

"We counsel clients that most banks have some wiggle room on adjusting their pricing but you need to present a strong case as to why you deserve better pricing and be able to "lift the fog" and show your bank that the competition is willing to offer better pricing." Patterson points out.

Patterson's website, The Best Business Loans in Town is an online marketplace for do-it-yourself South Florida entrepreneurs who are looking to quickly find and compare pricing on their particular business loan scenario. In less than 10 minutes the website allows business owners to find out what the best matches are for their particular loan request. The site focuses on gathering and providing loan data mostly from local banks. The company is a strong advocate of shopping local for financing because they firmly believe that local banks offer the best pricing. Data from outside lenders however is also used and provided in cases where local financing is not possible or cost prohibitive.

The Best Business Loans in Town's website currently has a 30 day money back guarantee and a guaranteed lowest rate promise where if you find a better deal they will pay you $100.

"When you are able to make business loan pricing transparent, that added level of data makes better results for consumers", says Patterson.