What is a Subprime Loan?
- A type of loan that is offered at a rate above prime to corporate entities who do not qualify for prime rate loans. Quite often, subprime borrowers are often turned away from traditional lenders because of their low credit ratings or other risk factors that suggest that they have a reasonable chance of defaulting on the debt repayment.
- Subprime loans tend to have a higher interest rate than the prime rate offered on traditional loans. The additional percentage points of interest often translate to tens of thousands of dollars worth of additional interest payments over the life of a longer term loan. However, getting a subprime loan could still be a good idea if the loan is exclusively business related and will be used for growth or if it is meant to pay off a higher interest debt .
- The specific amount of interest charged on a subprime loan is not set in stone. Different lenders may not value a borrower’s risk in the same manner. This means that a subprime loan borrower has an opportunity to save some additional money by shopping around.
Some possible uses of funds include:
- Renovations to grow your business
- Working capital management
- Completion of a property development
How much business funding can I get?
Naritas can facilitate business loans between $50,000 and $5,000,000. The amount loaned will depend upon:
- The type of assets you can offer as collateral.
- If you are a property developer, your net asset position and exit strategy