How to Use and Understand the Financing Comparison

The planner helps place up to three business-financing offers into a consistent comparison. For each offer, use the values in the provider’s written proposal rather than estimates from an advertisement or an earlier conversation. Entering the offers in the same way makes it easier to compare the funds available to the business, the expected repayment, the estimated financing cost, and the approximate payment amount.

The main inputs mean:

• Provider or offer name: An optional label that helps you identify each result. The name does not affect any calculation.
• Amount received: The amount the offer says your business will receive before subtracting any additional upfront fees entered separately.
• Total repayment: The total amount the provider’s offer says must be repaid over the stated period. Use the complete repayment figure shown in the proposal.
• Additional upfront fees: Fees paid or deducted at the beginning in addition to the stated repayment amount. The planner subtracts these fees from the amount received to estimate usable funds.
• Repayment period in months: The number of months over which repayment is expected. This input is also used to produce the simple annualized cost estimate.
• Number of payments: The total number of scheduled payments. The planner divides total repayment by this number to estimate the amount of each payment. Review the offer separately to confirm whether those payments are daily, weekly, or monthly.

The results use these entries to show several different views of the offer. “Usable funds after upfront fees” is the amount received minus the entered upfront fees. “Estimated total financing cost” is total repayment plus upfront fees minus the amount received. The cost percentage compares that estimated cost with usable funds. The simple annualized cost estimate scales that percentage according to the repayment period in months; it is a planning comparison and is not an official APR.

Hypothetical example

Hypothetical example: Assume a written offer shows an amount received of $20,000, total repayment of $24,000, additional upfront fees of $1,000, a 12-month repayment period, and 12 payments. These are simple round figures used only to demonstrate how the planner interprets its inputs. Actual costs depend on the values in the user’s real offer and the provider’s financing terms.

1. Calculate usable funds. The planner subtracts the $1,000 upfront fee from the $20,000 amount received. The displayed usable funds would be $19,000.
2. Estimate total financing cost. The planner adds the $1,000 fee to the $24,000 total repayment, then subtracts the $20,000 received. The estimated total financing cost would be $5,000.
3. Express cost as a percentage of usable funds. The $5,000 estimated cost is divided by $19,000 of usable funds. The result would be approximately 26.32%.
4. Produce the simple annualized estimate. Because the hypothetical repayment period is 12 months, the simple annualized cost estimate would also be approximately 26.32%. A different number of months would change this planning figure.
5. Estimate each payment. Dividing the $24,000 total repayment by 12 payments produces an estimated payment of $2,000. The offer must still be checked to confirm the actual payment dates and frequency.

How to Interpret the Result for a Business Decision

Start by confirming that the offers provide a comparable amount of usable funding. Two offers can show the same amount received but leave different usable funds when upfront fees differ. Next, compare estimated total financing cost and cost as a percentage of usable funds. These measures can help show how much the business is giving up in relation to the funds it can actually use.

Then consider the repayment structure. A lower estimated total cost does not by itself establish that an offer fits the business. Review the estimated payment together with the number of payments, repayment period, and actual daily, weekly, or monthly schedule in the written offer. A longer period may spread repayment across more time, while the total repayment and other terms still need to be compared.

The simple annualized estimate can help place offers with different repayment periods on a common planning basis. It should not be read as an official APR or as a complete description of the financing. The result also does not determine eligibility, approval, or affordability. Use the output to identify questions and differences that require closer review in each written proposal.

Limitations: What the Planner Does Not Capture

The planner relies entirely on the numbers entered and cannot verify whether they match the provider’s documents. Its estimated payment assumes total repayment is divided evenly by the entered number of payments. It does not model individual payment dates, every compounding method, variable fees, taxes, penalties, or changes that may occur under the contract.

It also does not evaluate personal guarantees, collateral, liens, security interests, late-payment charges, default charges, prepayment terms, or early-termination terms. Those provisions may be important even though they are not included in the numerical result. The tool also cannot show what will happen if business revenue declines or if a payment cannot be made as scheduled.

Practical Checks Before Making a Real Decision

• Verify the amount the business will receive and when any upfront fees are deducted.
• Confirm the complete total repayment and total number of payments in writing.
• Check whether payments are daily, weekly, or monthly and review the payment dates.
• Review personal-guarantee, collateral, lien, and security-interest provisions.
• Identify late-payment, default, prepayment, and early-termination charges or conditions.
• Consider how the required schedule would affect the business if revenue declines.
• Resolve any difference between the planner entries and the provider’s written financing terms before relying on the comparison.