As a business owner, you likely borrow money to help fund your startup. And when youneed a business loan, lenders typically charge you interest. So, what is interest?

What does interest mean?

Interest is the rate lenders charge individuals to borrow money. Essentially, interest is the cost of borrowing money. The amount you borrow is typically referred to as the principal amount.

兴趣如何工作？当您从贷方借钱时，您将支付利息。同样，如果您借钱，您就会赚取利息。有兴趣的常见贷款类型包括学生贷款，商业贷款和抵押贷款。

If you need aloan for a new business, you might apply for business loans. Or, you may opt to use apersonal loan for business.

The lender can charge a fixed percentage, known as an interest rate. Or, interest can be a flat amount or fee. The interest rate determines the amount of interest the borrower must pay.

The amount the lender charges for interest depends on many factors. Some things that can impact interest rates include:

• Type of loan
• Amount of expected inflation
• 钱的时间长度是借
• Liquidityof the loan
• 政府干预利率
• 信用记录

Usually, interest rates are set as an annual percentage. However, time periods for interest can be longer or shorter than a year.

简单而复杂的兴趣

贷方可以向贷款应用两种兴趣：简单而复合。Business loan ratesuse either simple or compound interest.

Simple interest is a set rate on the principal amount lent to the borrower. Compound interest refers to the interest on the principal amount and the compounding interest paid.

Whether or not an interest rate is simple or compound depends on the type of interest rate.

Types of interest rates

There are several ways to determine the amount of interest on a loan. Interest rate amounts can be as simple as setting a flat percent (e.g., seven percent). Or, lenders might factor in credit and othersmall business debt确定利率公式。

There are three main types of interest rates, including nominal, real, and effective interest.

Nominal

Nominal interest refers to interest that computes from the principal amount. The rate provides the exact amount of interest a person earns or pays for a loan.

For example, a loan of $100 with a nominal interest rate of 6% would accrue $6 in interest ($100 X 0.06).

不会改变如果率amount of the loan increases. A borrower would still pay 6% if the loan increased to $1,000.

Real

Real interest is similar to nominal interest. Both are considered types of simple interest. However, real interest factors in inflation. Real interest takes into consideration that the purchasing power of a lender can change due to inflation.

To calculate real interest, take the nominal interest rate and subtract the rate of inflation.

Nominal interest rate – Inflation = Real interest rate

For example, say your nominal interest rate is 7% and the inflation rate is 4%. Your real interest rate is 3%.

Effective

Effective interest uses compounding. When calculating effective interest rates, include the principal as well as the amount earned from previous interest.

Effective interest allows lenders to earn more since the interest factors in the principal amount and accrued interest.

For example, say you borrow $1,000 for seven years at a 10% interest rate. During the first year, your interest would be $100. The next year, your interest amount would include the principal amount plus interest, which is $1,100. This means your interest in the second year would equal $110 ($1,100 x 0.10).

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This article has been updated from its original publication date of March 26, 2015.

This is not intended as legal advice; for more information, please点击这里。