Why we don't quote rates online.
Indicative rates on a lender's homepage are a marketing tool, not a financial one. They serve the lender's click-through rate, not your understanding of cost. Here is what a real rate actually depends on, and what it tells you when someone quotes one before reading your file.
Every rate you see on a competitor's homepage is the rate for an imagined borrower. Strong file. Long history. No concentration risk. Hard collateral. Clean tax filings. The borrower they wish you were. When you arrive at the application page, the rate moves. By the time you accept terms, it has moved again. The number on the homepage was never about your deal.
What a real rate depends on, in our underwriting, is not one variable but six. The type of capital matters first: a term loan with hard collateral and a clear repayment schedule prices very differently from an unsecured line of credit drawn against a working-capital cycle. Even within term loans, the use of funds matters — refinancing high-cost debt is one risk profile, funding an acquisition with proven cash flow is another, equipping a build-out is a third.
Then the term and structure. A 7-year amortization with a six-month interest-only ramp behaves nothing like a 3-year balloon, even at the same nominal rate. Seller financing layered onto a senior tranche shifts effective cost in ways the headline rate doesn't capture. A quote that doesn't account for structure isn't a quote — it's a placeholder.
The borrower's profile is the next axis. Time in business, debt service coverage on existing obligations, credit history, concentration risk in one customer or one supplier, the cleanliness of the financial documentation. We read the file before we price it because the file determines the risk and the risk determines the rate.
Collateral and personal guarantee structure complete the picture. A first-lien position on a piece of acquired real estate prices differently from a blanket lien on receivables. A primary owner's PG with material outside assets behaves differently from a structure where the only recourse is the business itself.
What a homepage rate actually means.
If a lender quotes you a rate before reading any of this, one of two things is true. Either they are not underwriting the deal — the quoted number is bait, and the real number arrives at signing — or they are pricing every deal the same regardless of risk, which means good borrowers subsidize bad ones. Neither is a relationship a serious operator wants.
The right answer to "what does this cost" is "what is it for, and what file are we looking at." Anyone who skips that question hasn't done the work yet.
— Expansion Funding