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Finance Your Success With a Business Term Loan

The definition of a business term loan is one we’re all familiar with: you receive a one-time infusion of capital and pay it back over the term. They’re used for long-term investments including equipment purchases, refinancing debt and commercial real-estate.

  • Immediate access to large sums of capital
  • Favorable rates and terms
  • Funds can be used for almost any business purpose
All Loan Types

Loan Amount

Up to $500,000

Estimated Repayment Terms

1 - 5 Years

Interest Rate

Starting at 7%

Speed of Funding

As fast as 1 day

People Calculating Financial Decisions

Term Loans: The Funds You Need, the Rates You Want

When you’re ready to make a significant investment in the future of your business, you need a way to fuel it financially.

But here’s the challenge: these types of investments don’t always yield immediate returns. As a result, you need a predictable financial solution that won’t strap your business for cash.

A business term loan is that solution.

How Does It Work?

How Do Business Term Loans Work?

Business term loans are the standard product that comes to mind any time the word “loan” is seen, heard or spoken. By definition, a traditional term loan features payment periods ranging between 1 and 5+ years. Remittance installments are due monthly, and the payment is applied against the loan’s principal and interest.

Term loans offer businesses higher limits, longer repayment periods and lower interest rates. The trade-off for these favorable terms is stricter qualifying requirements.

While traditional banks are known for tough underwriting requirements and long funding timelines, they are not the only game in town. Technology advancements have allowed online lenders to change that standard, offering faster funding with a quick web-based application.

Characteristics of Business Term Loans

Loan Term

The term of your program is the amount of time you have to repay the full funding amount.

Typically, business loan terms range from 1-5 years, giving your business more time to pay off your debt. And with more time to repay your debt, you can expect lower payments than you’ll find with a short-term business loan.

Interest Rates

Traditional term loans amortize. Interest accumulates on the remaining principal balance, and loan payments are interest-front-loaded, meaning a large part of your loan payments go toward interest at the beginning of your term. As time goes on, the interest portion of your loan payments decrease and more is applied to your loan principal.

Term loan rates will depend on many factors, including your credit score, revenue and time in business. But in general, they offer some of the most competitive rates available to small business owners.

Repayment

Business term loans are paid back in weekly or monthly installments. Variables such as the loan amount, term length, risk factors and business preference help determine this structure.

Is a Term Loan Right for Your Business?

Business term loans are fantastic financial products that can be used to finance many projects and growth initiatives, such as hiring new employees, purchasing new inventory and opening a new location.

Consider a term loan if:

  • You have a fair to excellent personal credit rating
  • Have been in business longer than 1 year
  • Your funding needs require terms beyond 18 months

Consider other types of loans if:

  • Your personal credit is less than 600 FICO
  • Operating for less than 1 year
  • You plan on repaying the loan within 18 months

How To Qualify For Financing

How to Qualify for a Business Term Loan

Qualifying for a business term loan involves a few different business factors. The three that matter most are your time in business, your company’s annual revenue and your personal credit score.

Build Your Credit Scores

Your personal credit score is an essential variable in qualifying for a business loan. Simply put, the higher it is, the easier it will be for you to qualify for the favorable rates, terms and amounts you want.

Gather Necessary Documents

In addition to your bank statements, your lender will ask you to provide a list of business and personal documents that reflect the health and stability of your business. These include, but aren’t limited to, your driver’s license, profit and loss statement and a voided business check.

Understand Your Lender’s Requirements

Lenders will all require a specific threshold when it comes to time in business, annual revenue and credit score. Businesses interested in qualifying for a term loan through Fast Capital 360 need to meet the minimum qualifications of at least one year in business, a credit score at or above 600 and annual revenue of $100,000 or greater.

Do You Qualify?
Based on previously approved borrowers, you’re likely to qualify if:

  • You’ve been in business 1 or more years
  • Your annual revenue is $100K or more
  • You have a credit score of 600 or better

How to Apply for Financing

How to Apply for a Business Term Loan

In addition to inquiring at your local bank or credit union, owners can now apply for small business term loans through an online funder. Fast Capital 360 allows you to compare options all in one place, simplifying the process to help you find the best match.

Step 1: Tell us about your business.

Fill out a few basic questions about your business so that we can connect you with the best lenders.

 

Step 2: Tell us about you.

We need to learn about you so we can determine your eligibility without impacting your credit score.

 

Step 3: Connect your bank account.

Your revenue data enables us to match you to funding opportunities at the speed of modern business.

 

Step 4: Get funded.

Funds can be deposited into your bank account as soon as the same day.

How Much Does Financing Cost

What Will a Business Term Loan Cost?

Anytime a business owner is interested in securing additional funding, one of their first considerations is: how much will this cost?

The good news is, their interest rates are lower than the majority of lending products.

Even if you’re approved for the best rates, it’s still important to understand all the fees that are included in your term loan program. Regardless of the financing provider, be sure to ask any questions you have that deal with the cost of your particular program.

At Fast Capital 360, we pride ourselves on our transparency and are upfront about our lending partners’ fees. Furthermore, our knowledgeable Business Advisors can help guide you through your funding process and make it a priority to answer any questions you may have along the way.

Putting It All Together

Just how affordable can a business term loan be? Let’s take a look at an example.

In this scenario, Castillo Construction secures a $250,000 business term loan with a 3-year term at an interest rate of 8 percent. For the next 36 months, Castillo Construction will pay $7,834.09 monthly, for a total repayment of $282,027.29. After subtracting the initial loan amount, the cost to access the loan, minus any fees, is $32,027.29.

Amount Borrowed:

$250,000

Interest Rate:

8%

Term:

3 Years

Monthly Payment:

$7,834.09

Cost of Loan:

$32,027.29

Crunch The Numbers

Loan Use Cases

How a Business Term Loan Is Best Used

Whether you’re looking to make a large inventory purchase, add new machinery, refinance current business debts or simply need working capital to see you through a period of organizational change, a small business term loan is an excellent type of business loan to fuel growth and increase ROI.

Business Expansion

Expanding your business isn’t exclusive to companies with physical locations. If you’re looking to add new employees to your team, introduce a new product, open another location or acquire a rival business, a business term loan can cover multiple methods of expansion. Whatever your expansion needs, a term loan can provide the funds you need to grow without saddling your business with stifling debt.

Debt Refinancing

Though it may have been the best rate your business was able to secure at the time, it’s possible that the interest rates on your current debts could be reduced by refinancing. Improving your rates could lessen your total payback for using funds, providing an automatic short-term boost, as well as a long-term one.

Equipment Financing

Depending on the nature of your business, your equipment could be as simple as a collection of high-powered laptops or as complex as an entire warehouse of machines running 24/7. Regardless of your industry, you need your equipment to push your business forward. Whether you need laptops or warehouse machinery, a business term loan can help you spread out the expense of revamping your equipment.

Inventory Financing

Large purchase orders and major contracts are boons for your business, but they can also make life a bit hectic. However, a business term loan can be used as a means of inventory financing, allowing you to buy the materials you need to fulfill everything your client expects without negatively impacting your cash flow.

Ready to see how your business can grow with a term loan?