Up to $250,000
Estimated Repayment Terms
1 - 5 Years
Starting at 7%
Speed of Funding
As fast as 1 day
What Is a Business Term Loan?
Business term loans are used for long term investments, including equipment, debt refinancing and commercial real-estate. With long term business loans, you receive a one-time infusion of capital and pay it back over the term.
There are unsecured business term loans and secured business term loans. With unsecured loans, you’re not required to offer collateral to obtain the loan, though you may have to provide a personal guarantee. This means that if your business can’t repay the loan, you’ll be personally responsible. Also, you’ll likely have a higher interest rate and shorter repayment window than you’d find with a secured loan.
How Do Business Term Loans Work?
Business term loans work as follows: Payments are due daily, weekly or monthly, depending on your terms, and are applied against the loan’s principal and interest.
Business term loans offer you higher funding amounts, longer repayment periods and lower interest rates than many financing alternatives. These characteristics make long term business loans a preferred choice for small business owners in need of capital.
When determining the best long term small business loan for you, consider the following factors:
Typically, business loan terms range from 1-5 years, giving you more time to pay off your debt. And with more time to repay your long term business loan, you can expect lower payments than you’d find with a shorter term.
Business 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.
Business 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.
Business term loans are paid back in daily, weekly or monthly installments, depending on your terms. Variables such as the loan amount, term length, risk factors and business preference help determine this structure.
How to Qualify for a Business Term Loan
Qualifying for a business term loan involves a few different factors. The three that matter most are your time in business, your company’s annual revenue and your personal credit score. Because a business term loan will likely provide you with more favorable terms, there are typically stricter qualifying requirements.
Improve your chances of qualifying for a long term small business loan by:
Building Your Credit Score
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 best business term loan rates and amounts you want.
Understanding Your Lender’s Requirements
Business term loan lenders will all require a specific threshold when it comes to time in business, annual revenue and credit score. According to the VantageScore credit scoring model developed by TransUnion, Experian and Equifax, a credit score of 600 is considered Poor.
If you fall into this category and you’re looking for a long term business loan for bad credit, we have options for you. Businesses interested in qualifying for a long 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.
Gathering 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.
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 $200k or more
- You have a credit score of 600 or better
How to Apply for a Business Term Loan
To apply for a business term loan, you first need to find a lender. In previous years banks were the only option, but it’s now possible to find some of the best business term loan lenders online. While traditional banks are known for tough underwriting requirements and long funding timelines, they aren’t the only game in town. Technology advancements have allowed online lenders to offer faster funding with a quick web-based application.
What Will a Business Term Loan Cost?
Due to their favorable interest rates, business term loan costs are lower than the majority of lending products.
Even if you’re approved for the best business term loan rates, though, it’s still important to understand all the fees that are included in your term loan program. Be sure to ask your term loan lender any questions you have about the cost of your program.
If you’re looking for the best long term small business loan for your company, we can help. 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.
Business Term Loan Example
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%. For the next 36 months, Castillo Construction will pay $7,834.09 monthly, for a total repayment of $282,027.29. We calculate the total cost of the loan to be $32,027.29 after subtracting the initial loan amount.
|Cost of Loan:||$32,027.29|
How Will You Use Your Business Term Loan?
You can use a business term loan for nearly any purpose. Looking to add machinery? Purchase inventory? Refinance existing business debt? Let’s look at a few common uses of long term small business loans and how they can fuel growth and increase ROI.
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 them all and more.
Since business term loan rates are often lower than other options, it’s common to use them for debt refinancing. A lower interest rate could lessen your installment payments and total payback amount. This could provide short-term and long-term boosts to your business.
Business term loans are often used to finance equipment. 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.
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.