Business term loans work as follows: Longer-term loan payments may be set upmonthly, while shorter-term loans may require a daily or weekly payback structure.
Typically, business term loans offer you higher funding amounts, more extended repayment periods and lower interest rates than many financing alternatives.
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 decreases and more is applied to your loan principal.
Interest rates can be fixed or variable. A variable interest rate fluctuates up and down as the market and interest indices change. Fixed interest rates do not change regardless of market conditions.
Business term loans are paid back in daily, weekly or monthly installments, depending on the terms of your agreement. Variables such as the loan amount, term length, risk factors and business preference help determine this structure.