Business Term Loans

Short-term loans (1-3 years) have higher monthly payments but lower total interest cost good for businesses with strong cash flow. Long-term loans (7-25 years) have lower monthly payments but higher total interest over the life of the loan. Medium-term loans (3-7 years) are the most common and balance affordability with total cost.

Traditional bank lenders typically require a 650+ credit score, while SBA lenders look for 680+. Online and alternative lenders may work with scores as low as 550-600. Your credit score affects both whether you qualify and the interest rate you receive higher scores generally get better rates.

Many lenders allow early repayment, but some charge prepayment penalties typically 1-5% of the remaining balance. Always ask about prepayment terms before signing. Online lenders are more likely to allow early payoff penalty-free; traditional banks vary.

Online lenders can fund in 1-5 business days. Traditional banks and credit unions typically take 2-4 weeks. SBA loans can take 30-90 days due to additional documentation and government processing requirements.

Term loans can be used for almost any legitimate business purpose equipment purchases, working capital, real estate, business expansion, hiring staff, debt consolidation, or marketing campaigns. Some lenders restrict use to specific purposes, so confirm with your lender what's allowed.

Many term loans are secured by business assets or a personal guaranty, though some lenders offer unsecured options at higher pricing. Collateral often improves pricing and available amounts. Requirements vary by lender and loan size.

Many lenders prefer two or more years in business for term loans, though some online lenders work with younger companies, often at smaller amounts and higher pricing. Strong recent revenue can sometimes offset a shorter track record.