Business Term Loans
Fixed-rate, lump-sum financing with predictable monthly payments. Ideal for growth initiatives, large purchases, and working capital that requires longer repayment terms.
How It Works
A term loan provides a lump sum of capital upfront that you repay over a fixed period with regular installments. Unlike a line of credit, you receive the full loan amount at closing and make consistent monthly or weekly payments until the balance is paid off.
Term loans are best suited for one-time expenses or investments where you know exactly how much you need and can plan for structured repayment.
Key Features
Loan Amounts
$50,000 to $2M+ depending on business size, revenue, and credit profile.
Terms
12 to 36 months typical. Longer terms available through SBA programs.
Interest Rates
APR typically ranges from 8% to 35% based on creditworthiness and business performance.
Repayment
Fixed monthly or weekly payments. Fully amortizing with principal and interest.
Funding Speed
24-72 hours for approval. Funding typically within 3-7 business days.
Prepayment
Many lenders offer prepayment options with no or minimal penalties.
Best Use Cases
- Business expansion: Open new locations or expand operations
- Large inventory purchases: Buy in bulk for favorable pricing
- Marketing and growth initiatives: Fund campaigns with measurable ROI
- Refinancing high-cost debt: Consolidate into one predictable payment
- Working capital: Bridge gaps while pursuing growth
- Technology and infrastructure: Upgrade systems and tools
Qualification Requirements
Minimum Criteria
- At least 1 year in business (2+ years preferred for larger amounts)
- Minimum annual revenue of $250,000+
- Personal credit score of 650+ (higher for better rates)
- Profitable or break-even operations
- No recent bankruptcies or significant tax liens
Documentation Needed
- 6-12 months of business bank statements
- Profit & loss statements
- Business tax returns (1-2 years)
- Personal ID and possibly personal tax returns
- Business formation documents
- Use of funds explanation
Advantages vs. Disadvantages
Advantages
- ✓Predictable monthly payments
- ✓Lump sum upfront for large expenses
- ✓Lower rates than lines of credit
- ✓Longer repayment terms reduce payment size
- ✓Builds business credit history
Disadvantages
- ×Must repay entire amount even if needs change
- ×Higher rates than SBA or bank loans
- ×May require collateral or personal guarantee
- ×More documentation than lines of credit
- ×Origination fees can be 2-5% of loan
Example Scenario
A retail business with $750k annual revenue needs $150,000 to expand inventory and launch a marketing campaign. They qualify for a 36-month term loan at 18% APR.
Actual terms vary based on credit profile and lender. This is for illustrative purposes only.
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