A traditional term loan is probably the most common form of business loan, so it’s pretty easy to understand. You borrow a lump sum of money—usually for a specific purchase you’re making for your business—and pay the loan back over a set term, most often at a fixed interest rate.
Plenty of businesses can qualify for a traditional term loan—as long as you’ve been in business for a bit, have a good credit score, and are generating revenue.
Not all term loans are the same, though: the interest rate, length of the term, and maximum loan size depends on your business revenues and credit rating. Since traditional term loans have longer repayment periods than short-term loans, your business’s financials and credit score are more important.
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Depending on your small business’s growth needs, credit rating, cash flow, revenue, and more, there are plenty of different term loans available. In fact, we provide term loans with lengths and payment structures as varied as 1 year with daily payments to 5 years with monthly payments—and everything in between. Similarly, loan amounts and interest rates vary according to your business’s needs and history. You can get more or less money—at higher or lower rates.
The exact details of your term loan depend on your business’s financials, but the structure will stay the same. Collateral might be a requirement for a term loan—depending on the rest of your business’s financials—and you risk losing that collateral if you can’t repay your loan.
The point of a term loan: to help you finance something big for your business. Whether your business requires specific equipment or inventory purchase, more working capital, need to refinance other business debts, are looking to meet tax or payroll obligations, or something else entirely, a small business term loan can help you out.
Let’s say you’re borrowing $25,000 at a 11% interest rate and a 5-year term. You would have a monthly rate for the term of $543.56.