Term Loan

A business term loan is a lump sum of capital you borrow from a lender and repay on a fixed schedule over a set period (i.e., a “term”). The cost of capital for small businesses is generally cheaper than conventional financing, while the turnaround on funds is faster than SBA loans. Business term loans may be used for a variety of purposes, including long-term investments.

Established businesses with good financial health, credit history, and positive cash flows are best suited for term loans. Newer businesses and startups that have been operating for less than two years are unlikely to qualify.

The advantages of business term loans include affordable interest rates, short- and long-term options, predictable repayment schedules, and a wide variety of permitted uses.

The disadvantages, however, are that the application process can be more cumbersome, and newer businesses and startups are unlikely to qualify.