What is a Long Term Loan?
Long-term business loans can provide your business with financing that can be repaid over several years. Business owners usually use it to meet long-term financing needs such as construction, equipment financing or purchasing an existing business. Terms usually start at two years or more, although 10 to 20 years is more likely, with amounts from $25,000 to $200,000.
The benefits of long-term business loans typically include larger funding amounts and lower interest rates and payments, compared to short-term business loans. However, short-term business loans are usually paid back over much shorter periods of time, so they can have lower total costs than long term loans. As with any business lending, you should compare the costs and terms carefully and find the one that works for your business.
Options for Long Term Business Funding
A business line of credit is an arrangement between a lender and a customer that establishes a maximum credit limit the business can borrow from. The business can withdraw funds on the line of credit at any time, as long as they do not exceed the maximum limit.
SBA loans aren’t actually given out by the U.S. Small Business Administration. They’re loans issued either by a bank or another lending institution that is guaranteed by the SBA. The “guaranteed” aspect means the SBA will repay the lender, up to a certain amount, if the loan holder defaults on their payments. This means that while getting approved by the SBA can be a lengthy and challenging process, but if approved, the loan usually comes with favorable rates and terms.
Business credit cards are very similar to personal credit cards, in that the individual’s personal credit will be checked as part of the credit approval process (in addition to the business’s credit ranking). The differences lie in the features offered and how your credit is affected.
Invoice factoring allows a business to sell its invoices to a third party (called a factor) at a discount. The factor then provides an advance on payments for those outstanding invoices. This way, businesses can have the working capital to reinvest in operations and growth sooner than they could if they were waiting for their customers to pay them.
1We always do a soft inquiry unless your credit file is restricted, in which case we would ask you to contact the credit bureau to lift the restriction. Doing so may result in a hard pull.