Small Business Term Loans in 2020
What's a business term loan?
A short-term business loan is possibly the most traditional type of small business funding for borrowers. Term loans for companies may vary but all of them have a couple things in common. A lump sum payment is received by the debtor which is provided by a creditor/lender, which can be repaid over a specified period of time (also called loan term length). Business term loans can be used a wide range of expenses including hiring employees, investment in technologies, and purchasing real estate for a new location.
Advantages and disadvantages of term loans
- It's possible to borrow a considerable amounts of cash to fund growth.
- Extended repayment terms may make huge investments less expensive.
- Repaying term loans in time can help you build your personal credit rating.
- Online lenders will approve and fund you within 1 to 7 days.
- Qualification requirements for online business loans are more lax than conventional banking institutions.
- Less flexible than a business line of credit.
- Shorter term loans often have a higher APR than other forms of financing.
- SBA loans are cheap, but require excellent credit scores to get approved.
- Collateral might be needed for some types of term loans like equipment financing.
How to apply for a business term loan
Pick a lender based on positive customer reviews and fill out their online loan application. Do pay attention to the lender’s specific qualification requirements to ensure you have a chance of getting approved. Online lenders are quick to approve small businesses and you can get funded within 7 days at most.
Assess collateral requirements
Term loans may be secured or unsecured, which means that you might need to put down some collateral to be eligible. Before getting too far along in the application process, check to find out whether the lender needs collateral to get a term loan and if so, what types of assets are allowed as collateral. Remember that even when a loan is unsecured and no collateral is necessary, a personal guarantee may be required.