Whether you plan for it or not, your business\u2019s cash need can strain its finances, especially if your working capital is used for day-to-day operations. Long-term business loans might help you handle these costs without breaking the bank in the short term. Consider a long-term business loan with no or low-interest rates to drive your business\u2019s growth or expansion. Here\u2019s everything you need to know about longer-term financing solutions and whether they fit your ambitions.<\/p>\n\n\n\n
Before we go into our list of the best long-term business loans, let\u2019s review how these products function.<\/p>\n\n\n\n
To start with, a long-term business loan acts similarly to any other business term loan in that a lender provides you with a predetermined amount of capital that you must repay (with interest rates) over a given period. Generally, any loan with a repayment period of 12 months or more is considered a long-term loan. This is in contrast to short-term loans, which usually have terms of up to 12 months (sometimes as long as 18 months).<\/p>\n\n\n\n
There is no clear industry standard for what a \u201clong-term loan\u201d is, so loans with repayment terms between one and five years are usually called \u201cmedium-term loans.\u201d To this point, the terms of a long-term small business loan might range (often depending on the purpose of the funds) up to a 25-year payback period.<\/p>\n\n\n\n
Due to the longer time, it takes to pay back a long-term business loan, the interest rates are often lower. They are useful for financing business growth, refinancing existing debt, and making significant real estate or equipment purchases.<\/p>\n\n\n\n
Even though the details will depend on the product and the business lender, you can expect these loans to have the following:<\/p>\n\n\n\n
As we\u2019ve already said, the biggest difference between long-term and short-term business loans is how long you have to pay them back. Most of the time, the terms for these products are shorter, requiring weekly or daily payments instead of monthly payments.<\/p>\n\n\n\n
Long-term loans have the lowest interest rates overall, but they may not be right for every business or financial need. Long-term small business loans can also be tough to qualify for, as we\u2019ll see with the options below.<\/p>\n\n\n\n
As a result, here\u2019s a comparison between long-term and short-term business loans to consider:<\/p>\n\n\n\n
Let\u2019s take a look at some of the benefits and drawbacks of a long-term business loan:<\/p>\n\n\n\n
A long-term business loan is a way to go when your business wants to expand or make a substantial investment. Long-term business loans are available from banks and online lenders. The time it takes to pay back these loans can be as long as 25 years in some cases.<\/p>\n\n\n\n
A long-term business loan is better than a short-term one because it gives you more time to pay it back and has lower monthly interest rates. The difficulty: It may be more difficult to qualify because you will most likely need an established business and excellent financials. Always analyze the cost and terms of each loan carefully, as you would with any small-business loan.<\/p>\n\n\n\n
You should talk to a bank about long-term business loans if you have good credit and a successful business. Long-term financing is available from banks around the country, but starting with your local community bank might be beneficial. Local bankers are well-versed in their economies and may be acquainted with local small business owners. If you already have a relationship with your local bank, they may be more eager to provide you with a loan for your business.<\/p>\n\n\n\n
If you don\u2019t have a relationship with a bank, you could look to Bank of America for long-term business loans. Consider their Business Advantage Unsecured Term Loan, which allows you to borrow up to $100,000 for working capital. This loan requires no collateral and has fixed payments for the duration of the loan. These loans have interest rates as low as 4.75%.<\/p>\n\n\n\n
Overall, Bank of America will be one of the best options for a long-term business bank loan, with the lowest interest rates for highly qualified borrowers.<\/p>\n\n\n\n
Of all the online lenders out there, Funding Circle can perhaps offer interest rates and terms that are most similar to those of a bank but with the streamlined processes that alternative lenders are known for.<\/p>\n\n\n\n
With Funding Circle, you can expect;<\/p>\n\n\n\n
Funding Circle can also approve loans and send out offers in as little as one business day if all the paperwork is sent in. Business owners often receive their loans within five days. You can also complete the application online without penalty for paying back the loan early.<\/p>\n\n\n\n
To that end, to qualify for a long-term business loan from Funding Circle, you must have:<\/p>\n\n\n\n
Funding Circle, unlike other online lenders, does not require a minimum annual income. However, if your business is profitable, you are more likely to be approved. Funding Circle is an excellent choice for businesses that need long-term financing but don\u2019t want or can\u2019t get a bank loan.<\/p>\n\n\n\n
Fundation has slightly higher interest rates and shorter loan terms, but business loan criteria are more open. Fundation provides long-term business loans with:<\/p>\n\n\n\n
Fundation, like Funding Circle, allows you to apply for a loan quickly and easily online and receive funding in as little as one day or as many as 30 days. On average, Fundation funds businesses within five days.<\/p>\n\n\n\n
Fundation is a good online lender for long-term loans, especially if your credit score is close to 600. On the other hand, since Fundation requires a business to have at least three employees, it might not be a good choice for smaller businesses.<\/p>\n\n\n\n
The Opportunity Fund is a little different from Fundation and Funding Circle. Opportunity Fund (which also works with Lending Club) is a microlender that strives to offer a long-term business loan to underserved business owners, including women and minorities in low-income communities.<\/p>\n\n\n\n
Opportunity Fund has more specific requirements to meet as a microlender with a mission. However, they are a good choice for a wide range of businesses.<\/p>\n\n\n\n
To start the application process, you can call Opportunity Fund directly, and you\u2019ll work with a dedicated advisor to get everything in order. In most cases, the Opportunity Fund can fund a business in three to five days.<\/p>\n\n\n\n
Opportunity Fund has no minimum credit score requirement and will most likely prioritize your business financials over your credit, especially if your credit is poor.<\/p>\n\n\n\n
But if you can apply with Opportunity Fund, you will find that they offer the closest thing to long-term business loans for bad credit (even more so than Fundation) and long-term business loans for new businesses.<\/p>\n\n\n\n
Finally, Credibility Capital may be one of your greatest possibilities for a long-term small business loan. They have the shortest terms of any online lender on our list, but their business finance package is still quite competitive with others we\u2019ve reviewed.<\/p>\n\n\n\n
Credibility can provide the following benefits:<\/p>\n\n\n\n
Credibility, like many of the other choices we\u2019ve looked at, has an online application process that allows you to finish the application quickly and efficiently. Credibility also doesn\u2019t charge you extra if you pay off your loan early, and you can use one of their loans to pay off other debts.<\/p>\n\n\n\n
To be eligible for a long-term loan from Credibility Capital, you must have the following:<\/p>\n\n\n\n
These qualifications are a little hazy, so you may have some leeway in qualifying with Credibility. Credibility provides long-term business loans that are both quick and reasonable.<\/p>\n\n\n\n
Before we get into how to qualify for long-term business loans, let\u2019s talk about SBA loans. SBA loans were not included in our list of the finest long-term possibilities because a single lender does not originate them.<\/p>\n\n\n\n
On the other hand, SBA loans can be issued by large banks, community banks, and a number of other SBA lending partners. Having said that, while they don\u2019t fall into this comparison, they are long-term business loans.<\/p>\n\n\n\n
Overall, SBA loans have among the market\u2019s longest terms, with products such as the SBA 7(a) loan having maturities of up to 25 years. The interest rates on SBA loans are also pretty low, usually between 6% and 10%.<\/p>\n\n\n\n
SBA loans, like bank loans, are frequently difficult to qualify for and slow to fund. To qualify for an SBA loan, you must have at least two years of business experience, a credit score of 640 to 675, and excellent business financials. Furthermore, funding can take two to three months.<\/p>\n\n\n\n
So, like bank loans, SBA loans aren\u2019t right for every business. If you think you qualify, you should apply to take advantage of the low rates and long terms that come with these loans.<\/p>\n\n\n\n
When it comes down to it, the steps required to apply for a long-term business loan will differ depending on the lender you choose. As we stated with our selections above, each lender will have different qualification standards and a different business loan application process.<\/p>\n\n\n\n
On average, banks have the slowest and most difficult processes. Often, you have to go to a branch and show several physical documents. On the other hand, online lenders will have quicker, online-based processes that can usually be finished significantly faster\u2014in some situations, in just minutes.<\/p>\n\n\n\n
You can fill out the forms for these lenders online and attach the necessary documents. Furthermore, unlike banks, alternative lenders often do not require as much documentation.<\/p>\n\n\n\n
But no matter who your lender is, if you prepare your application files ahead of time, you can increase your chances of getting approved and cut down on time it takes to get a loan.<\/p>\n\n\n\n
A long-term business loan typically has a repayment term of two to five years, but some can be as long as 25 years.<\/p>\n\n\n\n
Long-term business loans typically range from six to twenty years. Long-term loans are great for buying equipment, buildings, or other businesses and large construction projects. Furthermore, long-term loans have lower interest rates but are more difficult to qualify.<\/p>\n\n\n\n
Long-term business loans are generally best suited for business owners anticipating large expenses. Expansion and acquisition are two common examples, but so is expensive equipment.<\/p>\n\n\n\n
Yes. These long-term loans have terms ranging from three to twenty-five years.<\/p>\n\n\n\n
Cash Flow: One significant disadvantage of a long-term business loan is that it affects your monthly cash flow. The larger the loan, the more you agree to repay each month. As a result, long-term loans should be used only in emergencies.<\/p>\n\n\n\n
You\u2019ll typically need good or excellent credit to qualify for a personal loan with a long repayment term. A credit score of 700 or higher is generally regarded as excellent. If your credit score is low, it may be hard for you to get a personal loan in a long term.<\/p>\n\n\n\n
However, some lenders offer long-term business loans for people with bad credit; however, keep in mind that these will most likely have higher interest rates.<\/p>\n\n\n\n
Yes. Long-term personal loans are available from some banks, online lenders, and credit unions.<\/p>\n\n\n\n
Getting a loan for your business needs can be very helpful if you want to make big purchases or grow. Consider your credit score and the company’s financial history when deciding which loans are best for you and your needs. Evaluating the affordability of the repayment term is one of the most important factors in making a loan decision.<\/p>\n\n\n\n
Depending on the amount you want to borrow, a repayment term of three to five years may be preferable to ten years. When researching and deciding which option is best for you, compare multiple lenders’ offers and ensure you understand every part of your agreement.<\/p>\n\n\n\n
Traditional banks frequently make large business loans with favorable interest rates and terms. Repayment terms can range from a few years to up to 20 years. To be approved for a bank loan, business owners typically need high credit scores, strong cash flow, profitability, and a significant amount of time in business.<\/p>\n\n\n\n
640 to 700: Most business loan lenders think a credit score between 640 and 700 is good but not great. The minimum credit score for SBA and term loans is typically around 680.<\/p>\n\n\n\n
A business loan can have an impact on personal credit. Your credit will suffer if you guarantee a business loan. A business loan will also impact your finances if you are a sole proprietor or run a partnership. Your credit score will suffer if your business delays or defaults on payments.<\/p>\n\n\n\n