Give Us a Call 24/7 to Speak to a Loan Specialist: (866) 526-0238
Give Us a Call 24/7 to Speak to a Loan Specialist: (866) 526-0238

Term Loans

What are Term Loans?

Term business loans are a standard debt financing facility with standard payments (usually monthly) with a maturity and amortization schedule, ranging from anywhere in 6 months to 30 years in length (depending on use). Term loan sizes for small and medium-sized businesses can be as small as a few thousand dollars, and can range up to $5,000,000 for loans with SBA-enhancements, and well above that for other traditional facilities. The repayment associated with most term loans are made monthly, although some alternative lenders will require payback be made on a weekly or even daily basis.

Term loans vary in size, structure and uses depending upon the commercial lending institution. A term loan from a bank may have a very different underwriting criteria than that of a mid prime lender that specializes in buying-out high-interest merchant cash advances. Term loans are usually collateralized with the borrowing company’s assets (building, land, equipment, accounts receivable, cash flow, etc.). While each lender has their own requirements, its common for a blanket lien to be placed on all the company’s assets when a term loan is provided to the business.

While each lender is different, a term loan provided by a conventional, private investment bank or SBA-preferred lender usually requires and extensive amount of business and personal financial documentation for due diligence during the underwriting of the loan. Traditional commercial lenders will require that the business prove it has an acceptable debt-service-coverage-ratio to ensure the lender will get paid back.

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Approval Rates

Traditional Banks45%
Alternative Lenders70%
Cash Advance Lenders90%
Large Banks25%

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Details

  • Rates: 5-15%
  • Terms: 1-25 years
  • Funding time: 30-90 days
  • Repayments: weekly – monthly
  • Industries funded: most

Documents

  • Business tax returns
  • Financial statements
  • Schedules of liabilities
  • Personal tax returns
  • Personal financial statement

Pros

  • Lowest rates
  • Longest Terms
  • Interest is tax deductible
  • Monthly repayments
  • Access to other forms of financing

Cons

  • Good credit required
  • Long funding process
  • Good cash-flow required
  • Collateral often needed
  • Lots of Documentation Needed

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