What is Business Term Loan?

A business term loan is a type of financing that provides a lump sum of money to a business in exchange for regular payments over a fixed period of time. The loan is typically secured by collateral, such as real estate or inventory, and the lender may require the borrower to provide a personal guarantee. Business term loans can be used for a variety of purposes, including purchasing equipment, expanding operations, and refinancing existing debt.

TERM LOAN PROCESS

Business term loans are typically operated with fixed interest rates and repayment schedules. The loan amount, interest rate, and repayment schedule are determined at the time of loan origination, and the borrower is expected to make regular payments over the life of the loan. The repayment schedule is typically structured as a series of equal payments over a period of time, such as monthly or quarterly payments. The borrower is also responsible for any additional fees associated with the loan, such as closing costs or origination fees.

Benefits of a Term Loan

Things to Know

Business Term Loan Rates and Terms

Business term loans typically have repayment periods of one to five years, with weekly or monthly repayment schedules. The amount you can borrow and the interest rate youll pay will depend on the lender and your businesss qualifications.

Shortterm loans usually have terms of one year or less and amounts under $500,000, while longerterm loans (like SBA loans) can have terms of up to 25 years and larger loan amounts. Interest rates on business term loans generally range from 7% to 30%, though highly qualified borrowers may be able to secure lower rates.

Working Capital Loans vs. Term Loans

Working capital loans and term loans are both types of financing that businesses use to fund their operations. The main difference between the two is the purpose of the loan. Working capital loans are typically used to cover shortterm expenses and operational costs, while term loans are used for longterm investments or projects.

Working capital loans are typically easier to obtain than term loans, as they do not require collateral and often have shorter repayment terms. They also tend to have higher interest rates than term loans, as they are considered riskier investments for lenders.

Term loans, on the other hand, usually require collateral and have longer repayment terms. They also tend to have lower interest rates than working capital loans, as they are considered less risky investments for lenders. Additionally, term loans can be used for a variety of purposes such as purchasing equipment or expanding operations.

Qualifications for a Term Loan

Over $300K

ANNUAL REVENUE

680+

CREDIT SCORE

Over 3 Years

TIME IN BUSINESS

Ready to Apply?

Filthy Rich Idea makes it easy to get a term loan for your business. Apply online and our lending partner, Business Funding Now, will give you a decision within minutes. One of their Loan Specialists will tailor a loan package for your business needs. As soon as your application and documents are received, a dedicated Funding Advisor will be in touch to discuss the application and next steps if approved. Approval typically takes 24-48 hours, and funds can be deposited into your account the following business day. It’s that simple!

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FAQs

What information and documents do I need to apply for funding?

Our lending partners will need 3 months of bank statements, the government IDs of all applicants, 1 or 2 years of business tax documents, business P&L and balance sheets, business licenses and formation documents, and a business EIN.

What is APR?

APR stands for Annual Percentage Rate and is a measure of the cost of borrowing money. It is the interest rate expressed as a yearly rate, including fees and costs associated with the loan. It's a good way to gauge the overall cost of your loan and your planned repayment schedule.

How long does it take to get the money once my business is approved?

Once approved, transfer times vary depending on the lender, but it is possible to receive your capital in as little as 72 hours after approval. Lines of credit, on the other hand, may be used immediately upon receiving approval in some cases.

How do I pay back the funding amount?

Our lenders offer secure digital payment portals so that you can make your repayments on time and without penalty. You may be able to change due dates and other important information.

How To Best Prepare for a Business Loan

Determine the amount of money you will request—and do not request an excessive amount.

Although you may have the option of a small business loan, it is important to only request the amount of money that you need and can afford to pay back. This will demonstrate to your lender that you are financially responsible and increase your chances of approval.

Understand the limitations and costs of your loan.

Before committing to a loan, be sure to consider the speed, flexibility, and cost. Some loans are more or less flexible while others charge for speed. Understand the APR and other associated fees and costs so you can make an informed decision.

Avoid taking out multiple loans.

If you already have a loan, it is not advisable to take out another one. This is calledstacking loans and is generally not allowed, except in certain cases (e.g. having a business line of credit with a term loan). If you stack loans without the permission of your original lender, you could be in breach of your loan agreement and default on your first loan. Before taking on another loan, check with your lender to make sure it is allowed.

Ready to Apply?