Generally, term loans provide a fixed payment over 1 to 5 years and are normally backed by collateral. They can also be used for a wide range of business purposes.
Applicants will have to complete an application where underwriting will verify financial qualifications. You will also need to have the ability to pay back the loan via a business bank account or receivables and may need to provide P&L statements from the past year.
What Types of Businesses Is It Good For?
Term loans are forms of debt financing. Business owners can use them for business acquisition, capital improvements, business expansion, working capital and equipment purchases, and a wide range of other business activities. These types of loans are provided by both banks and non-traditional lenders. A business that has been in operation for more than two years with good credit may be a good candidate for term loans.
What are the Minimum Requirements?
Generally, most lenders will consider your credit score, time in business, and collateral to determine whether or not the business will be able to get the loan. It is in the best interest of the business owner to have excellent credit, robust P&L statements, and a record of business bank statements.
How Much Will a Term Loan Cost?
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Term loan rates range from six to thirty percent. Typically, these loans have fixed interest rates or fixed flat fee.