Term business loans are the standard and most common type of business financing with a maturity date (usually between 1-25 years). The loan is repaid on a set schedule (usually monthly, but can be weekly) until the principal is repaid plus interest. Term loan interest rates are usually determined using an APR, but may use a factor rate to calculate rates. Fees associated with term loans vary depending upon lenders, with some banks and alternative funding companies charging origination fees, banking fees, and other fees. Uses of a term business loan include purchasing businesses, purchasing commercial real estate, working capital, purchase of business equipment, purchase inventory, along with just about any other business use. Term loans can be both secured against business or personal assets or may be unsecured. Approval rates of term lenders vary, with traditional term lenders with strict lending requirements having approval rates as low as 20%, and alternative term lenders with approval rates as high as 70%.

 

The process of getting a term loan requires providing documentation showing how your business has performed over the previous few years, as well as projections moving forward that show the business will be able service the new debt. Such documents include tax returns of the business and of the business owners, as well as financial statements and other business documents.