Need a term loan? Here is everything you need to know about business term loans and the most common business loan repayment terms. For more information, visit at https://www.onlinecheck.com/blog/business-loans/business-term-loans/

1. A GUIDE ON
BUSINESS TERM LOANS &
BUSINESS LOAN TERMS
www.onlinecheck.com

2. The “term” in a “business term loan” is set repayment term length of one to five years. The maximum loan
amount you can secure with a term loan is up to $500K with typical interest rates of 7% to 30% in as quick as
two business days.
Everyone loves a classic because it’s tested – and it’ll work considerably. It’s the same with a business term
loan: a steady, flexible way to get a lump sum of capital to repay in regular monthly repayments at a fixed
interest rate – helping you grow your business, and build credit.
What is a Business Term Loan?
In simple words, you can use a business term loan for, oh, just about anything from financing a specific
project to purchase new equipment or hire workforce and much more!
A business term loan offers many benefits including fixed payment structure, available for almost any
business purposes, lower monthly payments and longer payments terms than short-term loans. The only
drawback is the possible prepayment penalties.
If you’re in business for some time and have a good credit score and generating revenue, you’re a solid
contender of a traditional term loan. Not all business term loans are the same, nevertheless, the term length,
loan size and interest rates is depends on your business revenues and credit rating.
www.onlinecheck.com

3. Business term loans are traditionally a bank product
that involves longer application process with a lot of
paperwork. With the advancement in lending industry,
various online lenders have emerged, like Lending Club
and Funding Circle that are offering business term
loans at reasonable rates via quick online applications
and process.
Requirements for
Business Term Loans
Employer Identification Number (EIN)
The following is required to qualify
for business term loans:
Business Plan
Bank Statements
Financial Statements
Credit Score
Business and Personal Tax Returns
Personal Debt-To-Credit Ratio
Potential Collateral
Loan Purpose
Business Debt Schedule
www.onlinecheck.com

4. How Do Business Term Loans Work?
You can always use some extra cash
whether it’s for working capital,
equipment purchase or new hire. But
getting financing that your business
can afford is the real deal. Here is
everything you need to know about
how term loans work and what you’ll
need to qualify.
www.onlinecheck.com

5. A term loan is a common type of business loans where you get predetermined funds with a fixed or variable interest rate with repayment terms of
regular monthly installments. Based on your business’s growth, capital requirements, credit rating, cash flow, and revenue, there are different types
of term loans available.
Actually, you can get a business term loan with term lengths and payment structures as varied as 1 to 5 years with daily and monthly payments—and
everything in between.
Likewise, you can get varied loan amounts and interest rates at higher or lower rates as per your business’s needs and history. The traditional
business term loan structure will always stays the same, whereas the definite details of your term loan based on your business’s financials.
Qualifying for traditional business term loans from banks and specific alternative lenders is hard, especially when you don’t have collateral and a low
credit score. Actually, collateral is the major requirement for a term loan. While many lenders might not require collateral but, in its place, put a
“blanket lien” on your business, the same risk still applies.
Before applying for a business term loan, ask lender for any prepayment penalties or other fees involved. Review the exact terms with the lender so
you can figure out affordable monthly repayments.
The Essentials of Term Loans
www.onlinecheck.com

6. A term loan can be used for almost any business purpose including equipment upgrades, inventory purchase,
refinancing other debts, tax or payroll, or simple working capital to help you through the hard times.
When Should You Use a Term Loan?
If a term loan is used properly, it can help your business grows beyond your boarders—adding new products,
services, locations, or marketing campaigns into your toolbox.
With the predictable nature of term loans, you can assess how it will influence your business overall. The key is to
discern the calculations earlier and create spending strategy for the coming months or years.
www.onlinecheck.com

7. Short-term business loans are lump sum
cash that are designed to finance short-term
needs with repayment terms from 3 months to
18 months. They loans can be used to
manage cash flow, cover unexpected
expense, pay off existing debt or leverage a
business opportunity.
What is a Short-Term Business Loan?
A short-term loan offers many
benefits including fixed payment
structure, suitable for many
business purposes, with limited
paperwork and bad credit is
accepted. The drawbacks include
the higher annual costs than long-
term loans and weekly payments for
businesses generating sporadic
revenue.The maximum loan amount you can secure with a short-term
loan is up to $250K for terms up to 18 months with typical
interest rates starting at 10% in as quick as 24 hours.
www.onlinecheck.com

8. Who Qualifies for Short-Term Loans?
Short-term lenders focus more on business cash flow.
A strong business cash flow can sometimes prevail other
financial factors in loan qualification criteria. The loan
amount and interest rate will depend on your annual
revenue, business history, and personal credit rating.
Short-term business loans are typically applied online
making the loan application process faster and easier.
www.onlinecheck.com

9. Passport,
Voter’s ID
or Driving
License
The following is
required to qualify
for short-term loans:
Proof of
Ownership
6 months of
Bank
Statements
Income
Statement
Most recent
Income Tax
Return
Cash Flow
History
Credit
Score
www.onlinecheck.com

10. How Do Short-Term
Business Loans Work?
Every business needs quick access to capital every
now and then. But do you actually obtain financing
that fast? Merchant Advisors assists small business
owners secure working capital that directly
deposited into your bank account immediately.
www.onlinecheck.com

11. Short-term loans work similar to traditional term loans where you’ll receive upfront cash that you repay over
a predetermined period of time with lender’s fees and interest. Due to smaller loan amounts, the repayment
period is shorter with higher interest rates, and you often pay back on a daily or weekly basis instead of a
monthly schedule.
On the contrary, they’re easier to apply and qualify for, with quick funding. One thing to remember, short-
expensive loan products available to small businesses.
The Essentials of Short-Term Loans
Quick application process and fast access to capital makes short-term business loans riskier
for the lender. Because of lower amounts and repayment terms, they typically carry higher
interest rates. Above all, short-term loans make most sense for businesses, since the best
loan is always the lowest-cost loan.
www.onlinecheck.com

12. When Should You Use a Short-Term Loan?
One must start out with money to make
more money – making quick access to
working capital a game changer for almost
any business—whether you’re a startup or
planning to expand.
Actually, every business requires capital
every often and then and in such cases, a
short-term loan is the ideal financial
solution.
With a short-term loan, you can fund expansion, refinance other short-term debts, repay
taxes, leverage new opportunities, or fulfill more or less any short-term financing need.
www.onlinecheck.com

13. Let’s review the repayment term lengths of the most common types of business loans.
The “term” in this context means the predetermined period within which the borrower
has to pay back the loan, with lender’s interests and fees.
SBA Loans
The Most Common
Business
Loan Repayment Terms
Traditional Bank Loans
Medium-Term
Business Loans
Business Lines of
Credit
Invoice Financing Equipment Financing Short-Term
Business Loans
Merchant Cash
Advance
www.onlinecheck.com

14. SBA loans have the longest repayment terms in the industry ranging
from 5 year to 25 years. The term of SBA loans depends on the SBA
loan program. The most popular SBA 7(a) Loan Program has a term of
5-25 years, following SBA CDC/504 Loan with terms of 10-25 years and
SBA Microloan with terms of less than 6 years.
SBA
Loans
Traditional bank loans are the second business loan type offering
longest terms from 3 to 10 years. With that said, these loans are harder
to qualify for as well.
Traditional
Bank
Loans
www.onlinecheck.com

15. Medium term-loans function like traditional bank loans and offer
relatively lengthy business loan terms. These loans can be secured via
alternative lenders with terms from 1 year to five years, with longer
repayment terms than many other online business loan products.
Medium-
Term
Business
Loans
Business lines of credit offer terms from 6 months to 5 years and can be
either short-term or medium-term in nature.
Business
Lines of
Credit
www.onlinecheck.com

16. Invoice financing is a short-term financing solution that allows business
owners to access cash secured against their outstanding invoices. The
loan term based on the time the invoiced customer takes to pay off the
invoice. They typically have loan terms of three to six months.
Invoice
Financing
Equipment financing is another financing product where equipment is
purchased and serve as collateral for the financing. The built-in collateral
makes it less risky for lenders, allowing them to offer longer terms from
two to five years long.
Equipment
Financing
www.onlinecheck.com

17. Short-term loans are determined by their repayment terms of a year or
less. However, lenders typically offer repayment terms of three to
eighteen months on short-term loans.
Short-Term
Business
Loans
Because of unique nature of merchant cash advance repayment, the
loan term is undetermined. These advances are repaid via business’s
daily credit/debit card sales, and since the daily payment will vary,
there’s no determination of how long repayments will take. Although, the
daily payments are so recurrent, most borrowers will typically repay
merchant cash advances in 4 to 18 months.
Merchant
Cash
Advance
www.onlinecheck.com

18. Every loan has its own features and
eligibility criteria. Some needs short
quick solution in terms of short-term
loans, whereas some ask for longer
repayment terms. Typically, long-
term loans are more favorable than
short-term loan because of larger
loan amount, lower interest rates,
and longer repayment terms. Not to
mention, long-term business loans
are hard to qualify for than short-
term business loans.
THE BOTTOM LINE
It’s all about the timing and your needs. If
you’re in dire need of quick capital, a
short-term loan can be a better financing
solution. On the contrary, long-term loans
takes time to secure, in contrast with 24
hours it can take to get cash from a
short-term loan.
Eventually, the best business
loan is the one that actually
helps your small business
grow and succeed.
www.onlinecheck.com