Long Term Business Loans

• Resources for Growth – Most significantly, long-term business loans provide much-needed capital to expand and grow your business. Whether you need to purchase new equipment, hire additional staff, or open a new location, funding can help make it happen.
• Easier on Your Cash Flow – Long-term funding allows businesses to borrow large sums of capital and pay off the debt over several years. As a result, monthly payments tend to be smaller, which causes less strain on your business’s cash flow. Interest rates on long-term loans are also often lower compared to short-term loans. However, keep in mind that long-term financing tends to cost more over the entire lifetime of the loan.
• Stability and Predictability – Long-term business loans offer a degree of stability for your business. With fixed, regular payments, you’ll be able to plan your finances and budget for the future.
• Opportunity to Build Credit – By making regular payments on time, you’ll improve your credit history and be able to demonstrate that you are a responsible borrower. This can make it easier to obtain future financing and even help you negotiate better terms and interest rates.
• Possible Tax Benefits – With long-term business funding, you may even be able to access certain tax benefits for your business. Interest payments on business loans are tax-deductible, which can work to lower your overall annual tax burden.

• More Interest Payments – Although long-term small business loans feature lower interest rates, borrowers typically end up paying more in interest over the lifetime of a long-term loan vs a short-term loan. This is because borrowers will pay interest for an extended period of time, so total interest costs will be higher overall.
• Collateral Requirements – Depending on how much funding your business is seeking and the term length of your loan, your business may be required to provide collateral. With real estate or equipment purchases, the asset you’re buying typically counts as collateral for the loan. However, if you’re looking to finance a growth project, you may be required to provide collateral or put down a 20% down payment. You’ll also need to keep in mind the risks associated with collateral. If your business owner defaults on the loan, lenders reserve the right to seize your collateral.
• Long-Term Financial Commitment – In a way, long-term business funding can limit your flexibility as a business owner. You’ll have to adhere to a set repayment schedule for several years as you work to pay off your loan. In some cases, this may limit your ability to take advantage of new business opportunities. You may also find yourself with a larger debt-to-income ratio, making it harder to acquire additional financing.

• High funding amounts
• Extended repayment schedule
• Lower interest rates
• Great for long-term projects, where you won’t see an immediate ROI

• Restrictive eligibility requirements (high credit score, lengthy time in business, etc.)
• May require collateral
• Lengthy application process
• Longer repayment can increase how much you pay in interest

• Less intensive eligibility criteria
• Fast approvals & funding times
• Quick turnaround time (get out of debt faster)
• Often no need for collateral

• Higher interest rates
• Lower funding amounts
• Frequent repayment schedule

You may also be able to take out an equipment loan to make upgrades or repairs on existing assets.

Equipment financing is the opposite of equipment leasing, where you’re essentially renting a piece of equipment from a provider and will have to return it at the end of your contract. Equipment financing can be more economical over the long run and allows businesses to build up equity in an asset.

The great thing about equipment loans is that you may be able to finance between 80% to 100% of the equipment’s final costs. Even better, equipment financing allows you to break up the entire lump cost of the equipment into manageable payments.

The underlying equipment itself will also function as collateral for the loan – meaning you won’t have to put your own assets at risk. However, there may be cases where you’ll be expected to provide a down payment. In the event you’re unable to repay your loan, the lender will seize the equipment to recuperate their funds.

Commercial real estate financing can also be used to construct a property, renovate existing real estate, or refinance real estate debt on a property you already own.

With funding amounts as high as $25 million, commercial real estate loans are some of the longest-term loans available. They work similarly to traditional residential mortgages since a portion of your payments will go towards building equity in your property.

Keep in mind that if you’re unable to meet your payment obligations, the lender has the right to seize the property.

SBA loans feature low-interest rates, high funding amounts, and repayment terms as long as 25 years. Plus, these business financing options can be used for a large variety of purposes. Because of this, it’s one of the most popular types of long term business loans.

You can use SBA funding to cover working capital costs, hire employees, mitigate cash flow disruptions, invest in marketing expenses, real estate purchases, equipment purchases, and more.

In exchange for all their benefits, you’ll have to meet the SBA’s additional set of requirements alongside the participating lender’s requirements. Your business will have to be in good standing and meet the qualifications for revenue, credit scores, size standards, and more.

Term loans are great when you know exactly how much capital you’ll need to finance your goal. They help make large purchases or investments more manageable by distributing payments over a lengthy period of time. This way, you’ll be able to repay your debt alongside generating income rather than all at once.

With term loans, payments are typically fixed, so you’ll know ahead of time how much you’ll be paying and how frequently.