Long-Term Business Loans Ultimate Guide

Camino Financial27 Nov 2023
Long-term business loans allow companies to improve operations in various areas and pursue big ideas. This post will walk you through everything you need to know about getting business financing, how you can access these types of loans, and what benefits they provide over traditional forms of funding for entrepreneurs.

The Best Long-Term Business Funding Options

Camino Financial

Amount: $5,100 to $25,000 Terms: 24 months Interest rates: fixed annual interest rate Required credit score: 580 (applicants with no previous credit history can apply too)
  • Businesses must have a registration and operating for at least 12 months.
  • If you don't have a Social Security Number (SSN), you can apply with your Individual Taxpayer Identification Number (ITIN).
  • We don't have any hidden costs.
  • Our whole application is 100% online, so you can complete it anytime, anywhere.
Get ready to apply for one of our installment loans. Apply For A Business Loan!

Funding Circle

Amount: $25,000 to $500,000 Terms: 6 months to 5 years Interest rates: not disclosed Required credit score: 650

Credibility Capital

Amount: $50,000 – $500,000 Terms: 1 to 5 years Interest rates: 6.99-24.99% annual interest rates Required credit score: 650

Bank of America

Amount: $10,000-$100,000 Terms: 12 to 60 months Interest rates: Starting at 5.25% Required credit score: 700+


Amount: $5,000-$250,000 Terms: up to 24 months Interest rates: starting at 35% (APR) Required credit score: 600

How To Choose The Right Long-Term Business Loans

Decide what you will use the loan for. For example, are you using it for equipment, expansion, or working capital? Then, start shopping around for lenders. When shopping for a lender, there are a few things you should keep in mind:
  • Make sure to compare interests from multiple lenders. You want to make sure you're getting the best rate possible.
  • Repayment terms can vary depending on the lender. Make sure to go with a term that fits your needs.
  • Some lenders offer flexible repayment options, such as lines of credit. Find a lender/product with a term that matches your budget.
  • Fees can vary depending on the lender. Find lenders with low fees, and also make sure that there are no hidden costs.
Once you've compared multiple lenders and decided on one, you can start the application process. Most lenders require basic information, such as your business financials and personal information.

How To Qualify For Long-Term Business Loans

First, ensure you have a strong credit score. Lenders will often look at your credit to determine whether or not you're eligible for a loan. You're more likely to qualify for a loan with a strong score. Have a business plan. Lenders will often ask for a business plan to determine whether or not your business is viable. Even if they don't require it, you should write one; this will help you understand how to grow your business.
#DidYouKnow At Camino Financial, we won’t ask you to present a business plan.
Lenders will often look at your past financial history to determine whether or not you're a good candidate for a loan. A strong track record makes you more likely to qualify for a long-term loan. Finally, you can offer collateral to secure a loan, such as your home or business's assets. This can even reduce your interest rates, but it puts your assets at risk.

How To Apply

After you fill out an application and provide financial documents, such as your tax returns and business financial statements, the lender will review your application and determine whether or not you qualify for the loan. If you qualify, they'll provide you with an offer that includes the loan amount, interest rate, repayment term, and other conditions. Once you've accepted the offer, the lender will disburse the funds to you, and you'll begin making payments. Apply For A Business Loan!

What Are Long-Term Loans?

A long-term business loan is a financial product that gives approved applicants a lump sum of money they must repay over an extended period (longer than a traditional loan). Entrepreneurs typically use long-term loans for significant investments or expansions, such as purchasing new equipment or real estate. They can use the loans to consolidate debt or finance significant one-time expenses. The borrowing terms for a long-term loan are generally more flexible than those of a traditional term loan, which means you may get a lower interest rate. Some long-term financing examples include:
  • Bank loans
  • Bonds
  • Commercial papers
  • Equity Financing
  • Factoring

How Do Long-Term Business Loans Work?

They are an agreement between a lender and borrower whereby the borrower agrees to repay the loan over a set period, usually in monthly installments. The lender determines the interest rate and repayment terms based on the borrower's credit score, income, collateral, and overall financial health. The term lengths can range from one year to much longer, depending on the lender and the purpose of the loan. The borrower is typically required to make monthly installments, including principal and interest payments.

Typical Rates And Fees For Long-Term Small Business Loans

Interest rates on a long-term business loan can range from 10% to 50%. The interests are usually lower than the rate on a short-term loan. This is because the loan is repaid over a more extended time, giving the lender more time to earn back their investment. Your personal credit score and the health of your business will also affect the interest rate. Generally, the higher your credit score and the stronger your business financials are, the lower your interest rate. Long-term loans also come with origination fees, which the lender charges for processing. These fees usually range from 1% to 6% of the total loan amount and are typically paid at closing.

For example, let's say you're taking out a $10,000 loan with an interest rate of 10% and an origination fee of 5%. Your monthly payment would be $254, and you would pay a total of $3,048 in interest over the life of the loan.

Most Common Business Loan Terms

One year

This is the most common loan term for small businesses. Loans with a one-year term typically have higher interest rates than those with longer terms, but they also allow you to repay the loan faster.

Two years

This is the most common loan term for larger businesses. Loans with a two-year term typically have lower interest rates, but you'll also have to make payments for longer.

Five years

Loans with a five-year term usually have the lowest interest rates, but you'll also have to make payments for longer. The length of your loan term will depend on the size of your loan, the type of business you have, and your personal financial situation.

Five+ years

If you need a large loan that will take longer to pay off, you may get a loan with a term of 10 or 25 years.

These loans usually have the lowest interest rates, but they also mean you'll be making payments for way longer. These loans are for large, established companies or investments in long-term assets.

Advantages and Disadvantages of Long-Term Business Loans

Advantages of long term

  • Lower interest rates than short-term business loans. This can save you money in the long run.
  • Flexible repayment terms. This gives you more time to repay the loan, making your monthly payments more manageable.
  • Use them for various purposes. You can use these loans for multiple purposes, such as expanding your business, cash flow, consolidating debt, or financing one-time expenses.
  • Fixed monthly payments. These payments are usually easy to budget.

Disadvantages of long-term loans for business

  • May require collateral, such as your home or another property. If you default on the loan, the lender could foreclose on your collateral.
  • Origination fees. These fees can add up and make it more expensive to borrow money.
  • Recurring payments. If your income decreases, you may have difficulty making your payments.
Apply For A Business Loan!

Types of Long-Term Financing

SBA Loans

The Small Business Administration (SBA) offers a variety of loan programs that applicants can use for long-term business financing. The government backs SBA loans, so they typically have lower interest rates and longer terms than other loans. However, SBA loans also require collateral and have strict eligibility requirements.

SBA 7(a) Loan

This is the most popular type of product this financial institution offers. You can use it for various purposes, including working capital, equipment, or real estate.

The maximum loan amount is $5 million, and the repayment terms can range from 10 to 25 years.

SBA 504 Loan

The 504 loan is a government-backed loan you can use to purchase real estate or equipment.

The maximum loan amount is $5 million, and the repayment terms can range from 10 to 20 years.

Bank Loan

Bank loans are another option for long-term business financing. Traditional banks typically have lower interest rates than other loans but require collateral and strict eligibility requirements.
#DidYouKnow Bank and SBA loans will require a minimum credit score for long-term business loans. For SBA’s most common loan—the 7(a)— which is generally around 640.

Peer-to-Peer Loans

Peer-to-peer loans are financial products offered through online platforms that connect borrowers with investors. Peer-to-peer loans typically have higher interest rates than other types but don't require collateral and have less strict eligibility requirements.

Invoice Financing

With invoice financing, you can sell your unpaid invoices. In a way, they work as collateral for the loan. Invoice financing typically has lower interest rates than other types of loans but has strict eligibility requirements.

Equipment Financing

Equipment financing allows businesses to use the machinery they want to buy as collateral for a loan. These loans have lower interest rates but strict eligibility requirements (business lenders have precise guidelines regarding the equipment you can buy).

Business Line of Credit

A business line of credit is a type of revolving credit that allows you to borrow money up to a specific limit. You can use the funds as you need them and only pay interest on the amount you borrow, not the credit limit. Business lines of credit typically have higher interest rates than other types of loans, but they don't require collateral and have less strict eligibility requirements. The repayment terms can vary, but lines of credit typically have a shorter duration than other loans.

Asset-Based Lending

Asset-based lending is a type of loan that uses your business's assets as collateral.

Long-Term vs. Short-Term Financing

Long-term loans have typical terms of over a year, while short-term loans have terms within one year. Long-term loans usually have lower interest rates, but they also come with origination fees and may require collateral. In contrast, short-term loans generally don't require collateral and have higher interest rates.

For example, let's say you need $50,000 to expand your business. You could take out a long-term loan with an interest rate of 6%, which would require you to make monthly payments of $500 for five years, for a total cost of $30,000.

Alternatively, you could take out a short-term loan with an interest rate of 10%, which would require you to make monthly payments of $1,000 for one year, for a total cost of $12,000.

In this example, a long-term loan would be the better option.

Get a Business Loan with Camino Financial

Long-term loans can be an excellent option for businesses that need to finance a large purchase or expansion. The borrowing terms are typically more flexible than those of a traditional term loan, which means you may be able to get a lower interest rate. Camino Financial is here to help small business owners who need business capital. We offer a small business loan with competitive rates and personalized service so you can grow your business. Apply today, and let us help you reach your goals! Apply For A Business Loan!


What is the longest term for a business loan?

The longest term for a business loan can be 25 years.

What are the types of long-term loans?

Long-term loans include peer-to-peer loans, invoice financing, equipment financing, business lines of credit, etc.

Which long-term financing option is best?

The best type of long-term financing depends on your specific needs and financial situation. You'll need to compare different types of loans to find the right one.

What is a long-term loan?

A long-term loan is a type of loan that has a repayment period of more than 12 months. Long-term loans are typically for significant investments or expansions.

Can you get a 20-year business loan?

Yes, you can get a 20-year business loan. However, the interest rate will be higher than for shorter terms.

What are long-term business loans used for?

You can use long-term business loans for various purposes, such as working capital, expansion, or equipment purchases.

How long can you get business loans?

A business loan's repayment term can vary depending on the lender, but most loans have terms of up to 10 years.

What are the most common business loan terms?

Short and long-term loans. Short-term loans are for smaller amounts of money and have shorter repayment periods. They tend to have higher interest rates. Long-term loans are for more significant amounts and have more extended repayment periods. The interest rates are usually lower.

Who offers long-term business loans?

Banks, credit unions, and other alternative lenders. Each type of lender has its strengths and weaknesses, so it's important to compare your options before deciding on a loan. Banks are the most traditional lenders and usually have the lowest interest rates. However, they also have the strictest eligibility requirements, so not all businesses will qualify.

What are term loans?

A term loan is a financial product repaid over a fixed period, usually 1 to 5 years. Applicants often use term loans for equipment purchases or expansion projects. The maximum loan amount can vary but is typically lower than other types.

Related Articles

Prequalify in 5 minutes

Latest Articles

  • Stay connected

    Join a community of over 40,000 micro-entrepreneurs for access to informative resources, helpful tips, and best practices on growing your business

  • Mission-driven company

    Camino Financial is a nationally certified Community Development Financial Institution (CDFI) with oversight by the U.S. Department of Treasury. By partnering with other mission-aligned organizations, Camino Financial is able to pool and distribute low-cost funding and educational resources to underbanked minority-owned businesses. Camino Financial is headquartered in Los Angeles, California with supporting offices in Mexico City, Mexico.

© 2023 by Camino Financial, Inc. All Rights Reserved. Camino Financial is a Licensed Finance Lender & Broker in California under its subsidiary Salas & Company LLC.