If you’re looking for long term business loans, you may be wondering where to start.
- How do you know which lender is right for you?
- What are the requirements?
- How do you make sure you get the best possible rate?
In this post, we’ll walk you through everything you need to know about getting long-term commercial financing.
How to Qualify for Long Term Business Loans
Qualifying for long-term loans online can be a challenge, but there are a few things you can do to improve your chances.
One of the best things you can do is make sure you have a strong credit score.
Lenders will often look at your credit to determine whether or not you’re eligible for a loan. If you have a strong score, you’re more likely to qualify for a loan.
Another thing you can do is to have a business plan. Lenders will often ask for a business plan to determine whether or not your business is viable.
At Camino Financial, we won’t ask you to show us a business plan.
You can also increase your chances of qualifying for a long-term business loan by having a solid track record. Lenders will often look at your past financial history to determine whether or not you’re a good candidate for a loan.
If you have a strong track record, you’re more likely to qualify for a long-term business 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.
Some lenders will approve long-term business loans even for bad credit.
The Best Financing Options for Long Term Business Loans
There are a few online lenders in the market. The best choice for you will depend on your specific needs and financial situation.
Amount: $5,000 to $400,000
Terms: 24 to 60 months
Interest rates: 12 to 40% annual interest rate
Required credit score: you can apply even if you don’t have a previous credit history
Discover why Camino Financial has fewer requirements than other lenders.
Amount: $25,000 to $500,000
Terms: 6 months to 5 years
Interest rates: not disclosed
Required credit score: 650
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
Terms: 12 to 60 months
Interest rates: Starting at 5.25%
Required credit score: 700+
Terms: up to 24 months
Interest rates: starting at 35% (APR)
Required credit score: 600
How to Choose the Right Long Term Business Loans
Let’s discuss how to choose the right product for your business.
First, you need to decide what you will use the loan for. For example, are you using it for equipment, expansion, or working capital?
Once you’ve decided what you’re going to use the loan for, you can start shopping around for lenders.
When shopping for a lender, there are a few things you should keep in mind:
- Interest rates: Make sure to compare interests from multiple lenders. You want to make sure you’re getting the best rate possible.
- Loan terms: Repayment terms can vary depending on the lender. Make sure to go with a term that fits your needs.
- Repayment options: Some lenders offer flexible repayment options, such as lines of credit.
- Origination fees: Origination fees can vary depending on the lender.
Once you’ve compared multiple lenders and decided on one, you can start the application process. Most lenders will require some basic information, such as your business financials and personal information.
Applying for a long-term business loan can be a daunting task, but it doesn’t have to be.
By doing your research and shopping around for lenders, you can find the best loan for your business.
What is a Long-Term Business Loan?
A long-term business loan is a financial product that allows you to borrow the money you repay for a more extended period than a traditional term 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 large 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 be able to get a lower interest rate.
How Do Long-Term Business Loans Work?
The process of applying for a long-term business loan is similar to that of a traditional term loan.
First, you’ll need to fill out an application and provide financial documents, such as your tax returns and business financial statements. The lender will then 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.
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 longer period of time, giving the lender more time to earn back their investment.
The interest rate will also be affected by your personal credit score and the health of your business.
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 the loan.
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.
You can get long-term business loans from banks, credit unions, and other alternative lenders.
Each type of lender has its own 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.
There is no typical business loan term. That’s why it can be tough to keep track of them. However, there are a few that are more common than others.
Here are some of the most common business loan terms:
- Short-term loans: These loans are typically for smaller amounts of money and have shorter repayment periods than other types of loans.
They also tend to have higher interest rates since they are for smaller amounts and shorter periods of time.
- Long-term loans: As you might guess, these loans are for larger amounts of money and have longer repayment periods than short-term loans.
The interest rates on long-term loans are usually lower than those on short.
Advantages and Disadvantages of Long-Term Business Loans
There are a few things to consider before taking out a long-term business loan. Let’s take a look at some of the pros and cons:
Advantages of long term
- Lower interest rates than short-term loans: The interest rate on a long-term loan is typically lower than the rate on a short-term loan. This can save you money in the long run.
- Flexible repayment terms: Long-term loans usually have longer repayment terms than traditional term loans. This gives you more time to repay the loan, making your monthly payments more manageable.
- Can be used for various purposes: You can use long-term loans for multiple purposes, such as expanding your business, consolidating debt, or financing one-time expenses.
- Fixed monthly payments: Long-term loans typically have fixed monthly payments, usually easy to budget around.
Disadvantages of long term loans for business
- May require collateral: Many long-term loans will require you to put up collateral, such as your home or another piece of property. If you default on the loan, the lender could foreclose on your collateral.
- Origination fees: As we mentioned, long-term loans come with 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.
Types of Long-Term Business Loans
There are a few different types of long-term business loans available. The type of loan you choose will depend on your needs and goals.
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 that 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 loans are another option for long-term business financing.
Bank loans typically have lower interest rates than other loans, but they also require collateral and have strict eligibility requirements.
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 of loans, but they don’t require collateral and have less strict eligibility requirements.
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 it has strict eligibility requirements.
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 (they 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 types of loans.
Asset-based lending is a type of loan that uses your business’s assets as collateral.
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 it is typically lower than other types of loans.
Most Common Business Loan Terms
Most business loans have a term of either one year or two years. The most common terms are:
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 give you the flexibility to repay the loan faster if you can.
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.
This is the longest loan term available for business loans.
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.
Short Term Loans vs. Long Term Loans: Main Differences
The two main types of business loans are long-term loans and short-term loans.
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 than short-term loans, 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 than long-term loans.
- 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.
As discussed, it’s important to note that each type of loan has its own advantages and disadvantages, so it’s crucial to weigh all your options before choosing one.
Keep reading about Short Term Business Loans here.
Getting a Long Term Business Loans 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.
Apply today and let us help you reach your goals!
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?
There are several types of long-term loans, including 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 for you.
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 major investments or expansions.
Can you get a 10-year business loan?
Yes, you can get a 10-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 a variety of purposes, such as working capital, expansion, or equipment purchases.
How long can you get business loans for?
A business loan’s repayment term can vary depending on the lender, but most loans have terms of up to 10 years.