When you take out a long-term loan for your business, you gain access to a large amount of money meant for meaningful investments in your enterprise. Most long-term loan repayment periods range from three to ten years. If you get an SBA loan, your term may extend even to 25 years.
What are Long-Term Business Loans?
Long-term business loans are term loans with a more extended period for repayment than you would get with a short-term option. You get access to more advantageous long term business loan terms and rates than with short-term loans.
Businesses usually get long-term loans for large and expensive acquisitions and purchases. Examples include significant equipment and buildings.
Types of Long Term Business Loans
A term loan with a repayment period of between three and ten years is the main kind of long-term business loan. With this kind of loan, you get all the money as soon as you’re approved.
At Rok Financial, long-term loan amounts range from $10,000 to $5 million. Once you’re approved, you get your funding in one to three days.
A line of credit is different from a term loan, but it may also be long-term. Like with term loans, there are business lines of credit available that may last up to ten years. With a line of credit, you simply have money available. You aren’t directly given it, and you don’t have to use it.
Qualifying for a small business loan involves certain requirements. To be approved for a long-term loan at Rok Financial, you must have been in business for at least three months. Additionally, your monthly gross sales must be at least $15,000 (or your annual gross sales must be at least $180,000).
Rok Financial doesn’t require a minimum FICO score. No matter what your credit profile may be, we offer long term business financing options.
What is an SBA Loan?
SBA long term business loans are like regular term loans with one crucial difference: they’re backed by the U.S. government. This backing means the lender doesn’t face any risk, helping bring down the borrower’s interest rates.
You can apply for an SBA loan with Rok Financial. SBA loans are known for taking longer to process, but we have a streamlined process that means once approved, you may get your money within 45 days.
SBA loans offer terms as long as 25 years. The minimum term of a long-term SBA loan is ten years. The amount of money you may borrow with a long-term SBA loan ranges from $50,000 to $5 million.
Difference Between Short Term and Long Term Business Loans
If you want to borrow money to cover large investments for your business, such as purchasing major equipment or buildings, you need a long-term loan rather than a short-term loan.
Long-Term Loans Have Smaller Payments
As a long-term loan means you’re paying back the loan over a longer period, you will usually make smaller monthly payments than you would with a short-term loan.
Long-Term Loans Offer Lower Interest Rates
You’ll usually enjoy lower interest rates with a long-term loan. This is because these loans have more stringent application requirements, and they are well-secured. For example, if you get a long-term loan to buy a building, the building will be the security for your loan.
Long-Term Loans are Harder to Qualify For
You have to provide documentation showing your personal and business financial situation when applying for a long-term loan. Long-term loans from banks are especially difficult to get. That is why many businesses, especially small businesses, turn to alternative lenders.
The best small business loans are responsive to your circumstances and needs. If you go apply for a loan from a non-bank, alternative lender, make sure it’s reputable. Rok Financial is highly respected and known for its fair lending practices.
How to Determine the Repayment Period of Long Term Business Loans
When it comes to small businesses, long-term loans usually have repayment periods that range from three to ten years. However, there are certain options, such as SBA loans, that have much longer terms. In some cases, these loans may have 25-year terms.
Several different factors will influence how to determine repayment periods for long-term business loans. Examples include:
- Financial information for your business
- What the funds will be used for
- Lending institution type
- Terms and guidelines specific to your lender
If you get a long-term business loan through an alternative lender, the repayment period is likely to be between one and five years. If you manage to qualify for a bank loan for your business, the term may be a bit longer, at an average of between five and seven years. With SBA loans, the term usually ranges from six to 25 years.
What is the Usual Repayment Period for Long Term Business Loans?
There is no such thing as a typical repayment period for long-term business loans. Why? As touched on earlier, several factors go into deciding your long-term loan repayment period. Every business is different and has a different financial and credit profile, and lenders take this into consideration when formulating the correct repayment period.
Long Term Business Loan Interest Rates
The interest rate for your long-term business loan will depend on a variety of factors. To put things simply, the higher the risk lending to you presents, the higher your interest rate will be. If you want to enjoy low-interest rates, you must show you are reliable and able to repay your loan.
Interest rates for business term loans average between two percent and 13 percent. If you get an SBA loan, however, the range is between 3.5 percent and 11 percent. As we see, SBA loan interest rates are a bit more predictable.
How to Get a Long Term Business Loan
The first step is to understand all the small business loan requirements and contact ROK Financial. We offer long-term loans with up to 10-year terms. Have questions? Talk to one of our Business Financing Advisors. And when you’re ready to apply, complete our quick and easy online application.