Business Term Loans
Term loans are great for businesses to get one-time funding for significant investments like real estate purchases, equipment, or other fixed assets. With a term loan, you receive a lump sum upfront that you can repay on a set schedule over months or years, with either a fixed or variable interest rate.
When considering term business loans, it’s essential to understand that they are intended for long-term investments, with repayment terms generally ranging from 1-7 years or sometimes even longer. The average term for a traditional business loan is typically around five years.
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Choosing the Right Loan Term
The ideal term for a business loan depends on the purpose of the financing. If you’re purchasing equipment that may become obsolete in 3-4 years, a shorter-term business loan makes sense so you can pay it off quickly after the equipment is outdated. On the other hand, if you’re a business owner purchasing commercial real estate that you plan to occupy for decades, a longer term reduces the monthly payments and is aligned with the useful lifespan of the asset.
Short-term business loans of 1-2 years may work well for smaller projects to bridge temporary cash flow gaps or address issues with cash flow management. Medium-term loans of 3-5 years are suitable for business investments like vehicles, machinery, or renovations with a definable lifespan. Long-term business loans of 10+ years accommodate significant capital investments like purchasing commercial property that will benefit your business for many years.
Multiple Financing Options for Your Business
There are a variety of options when it comes to securing a business term loan for your company. Traditional banks remain among the most common sources, though qualifying can be challenging if you have a limited operating history or credit challenges. Online alternative lenders provide more flexible qualifying criteria but often charge a higher interest rate to offset the additional risk.
The three main types of lenders for business term loans are:
- Banks – General rates but conventional credit and revenue requirements
- Online Lenders – Offer loans based more on business cash flow and are more costly
- Small Business Administration Loans – Government-backed business term loans with competitive rates but a lengthy qualification and application process
At Sunwest Bank, we strive to provide the best of both worlds competitive rates and flexible requirements to make business financing accessible. Our experienced team takes the time to understand your unique situation and goals to create customized business term loan packages. Whether you need equipment financing or longer-term commercial real estate loans, or working capital, we have business term loan programs to meet your needs.
Term Loan Experts
Sunwest Bank Term Loans:
Flexible Financing for Your Business
Partner with a bank that takes the time to understand your business needs and get to know you. At Sunwest, we create tailored term loan packages based on what you do and how you do it.
Our general term loan criteria include:
- Terms from 1-7 years; Up to 25 years on amortization
- Fixed or variable interest rates
We offer very competitive rates compared to alternatives because we take the time to evaluate each application based on its merits, not just generic credit criteria. Our streamlined application process and local underwriting allow us to provide flexible approvals and rapid business funding.
Term Loans for Startups and New Businesses
Access to capital is vital for business success for small and established businesses. That said, many startup businesses need help to qualify with traditional lenders. At Sunwest Bank, we understand startup challenges and offer term loans tailored to newer companies based on their projected cash flow and future sales growth potential.
While a minimum credit score of 500 is recommended to borrow funds, we may still be able to assist a business owner with bad credit, depending on the specifics of your situation. We know every business is unique, so we take the time to understand your business plan and objectives when evaluating your application for a business term loan.
Let’s Partner Together on Your Next Term Loan
Ready to discuss how a customized Sunwest Bank term loan can help you achieve your goals? Our knowledgeable team makes financing simple. Complete our online application to get started today.
Frequently Asked Questions about Business Term Loans
What are the main options for securing a business term loan?
There are three primary options for getting a term loan for your business:
- Traditional banks – Offer competitive interest rates but have requirements for time in business, annual revenue, and personal credit scores.
- Online lenders – Provide loans based on projected cash flow rather than credit scores. You’ll pay higher interest rates to offset the additional risk.
- SBA loans – These government-backed loans have competitive rates, but the application process is lengthy.
At Sunwest Bank, we offer a hybrid model with competitive rates and fast funding through an efficient application process with flexible qualification requirements.
How long of a term can I get on a small business loan?
The maximum term depends on the lender but generally ranges from 1 to 5 years for most banks. Other lenders may offer longer terms from 10 to 20 years, or even 30 in some cases. The tradeoff is higher interest rates for longer loan durations.
At Sunwest Bank, we offer flexible terms from 1-7 years through our conventional loans. We also have alternative lending programs that can accommodate longer terms for qualifying borrowers.
Should I get a short-term business loan or a long-term business loan?
The ideal loan term depends on the purpose of the financing:
- Short-term loans of 1-2 years work for minor needs like equipment purchases or renovations.
- Medium-term loans of 3-5 years match the lifespan of assets like vehicles and machinery.
- Long-term loans of 10+ years accommodate significant investments like commercial real estate that benefit your business for many years.
Speak to a Sunwest Bank advisor to determine the correct term length for the business loan that fits your specific borrowing needs.
What are the repayment options for term loans?
Business term loans generally have set repayment schedules over the loan duration. Options include:
- Monthly payments – Most expected, with principal + interest due each month
- Interest-only periods – Temporary initial phase paying just interest
- Balloon payments – Smaller installments with a large final payment
Sunwest Bank tailors repayment plans to each business’s cash flow situation. Talk to us about structuring the right schedule for your needs.
Partner With Sunwest Bank for Your Next Term Loan
At Sunwest Bank, we understand that every business is unique. That’s why we take the time to get to know you and create customized business credit packages tailored to your goals and circumstances. Our experienced advisors are ready to help you secure the business loan you need on terms that work for your company. Contact us today to learn more!