Best Long Term Business Loans: 3, 5 and 10 Years

Best Long Term Business Loans: 3, 5 and 10 Years

Whether you’re looking to buy new materials or make large equipment purchases, it’s likely at some point you’ll need to take out a loan to benefit your business operations. When evaluating the vast array of loans that are available to small businesses, you’ll want to consider your personal credit score, the number of years you have been in business, your company’s annual revenue, and your company’s needs.

Short Term vs Long Term Business Loans

Long term loans are ideal for businesses with excellent credit, multiple years in operation, and extensive financial histories. This type of loan can come with repayment terms ranging anywhere from just one year to 25 years for a large quantity. These can be used for recurring expenses, large expenditures such as equipment or property purchases, or long term investments. APRs typically range between 4% and 30%.

While long-term financing often has lower interest rates than short-term loans, they are best suited for borrowers with excellent credit scores, so it may be more difficult to obtain if your credit hovers around or below 650.

If you’re just starting a business and haven’t established a longstanding financial history, short-term loans might be a good option to help meet your immediate financial needs. This type of loan often comes with three- to 18-month terms and requires daily or weekly payments. Annual percentage rates for this type of loan usually range between 8.5% and 80%. Due to their relatively high cost, are best for managing one-time expenses.

>>>Read more about short term business loans

Pros and Cons of Long Term Business Loans

Let’s take a look at some of the benefits and potentially negative aspects of taking out a long term business loan:

Pros:

• Potential for low-interest rates
• Good for long term investment
• Long repayment terms
• Monthly, instead of daily or weekly payments
• Good option for large equipment or property purchases

Cons:

• New businesses and borrowers with low credit may have trouble getting approved
• Risk of losing collateral in the event of default, if the collateral was offered
• Repayment terms might outlast the lifespan of the investment

Long Term Business Loans Up to 10 Years

SmartBiz – Loan amounts from $30,000 to $350,000, with APRs between 9.7% and 11.04%. Requires a 675+ credit score and $100,000+ annual revenue. Repayment term of 10 years. Best for borrowers with good credit seeking SBA loans.

» MORE: SmartBiz SBA Loan Review

Long Term Business Loans Up to 5 Years

LendingClub – Loan amounts from $5,000 to $300,000, with APRs between 9.77% and 35.71%. Requires a 620+ credit score and $50,000+ annual revenue. Repayment terms of one to five years.

» MORE: LendingClub Business Loan Review

Funding Circle – Loan amounts from $25,000 to $500,000, with APRs between 4.99% and 26.99%. Requires a 660+ credit score. Repayment terms of one to five years.

» MORE: Funding Circle Business Loan Review

Currency Capital – Loan amounts from $5,000 to $2 million, with APRs between 6% and 24%. Requires a 620+ credit score and $120,000+ annual revenue. Repayment terms of one to five years.

» MORE: Currency Capital Business Loan Review

Long Term Business Loans Up to 3 Years

Credibility Capital – Loan amounts from $10,000 to $350,000, with APRs between 8% and 25%. Requires a 680+ credit score and $250,000+ annual revenue. Repayment terms of up to 3 years.

» MORE: Credibility Capital Business Loan Review

Qualifications For a Long Term Business Loan

There are a few major factors that lenders look at when evaluating your long-term business loan application.

Cash and credit: Lenders will consider your annual revenue, as well as your financial and business credit history.

Insurance: Having proper disaster or other insurance for your business can increase your chances of approval for a long term loan.

Business Plan: By looking at your business plan, lenders can better understand the sustainability of your business as well as your financial goals.

Conclusion

Taking out a loan for your business needs can be immensely helpful if you are looking to expand or make major purchases. While making your decision on which loans fit your needs and qualifications, it’s important to look at your credit score and the company’s financial history. One of the biggest factors in making a decision on a loan is evaluating the affordability of the repayment term. Depending on the amount that you want to borrow, a repayment term of three to five years might be more ideal than a 10-year term. As you research and figure out which option is right for you, make sure to compare multiple lenders’ offers and thoroughly understand each aspect of your agreement.