A business term loan is a type of loan that provides a lump sum of money upfront, which the borrower pays back over a fixed period of time with interest.
Here are some key features of Term Loans:
- Lump sum amount: Term loans offer a fixed lump sum amount, which can be used for a variety of business purposes, such as purchasing equipment, expanding operations, or refinancing debt.
- Fixed interest rates: Most lenders offer fixed interest rates for the entire term of the loan, which means that the interest rate stays the same throughout the repayment period. This provides stability and predictability for businesses when planning their finances.
- Repayment terms: Repayment periods can range from one to ten years or more, depending on the lender and the amount borrowed. Repayment can be made on a monthly, bi-weekly or weekly basis, providing flexibility and convenience for businesses.
- Loan amount: Businesses can borrow up to $500,000 or more, depending on their creditworthiness, financial history, and other factors.
- Collateral: Some lenders may require collateral, such as business assets or personal guarantees, to secure the loan.
Term loans may be a good option for established businesses with a steady cash flow that need a large amount of capital to fund long-term investments or growth initiatives.