Business Term Loans.
A lump sum of capital with fixed interest, repaid over a set period. Ideal for financing specific projects or investments with predictable monthly payments.
Overview
What is a business term loan?
Term loans are traditional business loans. A business is funded a lump sum of capital and is expected to repay the loan over a set term, with a fixed interest rate. Terms can range anywhere from 1 to 5 years, and rates can vary between 5% to 25%. Your business's factors such as credit, cash flow, revenue, time in business, etc. will determine the structure and rate of the term loan you will qualify for.
Structures can vary anywhere from 1 year terms with daily payments to 5 year terms with monthly payments. While there are few to no loan use restrictions when it comes to business term loans, businesses typically use term loans to finance a specific project or investment. If used properly, to generate more revenue, a term loan can help boost your business to the next level.
Lower Payment Amounts
Term loans typically have lower monthly payment amounts than shorter term financing options, due to their extended repayment periods of 1 – 5 years.
Wide Range of Uses
Term loans can be used by a business to finance a wide range of projects and investments!
Fixed Payment Structure
Term loans have a fixed payment structure. Repayments are made based on a set term and rate.
Eligibility
Do I qualify?
Minimum Qualifications
- 600+ personal FICO score
- At least 1 year in business
- $100,000+ in annual revenue
What You Need to Apply
- Basic info about your business
- Business checking account
- Last 3 months business bank statements
Applying is free and won't impact your credit score.
How It Works
How does a business term loan work?
Business term loans are straightforward. Once approved, you receive the full loan amount upfront, minus any fees. You then repay the loan with interest over a set period.
Short-Term Loans
Easier to qualify for but have higher interest rates. Best for immediate expenses like seasonal inventory or urgent equipment needs.
Intermediate-Term Loans
Ideal for opening new locations, expanding teams, purchasing equipment, or refinancing debt.
Long-Term Loans
Suitable for large projects like construction, purchasing buildings, or other businesses. Lower interest rates but harder to qualify for.
Key Features
Other considerations
Secured vs. Unsecured
Secured loans require collateral — your assets are at risk if you default. Unsecured loans don't require collateral but come with higher costs and shorter terms.
Fixed vs. Variable Rates
Fixed rates remain constant, providing predictable payments. Variable rates can fluctuate — starting lower but carrying the risk of increasing over time.
Fees to Know
May include origination fees, late payment penalties, monthly/annual fees, and prepayment penalties. These can increase the overall cost of your loan.
Step by Step
How to get a business term loan
Before applying, evaluate your funding needs. Lenders offer term loans ranging from $5,000 to $500,000, with the entire amount disbursed upfront. To avoid unnecessary debt, borrow only what you need.
Assess Your Funding Needs
Identify Your Purpose: Determine the specific purpose for which you need the loan. Whether it's for expanding your business, purchasing equipment, or covering operational costs, having a clear objective will help you decide the appropriate loan amount.
Calculate the Amount: Make a detailed estimate of the amount required. Include all potential costs associated with your project or investment to ensure you don't fall short of funds.
Evaluate Your Eligibility
When considering a business term loan, lenders typically focus on a few crucial factors:
Business Revenue: Lenders will assess your business's revenue to determine your ability to repay the loan. Requirements vary by lender, but they generally look for $100,000+ in annual revenue. Lenders in our network often have more flexible revenue requirements than traditional banks, which is advantageous for newer or smaller businesses.
Credit History: Your credit history is a key factor in evaluating your financial reliability and risk of default. Most lenders look for a personal FICO score of 600+. A higher credit score can improve your chances of receiving more favorable terms.
Time in Business: Traditional banks typically require a business to be active for at least two years, whereas lenders in our network often require a minimum of just one year. A longer operational history can convey stability to lenders, potentially leading to lower rates and better terms.
Submit Your Application
Applying for a business term loan at Ridgepeak Capital is designed to be quick and easy. Our online application process can be completed in just a few minutes. During the application, you will be asked to provide details about your business which includes the owner's information, general business information, the last three months of bank statements, identity verification documents, and a business checking account.
Once submitted, our advanced algorithm swiftly evaluates your business profile to match you with the ideal lenders, ensuring a perfect fit for your financial needs. If approved, you will receive business term loan offers to review and select the best offer that suits your needs. This enables you to access the capital your business requires, often within as little as 24 hours.
Considerations
Pros & cons
Pros
- Predictable monthly payments
- Often cheaper than other financing
- Flexible repayment over 1 to 5 years
- Timely repayments boost credit score
Cons
- May require assets as security
- Can be lengthy with extensive paperwork
- Good credit and financials needed
Our Process
Our application process is easy
Apply Instantly
Fill out our quick and easy online application. It only takes a few minutes and won't affect your credit score.
Discover Your Options
Receive personalized funding offers, carefully curated to align with your business goals and requirements.
Get Funded
Choose the best funding offer for you and access the capital your business needs in as little as 24 hours.
FAQs
Term Loan FAQs
Common questions about how business term loans work.
Still have questions? Contact us →What can I use a business term loan for?
There are few to no restrictions on how you use business term loan funds. Common uses include expanding operations, purchasing equipment, renovating a location, hiring staff, refinancing existing debt, or investing in marketing and growth initiatives. The key is that the loan should be used for legitimate business purposes.
What's the difference between a term loan and a line of credit?
A term loan provides a lump sum upfront that you repay over a fixed schedule with interest. A line of credit gives you access to a pool of funds you can draw from as needed, and you only pay interest on what you use. Term loans are better for one-time investments, while lines of credit are ideal for ongoing or unpredictable cash flow needs.
What credit score do I need for a business term loan?
Lenders in our network typically require a minimum FICO score of 600. A higher credit score can improve your chances of qualifying for larger amounts, lower interest rates, and longer repayment terms. Traditional banks often require 680+, but alternative lenders are generally more flexible.
How fast can I get funded?
Once you submit your application and are approved, funding can happen in as little as 24 hours for short-term loans. Intermediate and long-term loans may take 2–7 business days depending on the lender, the loan amount, and documentation requirements. Our platform is designed to streamline this process as much as possible.
Are there prepayment penalties?
It depends on the lender. Some lenders allow early repayment with no penalty, while others may charge a prepayment fee. This will be disclosed in the terms of your loan offer, so you can review and compare before accepting. We recommend checking this detail when reviewing your offers.
Ready to fund your next business investment?
Apply in minutes. No impact to your credit score, and funding can arrive in as little as 24 hours.
Apply NowHave questions? Talk to an advisor.
Our business advisors can help you find the right financing for your needs.
Contact Us*The content provided on this page reflects the opinions and insights of Ridgepeak Capital, based on our research, methodologies, evaluations, and various additional considerations. This information is accurate as of the initial publication date. Ridgepeak Capital makes every effort to update and maintain the accuracy of this content, however, the information may differ from what you may find on other platforms. All information is presented without any warranty. We encourage you to carefully review the terms and conditions, relevant policies, contractual agreements, and all applicable details of the financial institution when considering offers. The ranges mentioned here do not represent pre-qualified offers. Ranges may be greater or less based on the information provided in your business financing application. Ridgepeak Capital may receive compensation from financial institutions reviewed on this page if you proceed to obtain business financing through them.