Developing a business is far from easy — or cheap. It’s a constant balancing act for business owners, who need to solve short-term problems on a regular basis but also consider long-term growth to keep their business on the right path for years to come.
Long-term business loans, with lower monthly payments and longer repayment terms than their short-term counterparts, can be what your business needs when you are looking to expand or make a sizable investment.
When choosing the right long-term business loan, it’s worth considering a few factors. How long has your business been around? An established business will have an easier time being approved than a business that’s been around for 12 months or less. What’s the financial status of your business? Being profitable is a good start, but showing that you have solid cash flow week after week can make the approval process much easier.
Business loans by term
The reality of long-term business loans is that being approved for longer 10-year terms can be a challenge. Five-year business loans are an alternative for your business if it’s having trouble getting approved for 10-year business loans. Your credit score will likely play a major factor in whether your business gets approved by lenders, as well as the profitability and age of your business.
If your business doesn’t qualify for major business loans, electing to start with a smaller business loan might be the right option. While these business loans typically come with higher annual percentage rates (APRs) and monthly payments than a 10-year long-term business loan, they can still be a great choice for your business if you don’t qualify for a 10-year business loan.
Bitbond is a peer-to-peer lending platform designed for small-business loans. This platform was built to make the lending process easier without getting banks involved. That saves Bitbond money, and the savings are passed on to your business, with interest rates as low as 7.7% and origination fees ranging from 1% to 3%.
Bitbond provides term business loans of up to $10,000, repaid monthly over a maximum of five years. Keep in mind that the APR can range as high as 25%. Once you begin the lending process with Bitbond, your business gets assigned a credit rating, and your interest rate is assigned accordingly.
Borrowers can only have one loan at a time with Bitbond. There’s no minimum personal credit score to apply and you can even repay your loan early to save on interest with no prepayment penalties.
Business loans 10 years or above
Five-year repayment terms can be a good fit for new businesses or small-business owners with low credit scores, but for established businesses with solid credit, 10-year business loans are typically the better option. The average APR ends up being lower, and having a longer repayment term means your business will have lower monthly payments.
For example, say your business has been approved for a $50,000 loan. With an 8% APR, you would have to make monthly payments of $1,013 for a five-year term, or your payments would be $606 monthly. The 10-year business loan terms also offer higher loan amounts, meaning your business would have more cash available to invest in its growth.
Before you consider applying for a business loan of this size, make sure that your business will qualify. Ensuring that your business is well-established (existing for a minimum of two years) is the first step. Borrowers should also have a FICO credit score of at least 600, with business loans of more than $150,000 requiring at least a credit score of 670. Your cash flow also needs to be stable, with your business expected to earn a minimum of $50,000 annually.
SmartBiz SBA Loans
With its speedy approval process, SmartBiz SBA Loans can be a good fit for those seeking larger, longer term business loan. It typically approves loans within seven days. Another benefit is its interest rates: the highest your business will pay is 8.69% APR. You’ll also have access to business loans of up to $350,000 with 10-year repayment terms.
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