Business Term Loans
A lump sum repaid in fixed installments over 1–5 years. Predictable, cheaper than short-term products, and the natural upgrade once you have two years of history.
Updated September 2026. Details vary by lender and change often; confirm terms with the provider.
How it works
You borrow a set amount and repay it in equal monthly (sometimes weekly) payments over a fixed term. Interest is quoted as APR, so comparing offers is straightforward.
| Online lenders | Banks | |
|---|---|---|
| Amount | $10k – $500k | $50k – $5M |
| APR | 9% – 40% | 7% – 12% |
| Term | 1 – 5 years | 3 – 10 years |
| Funding time | 2 – 10 days | 3 – 8 weeks |
| Minimums | 1–2 years, $100k+/yr revenue, 620+ credit | 2+ years, profitable, 680+ |
Best uses
- Expansion: a second location, a major hire, a renovation.
- Buying out a partner or acquiring a small competitor.
- Consolidating expensive short-term debt (advances, cards) into one lower payment. This is the single best use of a term loan for many businesses.
What lenders look at
- Cash flow: can the business cover the new payment with 1.25x room to spare?
- Time in business: two years unlocks most lenders and the best pricing.
- Credit: personal score of the owner(s) and any business credit file.
- Existing debt: stacked advances are the most common reason for decline.
Tip
Run the numbers on the loan payment calculator and include the origination fee (2–6% is common). A 3% fee on a 2-year loan adds about 1.5 points of APR.
Frequently asked questions
Fixed or variable rate?
Online term loans are almost always fixed. Bank loans over 5 years may be variable, tied to prime. Fixed is safer for a small business budgeting on thin margins.
Will there be a prepayment penalty?
Many online lenders charge the full scheduled interest even if you pay early, or offer a partial discount. Ask for the payoff policy in writing before signing.