Business Term Loans: 3 Key Ways They Differ

1
Business Term Loans 3 Key Ways They Differ

• Discover the key differences between business
  term loans and what you might expect. Outline 3
  crucial ways these loans differ from repayment
  schedules to terms helping you make informed
  decisions. Whether youre expanding or managing
  cash flow, understanding business term loans is
  essential as it will help you make informed
  decisions for your business.

2
What Is A Business Term Loan

• A business term loan is a loan that provides you
  with a lump sum of money upfront that you borrow
  from a lender, then pay back at fixed intervals
  over a set period of time, with interest.
  Depending on your lender and the terms of the
  loan, youll pay off the loan on a weekly,
  bi-weekly, or monthly basis. Repayment periods
  can last from a few months up to 10 years or
  more, and funding amounts can range from 2,000
  to 5 million. Much of this depends on
  creditworthiness.

3
Pros And Cons Of Term Loans

• Term loans have many benefits that make them a
  great business financing option, but they arent
  right for every situation or every company, so
  youll also want to be aware of the cons.

4
Some Pros Of Term Loans

• You can borrow large loan amounts with flexible
  monthly payments.
• Long repayment terms can make loan repayment more
  affordable.
• Repaying term loans on time can build business
  credit, which is beneficial for new businesses.
• They can be unsecured, in some cases.
• The entire loan amount can be deposited quickly
  into a business checking account.

5
Some Cons Of Term Loans

• Term loans can be less flexible than a business
  lines of credit or business credit card.
• Term loans with a shorter repayment term can have
  higher costs.
• Some lenders charge an origination fee to process
  your application.

6
3 Ways Term Loans Can Vary

• As lending has evolved in modern banking, term
  loans have also done the same. Here are a few
  things to know before selecting a loan and lender.

7
Term Loans Can Come From Different Types Of
Lenders

• Historically, small businesses have had to go to
  a traditional bank or credit union for lending.
  In recent years, this trend has shifted. 49 of
  firms received financing from a nonbank financial
  company while 48 used a traditional bank or
  credit union, according to the Small Business
  Credit Survey. Both options have advantages and
  disadvantages.

8
Term Loans Have Different Term Lengths

• The length of your repayment term can have a big
  impact on whether this type of loan is a good
  financial decision. Youll have to find a lender
  who offers you a term, payment schedule, and
  interest rate that make sense for your business.
  But unlike home mortgages, where you typically
  have a 15-year and a 30-year option, business
  term loans can be much more flexible.

9
Short Term Loans
Medium Term Loans
Long-Term Loans
10
Term Loans Have A Variety Of Uses

• Traditional term loans can be used for a large
  variety of different financing needs. While some,
  like the SBA 7(a) or especially an SBA 504, are
  limited in scope, in general, you can get a term
  loan for the following purposes

11
Real Estate
Facility Repairs or Expension
Equipment And Inventory
Working Capital
12
Refinancing Or Paying Off Debt

• If you previously took out a loan that doesnt
  have favorable terms or you need to refinance,
  taking out a better loan can help you quickly pay
  off those old debts. Traditional term loans and
  SBA 7(a) loans can be used for this.

13
What You Need To Get A Term Loan

• Each lender will likely require this list of
  documents for a term loan application. Its
  advised to gather these documents before you
  begin your application process to ensure a smooth
  application process.

14
Wrapping Up

• Term loans, whether traditional term loans or SBA
  loans, are a reliable source of funding for small
  business owners. Because they can come from such
  a wide variety of lenders and offer flexible
  repayment terms, term loans are an excellent
  financing option for business needs.

By Russ Shumaker
15
Why Choose Biz2Credit?

1. Trusted partner for franchise funding
2. Biz2Credit was founded in 2007 and has provided
   more than 10 billion in loans.
3. Dedicated support team
4. Tailored financing solutions

16
Thank You