Understanding Small Business Loan Term Lengths

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Understanding Small Business Loan Term Lengths
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Short-Term Loans
Short-term loans (lt1 year) are suitable for
borrowers who have expenses with a limited time
horizon. These loans are often funded with less
extensive paperwork, and you can gain access to
the funds quickly, sometimes within days. The
loan amount can vary based on the terms.
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The Advantages of Using a Short-Term Loan

• Using lending can help build your personal and
  business credit score.
• You may have a higher likelihood that you will be
  approved for a short-term loan rather than a
  long-term loan.
• If the business loan term length is short, you
  can likely avoid prepayment penalties.

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Other Types of Business Loans
Short-Term Bridge Loan
Short-term bridge loans can help you get fast
access to cash for your small business. The term
bridge refers to bridging a gap between business
needs and when cash flows will satisfy the need
and pay off the debt.
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Invoice Financing
Invoice financing, sometimes called invoice
factoring, is another type of short-term loan
where a small business is advanced money by a
lender before accounts receivable are collected.
Business Credit Card
Business credit cards are another type of
financing that may appeal to small business
owners. Similar to personal credit cards,
business credit cards offer revolving credit and
charge no interest if the balance is paid in full
every month .
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When To Consider A Longer Business Loan Term
Length
Small businesses often choose medium business
term loans for expenses such as ordering
inventory for a full year, opening a new branch
or storefront, standing up a new team quickly or
purchasing computer systems for your sales
team. The loan repayment period is typically
once or twice a month. Interest rates may range
from single digits as far north as 30.
Medium-term loans may also impose prepayment
penalties.
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Companies typically take out long-term loans for
major construction initiatives, equipment
financing, buying other companies, or investing
in major machinery that allows their business to
run. These loans may require extensive detailed
applications, a minimum credit score, large down
payments, and collateral.
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Why Choose Biz2Credit?

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

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