Do I Need a Term Loan to Fund My Small Business?

November 19, 2021

Do I Need a Term Loan to Fund My Small Business?
Business resources

The last few years have hit small businesses hard.  

In fact, as a recent study published through the Proceedings of the National Academy of Sciences (PNAS) notes, “Small businesses employ almost 50% of American workers,” but the COVID-19 pandemic has shocked “America’s small firms [in a way] that has little parallel since the Great Depression.”  

With all the changes and uncertainties that continue to plague small businesses, the last thing owners should be forced to worry about is access to capital and finances. And yet it remains foremost in their minds—with good reason.

Fortunately, there are helpful financial options such as business term loans which allow small companies to make larger investments, undertake much-needed renovations, purchase new equipment, and more.  

If your business requires a boost to move forward, these loans could very well encourage your continued success.

Still, we recommend considering all the options available to you before making a decision.  

Is a business term loan right for you?  

Read on to find out…

What is a Business Term Loan?

A business term loan comes in two main forms: Short-term business loans and long-term business loans. Both are business funding options that offer small businesses such as yours the opportunity to access a lump sum of capital immediately and repay that money on a fixed schedule.

For most small businesses, interest levels are relatively low but will inevitably be determined based on the market, business success factors, the amount borrowed, and the type of business term loan lender.  

Essentially, the main difference between the short- and long-term business loans is the amount of time allotted to your business to pay back the loan—short-term usually applies to repayment plans under a year while long-term typically refers to repayments scheduled over the course of five or more years.  

In general, a term loan is one of the best ways for a small business to achieve its financial goals.  

The question is: which type of loan is the right fit?

Term Loan Routes to Consider:

When it comes to increasing your business capital, most small businesses opt for one of these business term loan options:

  • SBA loan. These loans have the backing of the government and very low interest rates. Sadly, these are some of the most difficult small business loans to obtain.
  • Bank loan. These are definitely the most popular choice, but that’s primarily because they’ve been around the longest. This is an old-fashioned deal that requires personal attention and relationship-nourishing as well as drawn-out processing and wait times.
  • Alternative business loan. The final track is the alternative business loan. With flexible repayment plans and interest rates, these frequently short-term business loans can be ideal for small businesses, allowing immediate access to cash without lengthy application and approval processes. This is the one we recommend for smaller businesses—especially during this difficult time.

Alternative Small Business Term Loans

At Idea Financial, we offer business loans of up to $250,000 and can instantly help you fund your business needs. The term loan application is fast and easy. Same-day approval is common as long as you meet our requirements. Additionally, your account will be eligible for a generous  business line of credit and after 50% of your initial loan is repaid, you can apply for another if necessary.

Our small business loans have helped many businesses navigate choppy economic waters and transform business dreams into reality. We want to help you, too. Look through our portfolio of companies we’ve helped and contact a loan representative to discuss the next steps on your business’ path to enduring financial success.