What is a business term loan?
A term loan, often referred to as a business loan, is an agreement between a lender and a borrower where a lender provides immediate cash to the borrower, and the borrower repays the money in installments over an agreed-upon length of time. The borrower also pays a certain percentage of interest as an incentive to the lender.
A business term loan can help you as a business owner with large purchases. It efficiently spreads a large sum payment over smaller fixed installments to the lender. Think of it as something similar to a student loan, where a student pays off the university and then pays back the amount to the lender in smaller monthly repayments.
A business term loan is great for specific expenses like the purchase of a new location for business expansion, equipment, vehicles, etc. to improve your operations and boost growth. However, it comes at the cost of interest and may include other fees.
How does a business term loan work?
For a long-term loan between three and ten years, you will probably pay an interest rate between 4% and 6%. However, several factors will determine your interest rates, such as your cash flow, credit history, and other financial information.
There are two types of business term loans offered. One is a secured loan where you will have to provide collateral for the unpaid balance. The second option is an unsecured loan that does not require collateral.
Like any loans, business term loans charge interest. You can get a fixed-rate loan, which will keep the interest rate the same throughout the life of the loan. Alternatively, you can get a variable rate loan, which goes up or down depending on a base interest rate. Most borrowers opt for a fixed-rate term loan to keep interest costs stable.
You can find both short-term and long-term small business loans from online lenders like Idea Financial (sometimes called "alternative lenders"), peer-to-peer lenders, and other institutional lending companies. Some may try to match bank loan rates, but most will cost more.
Benefits of a business term loan
A business term loan may offer several benefits to businesses, but the most significant ones are as follows:
A standard business term loan transfer may take up to three working days. Some lenders offer same-day funds transfer upon approval.
In case you pay off your loan early, you may qualify for pre-payment incentives. This may also make you eligible for the waiver of the remaining interest without any fee or penalty.
If you are a repeat customer, many banks and lenders offer you customer loyalty benefits such as no origination fee on any subsequent loans.
Helps build credit history
Making repayments on time helps you build business credit. Banks and other lending parties can see these credit reports when running credit checks for future loan requests.
With fixed-rate business term loans, you pay the same installments throughout your lending period. This helps you manage cash flow effectively with no surprises or large upfront costs.
How do I apply for a business loan?
Applying for a business loan with Idea Financial is quick and easy. First click on the apply now button in the upper right-hand corner of your screen, then fill out the required information.
There is a section about business information so we can understand your company, a section about owner information so you can provide us with some personal info and a financial review where we get to know more about your financial situation. The entire application only takes a few minutes.
Once you have submitted your application we review it to check your suitability for a business loan. These are standard checks and if we do not have any questions we will contact you about your application and let you know if we can offer you a loan.
Do I qualify?
There are 4 basic tests we use to determine if your business qualifies for a loan. If you meet these basic criteria we can consider your application.
- Your business has operated for at least 2 years. This shows that your business is viable and helps provide some financial history for the company.
- Your business earns at least $15,000 in monthly revenue. This is important because it shows you are earning money and can afford to make payments on a business loan.
- You must have a credit score of at least 650. This is important as it shows you have a good credit history and are more likely to be able to meet the financial obligations associated with a loan.
- You are not a sole proprietorship or a non-profit entity. We are not able to offer loans to businesses in these categories.
If you're not sure if you meet our criteria please get in touch.
Business loans can be used for most business-related expenses. This can include expanding your operation, opening new stores, purchasing equipment or buying inventory. Our goal is to put as few restrictions on your financing as possible so you can take control of your working capital and quickly make decisions about your companies spending.
If you have specific questions about how you can spend your loan you can speak with our business advisors at (855) 900 7838. They can help you answer any questions you may have and help you better understand the benefits of selecting us as your funding partner.
At Idea Financial, we take pride in providing fast and efficient corporate lending. We understand that businesses often have to work to tight deadlines and delays in cash flow cost you money. As such we have same day approval and funding for our loans.
Our application process takes just two minutes. Once our team recieve your application and you accept the offer we can make the funding available almost immediately. In fact, we can usually approve your loan and get you funding on the same day.
This means you can get the cash you need fast to move your business forward without any application costs or long wait times.
Yes, Idea financial offers customers multiple loans. If you are interested in taking out a second loan from us you will need to have paid off at least 50% of your initial loan. Once this is done we are happy to consider you for a second loan.
You will need to apply for a second loan just like you did for your first loan. We can then review your application to see if you qualify for more financing. If you are approved we can usually get you your funding on the same day.
You can also reach out to our business advisors to talk about accessing additional funding. They can help answer any additional questions.