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Business Term Loans: What You Need to Know

By December 18, 2019No Comments

When you first started your business, you had a dream. No matter what the product was, you dreamed of providing it to the client at a value they couldn’t resist. You needed funding when you first started, of course, but you were hopeful of everywhere this dream could take you. 

Now, a few years later, you’re happy with how far you’ve come! But you haven’t stopped dreaming. You’re ready to expand your locations, invest in new equipment, or hire more employees. You know your business is ready for it, but that doesn’t mean you have the money right now to make it a reality. That’s where business lending from Merchant ReFi comes into the picture.

Business term loans could be the right business lending option for you. In today’s blog, we’ll discuss what a business term loan is, its advantages, why to consider it, the overall costs associated with it, and the process for getting this form of business lending from Merchant ReFi. Keep reading to learn more, and be sure to contact us today with questions or to apply online for business lending.

What a Business Term Loan Is

Term loans are offered by credit unions, traditional banks, and online lenders, such as Merchant ReFi. Term loans essentially work the same way that a student loan, mortgage, or car loan works: you borrow cash upfront for a specific purpose and then repay the loan over a specified period of time with equal, fixed payments

The requirements, speed of funding, and interest rates can all vary immensely between banks and online lenders. For example, they can range in size from $2,000 all the way up to $5 million, with annual percentage rates ranging from 6% all the way up to 99%. Banks generally offer lower rates on business term loans, but they may require stronger credit scores, higher annual revenue, and a longer amount of time to fund.

Similar to mortgages and car loans, business term loans typically follow an amortization schedule. This essentially means that, at the beginning of your loan, the majority of your payment goes toward paying interest and the payments toward the end go toward the principal.

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Advantages of Business Term Loans

Business term loans are popular for many small business owners for a variety of reasons. Check out some of the benefits of this form of business lending:

  • Great for expansion: Whether you’re expanding by hiring new employees, opening new locations, or you’re expanding in another way, you can borrow large amounts of money to fund your business growth responsibly.
  • Quicker funding and approval: By applying for a business term loan online, it can be processed, and therefore approved, faster. This allows you to expand your business at a faster rate and reach your goals.
  • Longer repayment terms: Huge investments are made more affordable when you have longer repayment terms. This allows you to grow quickly and make money off of the growth before repaying in full.

Why to Consider a Business Term Loan

Perhaps you need restaurant equipment leasing, a fast, small business loan in order to open other locations, or you’re interested in business lending so that you can improve your business in other ways. Whatever your goal is, a business term loan can help you get there. A working capital loan in the form of a business term loan is a method of acquiring unique purchasing opportunities, a precaution against unexpected costs, and a short-term financing option. You should consider this form of business lending if your business is growing and you need more funds to get it to the next level of opportunities and possibilities. 

Maybe it’s for renovating an office space, purchasing equipment, or investing in something else for your business. Either way, it’d be a shame to pass up the right business opportunity just because you didn’t have the right funds at the time.

The Costs of Business Term Loans

When it comes to business lending, you should always know exactly how much financing will cost you right from the start. One benefit of business term loans is that it’s easy to compute the financing on your own — it’s a very transparent, open process.

Let’s say you borrow $30,000 from a business lender and that the interest rate is fixed at 10% on a 5-year term. Additionally, because it’s a longer business term loan, you can expect a monthly payment of about $212.47. It’s a set term, so you can easily calculate the expense and build your business’s financial plans around it. 

When discussing the costs of this form of business lending, it’s also important to note that some small business term loans come with fees such as origination fees, prepayment fees, packaging fees, etc.

Whether or not the cost of a business term loan is worth it is entirely dependent upon you and your business. It’s a good source of finance to fund huge investments, like business equipment financing and office renovations.

The Process for Securing a Business Term Loan

When you work to acquire a business term loan, the process will vary depending on the source. Here at Merchant ReFi, here’s what you can expect from business lending with us:

  • Apply: Fill out the application and upload the needed documents to start the qualification process.
  • Review: Our agents will review the application and help you get the best rate available.
  • Approved: Receive your business term loan and 10,000 United MileagePlus® bonus award miles.

It’s really that simple! Most businesses that received approval with Merchant ReFi have an annual revenue of $300,000 or more, credit scores at 680 or higher, and have been in business for more than three years. We require the following documents during the application process: driver’s license, voided business check, bank statements, balance sheet, profit and loss statements, credit score, business tax returns, and personal tax returns. 

Get Business Lending With Merchant ReFi Today

Business lending can be the difference between your business continuing to be successful and growing and it growing stagnate and not improving. If the former is what you’re looking for, then Merchant ReFi can help. Check out some of our other blog posts regarding business lending:

Stop searching “how to apply for a small business loan” — we’ve got you covered with business term loans and other business lending here at Merchant ReFi. Contact us today with questions or begin the fast, easy application process now.

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