Long Term Business Loans: What Are They, And Why Do I Need One?

Have you ever wondered how a long-term business loan could be the key to unlocking your company’s full potential?

As the CEO of Sunwise Capital, I’ve witnessed firsthand how strategic financial planning can lead to sustainable growth and success. After 17 years with Wall Street firms and 20-plus years in the lending space, I understand what it takes to succeed.

“Long Term Business Loans: What Are They, And Why Do I Need One?” is a guide born from a wealth of experience designed to illuminate the path for entrepreneurs curious about the impact of long-term financing on their business journey.

This guide is your friendly, expert companion, offering insights into how these loans work, their benefits, and why they might be the game-changer your business needs to scale new heights.

Join me as we explore the transformative power of long-term business loans, turning the complex into the accessible.

Long Term Business Loans: Why Do I Need This Type of Loan?

Most small businesses start with little money but can scale quickly. Then they hit a wall. Their growth slows down. They may have reached a tipping point where the market no longer supports continued growth or where the strength of their competition has become intolerable. The result may lead you to ask about long term business loans and if you need this type of loan. 

Whatever the reason, they run out of cash before scaling.

They need capital to expand, hire employees, buy equipment, develop new products, and build an online presence.

In many cases, they can’t raise money through traditional channels. Banks won’t lend to companies without a track record, and venture capitalists won’t invest unless they see a clear plan for explosive future growth.

 And angel investors require collateral, which most startups and newer companies don’t have.

For entrepreneurs, finding financing can be difficult. But it doesn’t have to be.

You can fund your company without selling equity with a long-term business loan. 

You can borrow against your existing assets, such as inventory and accounts receivable. 

And you can pay interest rates that are lower than bank loans.

This funding option means focusing less on financing and developing your company.

Here’s the process of getting a long term business loan:

1) You apply for a loan.

2) You provide financial information.

3) The lender reviews your application

4) You sign a contract agreeing to repay the loan.

5) The lender approves your request.

6) You receive funds from your loan.

7) You repay the loan.

8) You continue working until the loan is paid off.

9) You repay the loan plus interest.

10) Repeat steps 1 – 9 as needed.

The process sounds simple, but there are several essential points to consider.

First, you won’t find lenders specializing in long-term financing or “long term” business loans. Instead, you’ll find banks and alternative lenders that offer various lending services. A longer-term business loan frequently means higher fees and longer repayment terms.

Second, your application will likely involve providing extensive documentation. For example, you might have to show proof of revenue and expenses, and you might have to provide copies of tax returns, balance sheets, and profit/loss statements.

Third, your lender will probably ask you to put up collateral. Collateral is something you own that secures a loan. Typically, collateral includes items like cars, houses, boats, and jewelry.

Fourth, you may have to wait for the approval. Lenders usually don’t make decisions overnight and typically ask for at least three months’ worth of financial data before they agree to extend you a business line of credit.

Finally, once approved, you’ll have to decide whether to use the loan to purchase inventory or pay bills. You can borrow money when you need it with a line of credit.

So, choosing this option, you’ll have to budget carefully. You’ll also have to monitor your spending since you won’t be able to withdraw funds until the loan is repaid.

Long term business loans are an ideal solution. Unlike venture capitalists, lenders understand that newer companies rarely produce profits immediately, so they’re willing to accept a slower return on investment.

Lenders also appreciate that newer companies tend to have lower debt loads, and most young companies don’t have significant amounts of inventory or other assets to settle their debts. 

In addition, most newer companies don’t have large salaries to pay off their debts. Therefore, financial institutions inclined to work with startups favor providing loans to new businesses over those already in operation.

Once you’ve decided to pursue a long term business loan (or any type of loan), here are some tips to help you succeed:

• Choose a reputable lender.
• Take the time to understand the terms of the loan agreement.
• Be prepared to provide detailed financial information.
• Keep good records.
• Pay your loan payments promptly.
• Don’t overextend yourself.
• Stay organized.
• Budget wisely.
• Have confidence in your business idea.

If you follow these instructions, you’ll boost your chances of acquiring the finance you need.

Remember, you’re not looking for someone to hand you money. You want to find a lending partner who can meet your unique requirements and support you on your path to success.

Your success depends on your willingness to look for alternatives.

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Long Term Business Loan Basics

 

A long-term loan is an unsecured debt obligation between two parties and is usually available for companies operating for several years. 

Businesses can obtain different types of secured and unsecured loans. In addition, short-term loans are available for unexpected costs.

Term loans are the most prevalent option for business financing. There is often a minimum duration of 3 – 6 months for a term loan. However, it could be as long as 3 years. Because these loans guarantee a regular payment, the interest rate is typically greater than other loans.

Another popular type of business loan is a revolving line of credit. This loan allows borrowers to draw funds against their accounts whenever needed. 

Revolving lines of credit tend to be cheaper than term loans because they allow borrowers to access funds without committing to a fixed repayment schedule.

Borrowers often ask, “how long should I intend to fund my startup?”

My answer is simple: until you run out of money.

Apply now

Tips for Securing a Long-Term Business Loan

If you are a small business owner, you know it is not easy to get a loan for your business: high-interest rates and other terms and conditions are attached to the loans. Avoiding these pitfalls is much easier if you obtain financing from a non-traditional or alternative lender.

You won’t be able to get a loan from a bank if your credit is less than perfect or if you don’t have any credit. If this happens, you must look for alternative methods and lenders.

Owners who cannot offer any assets or collateral in exchange for a loan would benefit significantly from this option. You need to show them proof of revenue, and they will give you the money without asking for anything in return.

Those who don’t have valuables or property to put up for security are the perfect candidates for this form of loan. This funding is advantageous since you can use it for any business goal, including expansion and new product development. However, before applying, consider some of the tips below. If you’re looking for a long-term loan for your company, heed the following advice:

Know what you need.

Before you go out looking for a long term loan, you must be clear about what you need. Long-term loans come in various forms today; some are secured by real estate, while others require only personal guarantees. Finding out what helps you the most is recommended.

Find an experienced lender.

When you get a long-term business loan, you must find someone who knows what they are doing. A reputable lender will help you understand the process and guide you throughout the application process. They will also ensure you know everything in the loan agreement.

Choose the right company.

When looking for a long term business loan provider, you must research first. Make sure that the company has experience working with small businesses. Also, check their reputation online. Do not forget to ask friends and family members for recommendations.

Apply early

You need to apply for long-term business loans as soon as possible. Most lenders will not approve applications after 30 days, so you might miss the opportunity altogether if you wait until the last minute.

Be prepared

Prepare when applying for a long-term loan. Include all relevant information. You must provide detailed financial statements, tax returns, and other documents proving your income.

Pay attention to details.

When submitting a loan application, consider every element carefully. When you sign the contract, read it carefully. If you don’t understand something, contact the lender immediately.

Keep track of your payments.

Once you receive the loan, you must make monthly payments and follow up with your lender regularly to avoid falling behind.

Avoid scams

Many scammers try to take advantage of people like you. So, always be careful when dealing with companies that offer loans. Never send your personal information over email or social media sites. Instead, call the company directly at its phone number.

Understand your rights

You should talk to your lender if you feel the loan agreement terms are unfair. The law protects borrowers against unfair lending practices. If you think the terms are too harsh, you can file a complaint with your state’s consumer protection agency.

Don’t hesitate to ask questions.

Asking questions is very important, and you should never be afraid to ask if you have any doubts. Your lender may even offer free consultations where they will explain things in more detail.

Get professional advice

Finally, it would be best to consider getting professional advice from a lawyer or accountant before applying for a loan. This way, you will know that you made the right decision.
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How Do You Know Your Company is Right for a Long Term Loan?

 

To determine whether or not a long-term loan is the best option for a business, it’s essential to consider the following factors:

• The amount of money needed.
• The period over which the debt must be repaid.
• The interest rate.

Any business that can use a long-term loan can do so for any purpose. However, it may be more appropriate for specific industries than others.

A long-term loan is a form of financing in which a business owner takes out a loan with a fixed payment schedule over several years. Typically, this loan is used when a business needs capital to purchase equipment, build a facility, or fund other significant projects.

When looking for a long-term business loan, the most common options include the following:

• Fixed Rate – This type of loan has a set interest rate throughout the loan’s life.
• Adjustable Rate – This adjustable-rate loan allows borrowers to choose their interest rate based on market conditions.
• Balloon Payment – With a balloon payment, the entire balance becomes due at the end of the loan term.
• Amortization Schedule – The amortization schedule shows the total amount paid back in installments over the life of the loan, including principal and interest.
• Interest Only—This type of loan pays only interest during its life and does not require any principal payments until the final installment.
• Line of Credit – This allows a borrower to draw funds as needed.

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How Much Money Do I Need for My Business?

The first step is determining the type of business you want to run, and you should also consider what you want to do with the money you raise. Once you know what you want, you can start researching different ways to finance your business. There are a plethora of online websites to help you locate suitable finance for your company.

The next step is determining the capital investment required to launch your company. Remember that you’ll need more than one funding source because you may need to pay off existing debt, buy inventory, hire employees, etc.

 After establishing your financial needs, the next step is to choose the most appropriate type of company loan.

What sort of business you’re operating will determine this. Some companies require large amounts of money, while others require very little. Here are some examples of how much money you might need for various types of businesses:

• Small Business Loan – $10k-$50k
• Medium Business – $50k-$250k
• Large Business – $250k+

Getting A Business Loan for Your Business

When considering opening a new business, you may wonder where to turn for financing. Several options include bank loans, private investors, and government grants. Any decision you make will have both positives and negatives, pros and cons consequences.

What Type of Business Should I Be Running?

If you’re starting, you’ll probably need a small amount of money. However, once you’ve established yourself, you’ll likely need significant sums to grow your company. 

If you are new to business management, you should consult with someone who has been in your shoes. The pro can help you decide what type of business will work best for you and provide advice on staying within your budget.

How Long Can a Company Get a Loan?

Long term loans usually start with a repayment term higher than one year.

Typically, long term loans have a maximum term of 25 years.

Check out all available options before deciding which loan is best for you.

Lenders will want an increase in revenue or profits before extending a new line of credit.

For what reasons might a company choose a long-term loan?

• Longterm business loans offer lower payments over the life of the loan.
• Long term loans are often synonymous with larger loan amounts.
• Fixed interest rates are standard with long-term business loans.

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How Long-Term Business Loans Work

A longterm business loan is an investment into your company to help grow your business.

The interest rates on these loans are costlier than those of comparable alternatives. Banks typically have much lower interest rates but require strong financials and collateral. Alternative lenders may be more expensive, but there are fewer hoops to jump through to get approved.

 

Smaller monthly payments

• Longterm loans offer lower monthly payments, but they cost more overall.
• A short term loan is usually cheaper and comes with shorter repayment periods, offset by lower interest rates.
• If you have multiple debts, a balance transfer credit card can help you pay them off faster.
• Longterm loans are less expensive per month but cost more overall.
• A loan can be a better option than using a credit card for a small business.
• If you borrow less money, you can pay off the loan faster.

Fixed monthly payments

Fixed monthly payments mean no fluctuation in the amount you pay every month.

• Long term loans offer better deals than a short term business loan.
• Interest rates tend to go down over time.
• Fixed monthly payment means you don’t have to think about paying off your loans every month.
• Lenders offer fixed term loans to help businesses manage cash flow better.
• Interest rates tend to increase over time, making fixed-term loans attractive.

Higher funding amounts

Long-term loans usually carry higher funding amounts. They allow you to borrow money for a more extended period, and larger funding amounts will enable you to expand into different areas of your business.

If you have bad credit, you may be able to find a willing lender; however, do not expect them to reduce their interest rate or waive fees.

The lender will examine how well you handle debt and whether you have any outstanding collections.

Banks and lenders have no legal obligation to give you these loans. They do so because they want to make money from lending you money.

Lowering your monthly payments doesn’t always equate to a better deal. Interest rates vary depending on your loan type, and closing costs and other fees can increase over time.

Compare interest rates, shop around, and compare funding options before deciding which loan will work best for your business. Remember, online loans from non-bank lenders typically carry higher interest rates.

How Much do Long-Term Company Loans Usually Cost?

Features:

• Interest Rate – 5.49% starting Annual Interest Rate
• Terms – Terms ranging from one (short term business loans) to five years
• Payments – Payments are MONTHLY
• Prepayment – No Prepayment Penalty
• Growth – You can use business funding for the growth of the business
• Refinance – Use a business loan for debt consolidation
• Get Funding – Get Funding in 2 to 10 days (business day start to finish)
• Loan Amount – Get business loan amounts from $25,000 up to $5M

Competitive Rates

Long-term business loan rates typically start at around 3.5%, although they can go as high as 7% if you have a good credit rating.

Average long-term business loan interest rates for well-qualified bank borrowers range between 3.25% – 6% depending on the lender and loan.

However, the interest rate can run in the mid-teens or even as much as 36% depending on the industry, time in business, credit, etc. Other factors, such as collateral cash flow, can impact the rates and terms.

Financial institutions are likelier to extend credit to established companies because they see a higher likelihood of future growth.
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Getting Approved for a Long-Term Business Loan

What’s Required?

 

 

Credit Score – For credit approval, you need a 680 Minimum Credit Score Requirement (Not loans for bad credit)

Debt Ratio – You need a small loan-to-debt ratio (not maxed out on debt) to qualify for a business loan

No Bankruptcy – In the past seven years, no bankruptcy

Profitable – At least one of the last two years should be profitable

Business – Minimum 3 years in Business

Owners – Need all owners that are 19% or more on the application

No Sole Props – No Sole Props

Tax Liens – Tax Liens in the past three years must be less than $1,000 and have a payment plan. Tax liens filed within the last decade (but not in the previous three years) must be less than $5,000 outstanding.

Collateral usually secures Long term business loans

• A personal guarantee is usually required to secure a long term business loan.
• You can apply for long term business loans without collateral. However, you may not receive the same terms as those who provide collateral.
• Monthly payments are usually better suited for short term loans or lines of credit.
• More significant amounts and longer terms may require daily or weekly payments.
• Lenders will typically require collateral if you want an unsecured line of credit.
• Find out what lenders require to approve you for a business loan.
• Understand what type of business loan you need.

The Benefits of Long-Term vs. Shorter-Term Loan Financing

The main advantage of longterm financing is that it allows the company to plan and set a strategy based on the future needs of the business. 

Longterm financing provides a stable source of funding that can help a company avoid the risk of raising additional funds during periods of economic uncertainty.

By matching the duration of the asset base with the duration of liabilities, a company can avoid paying interest during periods where there is little or no cash flow coming into the company. 

This strategy helps reduce the amount of debt outstanding and thus reduces the overall cost of borrowing.

Companies generally prefer working with lenders who have invested in them for years because they know what they’re doing and how to help the company grow. 

Lenders with shorter loan durations typically don’t understand the business similarly. Companies stand to gain from a strong relationship with lenders providing long-term financing.

Long term financing offers lower payments and better returns than short-term financing. As a result, companies should consider long-term financing over short-term financing options when they are available to diversify their capital portfolio and minimize exposure to interest rate risks.

Diversifying your capital structure will help reduce your overall interest rate risk.

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Long Term Business Loan Options

A long term business loan is a type of financing that allows businesses to borrow money over several years. It’s also known as “term loans” because they typically last between three and ten years.

To start your new business venture, you may need a long term business loan. But how do you find the right lender to help you finance your dream without breaking the bank?

I’ve got the answer for you. Below we will highlight what you need to know to secure a long-term business loan. We’ll delineate loans’ general benefits and drawbacks and examine some standard lending options.

We’ll also discuss the different lenders you should consider and how to choose the right one. Finally, we’ll discuss the details of applying for a long-term business loan, including the paperwork you must submit with your application.

Read on if you’re looking for a way to fund your next big idea!

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Long Term Small Business Loans

 

A long term business loan is a business funding option companies use to finance large purchases such as equipment, inventory, or commercial property. Assets usually secure these long term business loans.

The borrower owns these assets, like equipment, inventory, or real estate, or they are the assets secured by the loan. This security means the business lender has the first claim on any asset, including cash on hand, in the event of borrower defaults.

A long-term business loan typically has higher interest rates than short term loans. The higher rate accounts for the additional risk of the time to repay the loan. The longer the term, as with all loans, the higher the rate. The appeal to the long-term loan is the monthly repayments are less on a five-year loan versus a 6-month loan.

Before considering taking out a long-term business loan, you should ask yourself some questions to determine whether it makes sense for your company.

• What will the money do for your business?
• How much money do I need?
• Can you afford not to borrow the money?
• Will my business grow if I borrow money?
• What is my ROI (Return on Investment)?
• Can I afford the loan repayment?
• Are they manageable payments?

To grow your business, you must ensure enough revenue and cash flow to cover the loan payments. You shouldn’t take out a loan if you don’t think your business will grow.

Do you prefer daily, weekly, or monthly payments? Would you rather pay more or less per month? You must know these things when deciding whether to take out long-term business loans. In short, there is a lot to think about before taking out any business loan.

You should ensure your credit score is good enough to get a business loan. If it isn’t, you will have trouble getting approved. 

You can check your credit score online and look up your credit report.

Once you know your personal credit score, you can start evaluating which types of loans you might qualify for. 

A long term loan is usually a better option if you want to invest money into a newer business or expand and grow an existing business. Loans can range from $25,000 $2M, depending on how much money you need.

Larger Funding Amounts with Online Application

Your small business loan application has two parts.

Part 1 is an overview of the company and its ownership. It includes your EIN and social security numbers, which help review your overall creditworthiness, time in the business, industry, and other underwriting criteria.

Part 2 consists of a financial analysis of the bank statements. Generally, online lenders require only the last three months to analyze your cash flow and whether you can afford to borrow money.

For larger loan amounts, underwriters review the company’s cash flow, balance sheets, income statements, cash conversion, debt, and equity ratios. From this information, they determine whether the company is profitable enough to support future growth and can repay a loan.

Analysts also look at the company’s history, management team, competitors, and industry trends to predict the likelihood of future profitability. Analysts typically recommend between $10,000 – $2M (or the maximum loan amounts).

Once you submit your application, lenders usually contact you within 24 hours. If they decide to lend you the funds, they’ll send an email confirming the terms of the deal. Lenders charge interest rates ranging from 6% to 38% depending on the funding needed or loan type.

Most online loans come due six to eight months from the original agreement date. However, there are exceptions. You may qualify for more favorable terms from 18 months to 3 years, and SBA loans can be 10 to 25 years for traditional business term loans or commercial real estate, respectively.

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U.S. Bank Business Loans vs. Venture Capital vs. Government Grants vs. Online Lenders

There are many benefits to financing through a bank (a traditional lender) or venture capital firm:

1. Banks provide more flexible repayment options with a traditional business loan.
2. Bankers often offer lower interest rates than private investors.
3. Bankers understand the needs of entrepreneurs and small businesses.
4. Bankers are familiar with local regulations and laws that affect companies.
5. Bankers are subject to fewer legal restrictions than private investors.

However, bank financing carries risks too. Banks typically demand higher security deposits than venture capitalists, which means less flexibility. Also, banks tend to avoid riskier borrowers than venture capitalists because federal agencies regulate them.

Venture capitalists are privately owned investment firms that provide early-stage funding to innovative technology companies. 

Venture capitalists operate like private equity firms; they use their finance, marketing, and sales expertise to identify promising ventures and invest their clients’ money in these companies.

Unlike banks, venture capitalists generally prefer to invest in well-established high-growth companies. Venture capitalists are willing to accept more significant risks than banks.

For these reasons, you may seek financing directly from friends and family instead of using a bank. But if you wanted to raise 1 million dollars, I’d probably go to a banker or lender.

Most businesses require financing. 

Most small businesses need money to grow. 

Many entrepreneurs turn to the 3 Fs – family, friends, or fools for loans.

However, most business owners don’t realize they can borrow money through long-term business loans. These loans last longer than 12 months, usually between 3 and 10 years.

These types of loans offer many benefits. For example, they allow you to build equity in your company without selling shares. They also provide flexibility, and you can pay off the loan early or extend the term.

They also offer some protection against bankruptcy. Unlike traditional bank loans, which you pay in full upon default, some long term business loans have collateral. So, if you go bankrupt, the lender has an asset that he can sell to recoup his losses. 

Online lenders may offer a non-traditional guarantee, which helps in the case of default. Speak to your lender about what happens in this situation.

To qualify for a long term business loan, you must demonstrate a strong cash flow and solid credit history. In your business plan, indicate that you have considered and accounted for all potential outcomes.

Your personal financials will also determine whether you qualify for a long-term loan through a traditional lender. You must prove you have the cash flow and enough assets to repay the debt.

Small businesses that need access to capital to expand but don’t yet have a track record can try to secure a long term loan. Long-term business loans are also outstanding for companies with existing revenue streams looking to invest in growth.

As with all forms of financing, there are drawbacks. For example, you might find that the terms offered by private lenders differ significantly from those of banks. You must shop carefully to ensure you get the best deal possible.

Also, you’ll need to consider how you will repay the loan. Will you use profits generated by the business? Will you draw down funds from savings? Will you raise additional funding?

Remember that this type of financing provides capital for long term projects. As such, the repayment period should be commensurate with the length of the project.

For example, a $100,000 loan for three years would probably be too risky for a startup. But a $1 million loan for five years could be perfectly appropriate.

Finally, remember that these loans are to fund expansion. If you decide to shut down operations after two years, you’ll likely owe more than the original amount borrowed.

In summary, long term business loans can be a good option when other sources of financing aren’t available. However, they carry some risks. Before applying for a loan, understand the terms and conditions fully.

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Who Offers Financing Options for Long Term Loans

 

Lenders Offering Long-Term Business Loans

Lender Type	Typical Requirements	Pros	Cons
Traditional Banks	– FICO score 680+- 2+ years in business- Strong business plan- Annual revenue of $250K+	– Low interest rates- Long repayment terms (up to 10-25 years)- Access to high loan amounts	– Lengthy approval process- Stringent credit and documentation requirements
Credit Unions	– FICO score 660+- Membership with the credit union- Stable cash flow	– Competitive interest rates- Personalized service- May offer flexible terms	– Limited availability- Membership requirements- Smaller loan amounts
SBA-Approved Lenders	– Meet SBA eligibility guidelines- FICO score 650+- Collateral often required	– Backed by government guarantee- Low interest rates- Extended terms (up to 25 years)	– Lengthy and complex application process- High documentation burden
Online Lenders (Long-Term)	– FICO score 600+- 12+ months in business- Monthly revenue of $15K+	– Faster approval compared to banks- Flexible credit requirements- Terms up to 5-7 years	– Higher interest rates than traditional banks- Prepayment penalties may apply
Private Lenders	– High-value collateral (real estate, equipment)- Strong business financials- Growth potential	– Tailored loan structures- Easier approval for businesses with non-traditional credit profiles	– High interest rates- Requires collateral or personal guarantees
Nonprofit Lenders	– Meet specific mission criteria (e.g., minority-owned, veteran-owned)- FICO score 600+	– Low interest rates- Focus on underserved businesses- May offer mentorship and resources	– Limited loan amounts- Longer approval process
Institutional Investors	– High-growth potential- Detailed financials and projections- Willingness to share equity	– Large funding amounts- Strategic partnerships and advisory support- Long-term repayment terms	– High focus on ROI- Stringent due diligence- May require equity sharing

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Key Takeaways:

1. Traditional Banks & Credit Unions:
   • Best for businesses with strong credit and stable finances.
   • Offer the most competitive interest rates and longest terms but require rigorous documentation and high creditworthiness.
2. SBA Loans:
   • Perfect for small businesses needing low-interest, long-term financing.
   • Ideal for startups meeting specific eligibility requirements but involve a complex application process.
3. Online Lenders:
   • Suited for businesses needing quick access to long-term financing.
   • Slightly more expensive than traditional lenders but offer faster approval times.
4. Private Lenders:
   • Target businesses with unique needs or unconventional credit profiles.
   • Provide flexible terms but typically have higher interest rates and collateral requirements.
5. Nonprofit Lenders:
   • Best for minority-owned or underserved businesses.
   • Offer competitive rates and additional resources but are limited in loan amounts.
6. Institutional Investors:
   • Fit for high-growth startups or businesses in need of large-scale funding.
   • Often require equity sharing or significant ROI-focused plans.

This table allows borrowers to assess the trade-offs between cost, ease of access, and flexibility to determine the best option for their long-term financing needs.

Bank Loans

A traditional bank loan is usually the most expensive form of financing, and banks charge interest rates ranging from 6% to 25%. Depending on the loan size, you might be required to put down at least 20% of the total cost of the equipment you purchase.

If you choose this route, you must show that you have enough collateral to back up your loan request. Collateral means something you own that will serve as security for the loan. Examples of collateral include real estate, cars, boats, and machinery.

If you don’t have any collateral, you may be able to secure a loan by putting up personal assets. However, defaulting on the loan means the lender can seize those assets.

Private Investors

Another way to finance your business is through private investors. Private investors are individuals who invest their own money into businesses they like. They hope to make a profit when the company’s value increases. The terms and conditions can be significantly different among investors. 

To attract investors, you must provide detailed business plans and projections and present them with evidence of your business’s potential.

Government Grants

The federal government offers several types of grants explicitly designed for small businesses. One example is the SBA 7(a) loan program. Under this program, qualified borrowers can borrow funds from the SBA at low-interest rates.

You must meet specific government requirements to qualify for a loan under this program. Among them are having less than $1 million in annual sales, being in one of 34 states, and having been in business for less than five years.

In addition, you must submit a business plan that includes details about your business goals, projected increased annualized revenues, and expenses. You may be eligible for funding if you complete all of these steps.

Alternative Lenders

Many alternative lenders offer long-term loans. These include online lenders, credit unions, peer-to-peer lending platforms, and microfinance institutions (MFIs).

Long-term business loans are available through alternative or online lenders, often offering competitive loan terms. So, if you need a short-term loan, consider looking into alternative lenders instead of returning to the bank.

Other sources of financing are available to small businesses. These alternative lenders include private equity firms, venture capitalists, angel investors, and crowdfunding platforms.

As you consider which type of financing is best for your business, remember that each option has advantages and disadvantages. It’s essential to balance these factors carefully before making a decision.

Companies Offering Long-Term Business Loans

Here’s a detailed list of companies providing long-term business loans, including their features and what sets them apart.

1. Sunwise Capital

• Overview: Sunwise Capital offers flexible long-term business loans tailored for small and medium-sized businesses across industries.
• Loan Terms: Up to 10 years.
• Typical Requirements: Minimum FICO score of 600, 2+ years in business, and $250,000+ annual revenue.
• Key Features: Fast approval process, customized repayment plans, and funding within 24-48 hours.
• Best For: Small to medium-sized businesses seeking quick and hassle-free long-term financing.
• Website: Sunwise Capital

2. Lendio

• Overview: A lending marketplace connecting businesses with various lenders for long-term loans.
• Loan Terms: Up to 25 years (depending on the lender).
• Typical Requirements: Credit score of 620+, 12+ months in business, and $50,000+ annual revenue.
• Key Features: Wide network of lenders, streamlined application process, and tailored offers.
• Best For: Businesses exploring multiple long-term loan options in one place.
• Website: Lendio

3. Funding Circle

• Overview: A trusted online lender offering competitive long-term loans with fixed interest rates.
• Loan Terms: Up to 10 years.
• Typical Requirements: FICO score of 660+, 2+ years in business, and $150,000+ annual revenue.
• Key Features: Transparent terms, no prepayment penalties, and dedicated account managers.
• Best For: Established businesses looking for straightforward terms and competitive rates.
• Website: Funding Circle

4. OnDeck

• Overview: A prominent online lender specializing in both short- and long-term business loans.
• Loan Terms: Up to 24 months (long-term loans).
• Typical Requirements: FICO score of 600+, 12+ months in business, and $100,000+ annual revenue.
• Key Features: Quick funding, flexible repayment terms, and loyalty benefits for repeat borrowers.
• Best For: Businesses with fluctuating cash flow needing fast, medium-term financing.
• Website: OnDeck

5. SmartBiz

• Overview: Specializes in SBA loans and long-term financing for small businesses.
• Loan Terms: Up to 25 years.
• Typical Requirements: FICO score of 650+, 2+ years in business, and steady cash flow.
• Key Features: Low interest rates, SBA-backed security, and long repayment terms.
• Best For: Small businesses seeking low-cost, government-backed long-term loans.
• Website: SmartBiz

6. BlueVine

• Overview: Offers lines of credit and term loans with flexible repayment schedules.
• Loan Terms: Up to 5 years.
• Typical Requirements: FICO score of 625+, 6+ months in business, and $10,000+ monthly revenue.
• Key Features: Quick funding, minimal paperwork, and competitive rates.
• Best For: Businesses with short operational history needing manageable long-term financing.
• Website: BlueVine

7. Credibly

• Overview: Provides personalized long-term loan solutions for businesses across various industries.
• Loan Terms: Up to 5 years.
• Typical Requirements: FICO score of 600+, 6+ months in business, and $15,000+ monthly revenue.
• Key Features: Flexible underwriting, fast funding, and tailored repayment plans.
• Best For: Small businesses needing funding with flexible qualification criteria.
• Website: Credibly

8. Kabbage by American Express

• Overview: Offers lines of credit and term loans through a simple, tech-driven application process.
• Loan Terms: Up to 18 months.
• Typical Requirements: FICO score of 640+, 12+ months in business, and $50,000+ annual revenue.
• Key Features: Automated approval process, integration with financial tools, and funding in minutes.
• Best For: Tech-savvy businesses needing small to medium-sized long-term loans.
• Website: Kabbage

9. Live Oak Bank

• Overview: A bank specializing in SBA and industry-specific loans.
• Loan Terms: Up to 25 years.
• Typical Requirements: SBA eligibility, FICO score of 680+, and strong financials.
• Key Features: Industry expertise, high loan amounts, and extended terms.
• Best For: Niche businesses requiring substantial funding for long-term growth.
• Website: Live Oak Bank

10. National Funding

• Overview: Focuses on providing long-term loans for businesses with varied financial needs.
• Loan Terms: Up to 5 years.
• Typical Requirements: FICO score of 600+, 12+ months in business, and $100,000+ annual revenue.
• Key Features: Fast funding, flexible terms, and high approval rates.
• Best For: Businesses needing quick, flexible long-term loans.
• Website: National Funding

Key Takeaways:

• Sunwise Capital is a standout for tailored long-term solutions and quick funding.
• SmartBiz and Live Oak Bank are ideal for low-cost, SBA-backed loans.
• BlueVine and Credibly cater to businesses needing faster, smaller long-term loans.

By reviewing each lender’s unique offerings, requirements, and benefits, businesses can select the best partner to meet their long-term financing needs.

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What are the types of Long Term Business Loans?

Banks usually work well if you already have a relationship with them.

Online lenders are suitable for new businesses and people with less-than-perfect credit.

SBA loans are outstanding for smaller companies and startups.

Equipment Loans and Financing

Equipment financing is usually used to purchase new or secondhand office equipment, machinery, vehicles, and other business-related items.

Many financing choices are available, including equipment leases and sales through various financial institutions. 

Equipment financing is often cheaper than leasing, especially if you plan to buy an expensive item like a forklift.

If you have the available credit, one way to finance a large equipment purchase is through a credit card company.

Equipment financing is an alternative to bank loans and lines of credit.

Interest rates on equipment financing may vary depending on the type of equipment financed.

Equipment financing usually lasts for up to six years.

Commercial Real Estate Loans

Commercial Real Estate Loans are common for buying a property that will be leased to tenants and for building construction projects.

Collateral, such as real estate or structures, is often required by lenders for this type of loan.

Loans against commercial real estate are frequently used to acquire or renovate commercial properties.

In many cases, a borrower may need to prove they will use at least 50% of the building’s square footage before receiving financing.

SBA Loans

SBA loans require a minimum net worth of $150K for specific purposes.

These SBA-backed loans are outstanding for startups or businesses looking to grow.

U.S. Small Business Administration loans come in many forms, each with benefits and drawbacks.

Each SBA loan comes with its own set of rules and regulations.

Some lenders will charge extra fees if you don’t qualify for an SBA loan.

Terms Loans

Term loans are good for financing an asset expected to generate additional revenue.

A term loan is a financing type where you repay the money over time.

When you take out a term loan, you usually don’t have to worry about interest rates changing.

Loan types typically have different interest rates. Generally, fixed-rate loans have more affordable monthly payments than their variable-rate counterparts.

Variable interest rate loans usually carry a higher APR than fixed-rate loans.

Merchant Cash Advance

A Merchant Cash Advance is a short-term loan or, more technically, a cash advance. Advancements usually do not restrict how you use money; you can use it for any business purpose. It is also known as a merchant cash advance, a business cash advance, or an MCA. 

A merchant cash advance is an alternative to traditional bank loans or lines of credit. This type of financing has the significant advantage of not requiring collateral, and you do not have to use your personal assets as security for the loan.

Compared to other options, the disadvantage of this type of loan is that the repayment period is relatively short. Typically, these loans are only valid for six to twelve months. However, you can get up to $2M, and repayment reflects a percentage of your daily sales, and slower sales will extend the repayment time. 

How Does an Online Installment Loan Work with Alternative Lenders?

An online installment loan with an alternative lender is known as working capital. It is a type of business financing in which you borrow money from an online lender and make fixed, regular loan repayments over a set period.

This financing option offers term loans with one to three years of repayment periods. These installment loan products online are prevalent and provide a strong business financing option.

The next consideration is the interest rate. Besides the actual percentage, the only question is whether it’s a fixed or floating rate. The loans available to most small to mid-sized businesses are almost always of fixed rates.

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Business Loans Online Resources

Several websites offer free information on how to finance your business. 

These sites typically give you access to articles, calculators, and other tools that can help you determine whether a particular type of loan makes sense for you and your business.

Some of these sites include:

• Biz2Credit – This site provides free information on how to get a business loan from banks, credit unions, and alternative lenders.
• Financing Your Business – This site offers free information about getting a business loan. It includes links to many different sources of financing.
• LendUp – This site offers free financial planning software that helps you create a plan for your business finances.
• SBA Loan Finder—This site provides free access to an interactive tool for finding government-backed loans.
• Small Business Administration (SBA) – The U.S. Department of Commerce’s SBA website provides free information on how the agency works with entrepreneurs.
• Venture Capital Firms – This site provides free info on venture capital firms and their services.

Other Websites

You can also use Google, Bing, or Yahoo! to search for “how to finance my business” to find a preferred lender. In addition, you could check local business directories such as Yelp.com or YellowPages.com.

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Conclusion

In conclusion, long-term business loans are offered to companies that have been around for a few years and have proven reliable sources of growing annual revenue. 

Long-term loans present a critical opportunity for businesses at a pivotal growth stage or those looking to expand into new ventures.

These types of loans have precise requirements, but if you meet them, they can provide you with the money you need to grow your company without putting too much pressure on you.

These loans are when a company has grown too large for its current bank and needs additional capital to expand into new markets or purchase equipment. These loans can transform your business’s future trajectory by offering the financial backbone necessary for substantial investments

Long term business loans are also helpful if a company wants to buy another company but doesn’t have enough cash to cover the entire cost.

If you want to learn more about how Sunwise Capital can help you finance your business, contact us today!

Understanding the process, the commitment, and the benefits of long-term versus shorter-term financing.

If you’re ready to take your business to the next level, consider the strategic advantage of a long-term loan.

Sunwise Capital is ready to support your ambitions with tailored financing solutions matching your unique needs. Let us be your partner in growth; apply for a business loan with Sunwise Capital today and unlock your company’s full potential.

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Frequently Asked Questions

What is a Long-Term Business Loan?

A long-term business loan is financing extended to businesses for a period typically ranging from three to ten years or more. These loans are used for significant investments such as purchasing equipment, expanding operations, or refinancing debts.

How Do I Qualify for a Long-Term Business Loan?

Qualification criteria can vary by lender but generally include a strong business credit score, a proven track record of profitability, a solid business plan, and sometimes collateral. Lenders will also review your financial statements and may require a personal guarantee.

What Are the Interest Rates for Long-Term Business Loans?

Interest rates for long-term business loans vary based on the lender, your creditworthiness, the loan amount, and the term length. Rates can range from as low as Prime plus 4-5% for loans backed by the Small Business Administration (SBA) to higher rates for loans from alternative lenders or businesses with less-than-ideal credit profiles.

Can Startups Get Long-Term Business Loans?

Startups may find it challenging to secure long-term business loans due to a lack of revenue history and established credit. However, options like SBA loans, crowdfunding, or venture capital may be more accessible for startups needing significant capital investment.

What Documents Do I Need to Apply for a Long-Term Business Loan?

You’ll likely need to provide detailed financial statements, tax returns, a business plan, personal financial information, and potentially collateral documentation. Specific requirements can vary, so checking with your lender is essential.

How Long Does It Take to Get Approved for a Long-Term Business Loan?

The approval process can range from a few weeks to several months, depending on the lender and the complexity of your financial situation. Working with online lenders can sometimes expedite the process. Sunwise Capital offers a 7-year term that can be funded in 2 to 3 business days.

What Are the Benefits of a Long-Term Business Loan?

The benefits include lower monthly payments spread over a longer period, the ability to finance large projects or purchases, and the potential for fixed interest rates that make budgeting easier.

Are There Any Disadvantages to Long-Term Business Loans?

Disadvantages might include the total interest paid over the life of the loan being higher than with short-term loans, potential prepayment penalties, and the requirement of collateral, which could put business assets at risk.

Can I Pay Off a Long-Term Business Loan Early?

Some lenders allow early payoff without penalties, while others may charge prepayment fees. Understanding the terms of your loan agreement before making extra payments is crucial.

How Can I Choose the Right Long-Term Business Loan for My Company?

Consider your business needs, the loan’s terms and rates, the total cost, and any potential restrictions or requirements. Speak to a SUnwise Capital pro to determine the best financing option for your business’s long-term goals.

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