Long-term business loans offer extended repayment periods and often feature lower interest rates compared to short-term options, making them ideal for significant expenses like an expansion. If your business is looking to fund long-term growth or major investments, finding the right loan is crucial.
To help identify the best long-term business loans, our team conducted extensive research. We analyzed loan products from traditional banks, online lenders, and government-backed programs, considering factors such as:
- Loan terms and repayment periods
- Interest rates and fee structures
- Maximum loan amounts
- Qualification requirements
- Application processes and funding speed
- Lender reputation and customer service
Our goal was to highlight a diverse range of options to suit different business needs and financial situations. The following long-term business loans offer a mix of competitive rates, flexible terms, and accessibility for small to medium-sized businesses.
| Lender/Program | Loan Amounts | Loan Term |
|---|---|---|
| SBA 7(a) | Up to $5 million | Up to 25 years |
| SBA CDC/504 | Up to $5.5 million | 10, 20, or 25 years |
| National Business Capital | $10,000 - $500,000 | 3 - 25 years |
| Funding Circle | $25,000 - $500,000 | 6 months - 5 years |
| Kapitus | $10,000 - $500,000 | Up to 5 years |
| Bank of America Unsecured Term Loan | $10,000 - $100,000 | Up to 5 years |
| SBA Microloan | Up to $50,000 | Up to 6 years |
| TD Bank | Up to $250,000 | 1 - 5 years |
1. SBA 7(a) Loan
- Up to 25 years for real estate loans
- Up to 10 years for working capital, inventory, or equipment
- Interest rates capped by the SBA, 2.25% to 4.75% over the prime rate
- Maximum loan amount of $5 million
- Operate for profit within the U.S. or its territories
- Must have reasonable invested equity
- Use alternative financial resources first
- Requires detailed financial documentation and business plans
If you’re running a small business and need a legitimate source of funding, one of your first stops should be the U.S. Small Business Administration. The SBA 7(a) loan program is a primary platform for the government to offer financial aid to small businesses. It’s the go-to option for many American small businesses seeking financial assistance.
Loan Terms
The maximum length for a 7(a) loan varies by use. The SBA offers loans up to 25 years for real estate and up to 10 years for working capital, inventory, or equipment. Of course, you can always pay your loan off sooner than this if you want to. But the long terms offered by this program are what make it particularly attractive. Longer terms spread the repayment over more time, resulting in smaller monthly payments.
Interest Rates
Interest rates for 7(a) loans are subject to SBA maximums and are tied to the Prime Rate. Interest rates for the 7(a) loans are determined by the lender, but luckily, they are capped by the SBA to keep them reasonable. Typically, you can expect rates to range from about 2.25% to 4.75% over the prime rate, depending on your loan amount and the repayment term.
You can borrow up to $5 million under the 7(a) program. This ceiling allows you considerable leeway to fund significant projects or make substantial purchases.
Qualification Requirements
As for what you need to qualify for this program, there is a long list of requirements. But fortunately, it is easy to meet them. Firstly, your business must operate for profit within the U.S. or its territories, have reasonable invested equity, use alternative financial resources (including personal assets) before seeking financial assistance, and demonstrate a need for the loan proceeds.
Application Process
You will need to gather detailed financial documentation, business plans, and projections. Once you have this, you can reach out to a lender, who will assess the application against both its criteria and the SBA’s requirements, including creditworthiness, business viability, and the ability to repay the loan. Once an application is approved, your lender will work with the SBA to secure the loan guarantee that the 7(a) program provides.
The flexibility and supportive terms makes this loan program an excellent option for small business owners looking to finance their next stage of growth or to stabilize their operations.
2. SBA CDC/504 loan
- For real estate and equipment purchases
- Involves a partnership with a Certified Development Company
- Repayment terms of 10, 20, or 25 years
- Rates tied to U.S. Treasury issues
- Maximum SBA loan amount up to $5 million, $5.5 million for certain projects
- Tangible net worth under $15 million
- Average net income under $5 million after taxes for the last two years
- Must create or retain jobs, or meet public policy goals
The SBA also offers another good option for small businesses, known as the CDC/504 program, a highly versatile solution for a variety of major capital expenditures. Primarily, it focuses on the purchase of real estate and equipment.
What sets the 504 program apart is its structure: it involves a partnership between a Certified Development Company or “CDC”, which is a nonprofit corporation designed to support economic growth within its community, a traditional lender like a bank, and the borrower. This tri-party arrangement is great for making sure that small businesses can access the capital they need on terms that actually facilitate growth, rather than hindering it.
Interest Rates
The rates for the 504 program are among the most competitive available for commercial loans, often lower than what’s available through other types of business loans. The repayment terms for SBA CDC/504 loans are particularly favorable, with options for 10, 20, or 25 years. Interest rates for 504 loans are tied to the market rate for 5- and 10-year U.S. Treasury issues, plus a spread that covers the administrative costs of the CDC and the SBA guarantee.
Loan Terms
You get a very generous maximum loan amount, so you can invest heavily into your business. The maximum project size for a 504 loan can go quite high, although the SBA portion of the financing is capped at $5 million for most projects and up to $5.5 million for manufacturing projects or projects that meet specific energy efficiency or renewable energy goals.
Qualification Requirements
As for how to qualify, you can expect similarly stringent requirements to the SBA 7(a), with a few differences. Your business must be operated for profit and fall within the size standards set by the SBA. Borrowers must have a tangible net worth of less than $15 million and an average net income of less than $5 million after taxes for the preceding two years. Another requirement is that the project being financed must also be expected to create or retain jobs or meet certain public policy goals, such as improving energy efficiency or supporting rural development.
3. National Business Capital
- Offers long-term loans
- Financing for equipment, real estate, SBA loans, term loans
- Loan terms range from 3 to 25 years
- Interest rates start at 3.25%
- Rates can go up to 15% for lower credit scores
- Requires annual income of at least $500,000
- Minimum credit score: 580
National Business Capital is another solid pick, and they offer a variety of loan products designed to meet diverse needs of different businesses, including long-term loans that provide extended repayment periods and competitive interest rates.
Loan Terms
You can get financing for a wide range of purchases, from equipment upgrades in the low thousands, to mutli-year investments that might not show an immediate ROI but require a massive upfront cost. Things like equipment financing, commercial real estate loans, SBA loans, and term loans are all among their offerings.
Each has its unique features and repayment terms, and can range from three to 25 years. Plus, each loan type comes with its own set of conditions, interest rates, and repayment schedules.
Interest Rates
Specific interest rates, as usual, will depend on your unique credit profile, but you can expect them to start around 3.25%. The lower your credit score and operating income you have, will result in a higher interest rate, typically 15%.
Qualification Requirements
Many lenders prioritize a high personal credit score, but for National Business Capital, you’ll want to make sure that your business has a high annual income of at least $500,000 too. Your credit score should still be atleast 580 — which is lenient compared to many other lenders.
4. Funding Circle
- Loan terms: 6 months to 5 years
- Interest rates start at 7.49%
- Loans range from $25,000 to $500,000
- Requires 2 years of operation
- Assesses credit history, annual revenue, cash flow
- Online application with soft credit check
- Decision typically within 24 hours
Unlike traditional banks, Funding Circle is a “digital-first” bank that simplifies the loan application process by offering quick access to funds through its online platform. The company has established itself as a vital resource for small businesses looking for accessible, straightforward financing solutions without the complexities often associated with bank loans.
Loan Terms
Funding Circle offers flexible loan terms, typically ranging from six months to five years. You can select a repayment schedule that best matches your cash flow and financial planning needs. The flexibility in terms allows for the opportunity to invest in growth initiatives or manage cash flow without being constrained by rigid repayment structures.
As for loan amounts, Funding Circle offers loans ranging from $25,000 to $500,000. Everything from small-scale investments to significant expansion projects should fit within this amount.
Interest Rates
Interest rates for Funding Circle loans are competitive and vary based on the creditworthiness of your business, loan amount, and term length. While specific rates are tailored to each situation, they start at 7.49% and increase depending on different factors.
Qualification Requirements
There are criteria are designed to assess the financial health of your business and its ability to repay the loan. To qualify for a Funding Circle loan, you’ll typically need to have been in operation for at least two years. Additionally, Funding Circle considers your business’s credit history, annual revenue, and cash flow when evaluating loan applications.
Application Process
You can apply online pretty quickly. The process includes a soft credit check that does not impact you or your business’s credit score. After submitting an application, you should receive a decision typically within 24 hours.
5. Kapitus Small Business Loan
- Focuses on customer service and flexibility.
- Cost varies based on creditworthiness, loan amount, and financing product.
- Offers loans ranging from $10,000 to $500,000.
- Repayment terms up to five years; payment schedules can be daily to monthly.
- Operational income weighed more than personal credit score.
- 2 years in operation and $250,000 in annual revenue required
- 625+ credit score.
Kapitus is another up and coming lender with a growing reputation for customer service and flexibility. They take a different approach to how they qualify applicants and how they determine the cost of your loan. But the added flexibility can make it a great choice for many businesses.
Loan Terms
Like the SBA Microloan, you can borrow a small sum if that’s all you need, but with Kapitus you can also access financing for larger investments too. You can access loans ranging from $10,000 to $500,000, depending on how much you need and how much you can qualify for.
Repayment terms are much more flexible compared to other lenders. You can stretch out your loan term to up to five years, or stick to just a few months. Plus, you can schedule your payments to be daily, weekly, bi-weekly, or monthly.
Qualification Requirements
Kapitus looks at your operational income more than your personal credit score, but they still need to see a healthy overall financial profile to give you decent terms. To qualify for Kapitus funding, businesses are generally required to have been in operation for at least two years, with a minimum average annual revenue of $250,000 and a credit score of 625 or higher.
Application Process
The application process with Kapitus is extremely straightforward, and you can apply online in a few minutes. The best part is that you should find out if you’re approved within a few hours, though it could take longer. If you’re approved, the money will be in your account by the next day.
6. Bank of America Unsecured Term Loan
- No collateral required
- Need two years of operation
- 700+ FICO score significantly boosts your qualification chances.
- Loan amounts range from $10,000 to $100,000.
- Interest rates start at 7.5%, adjusting based on risk assessment.
- Term loans start at a lower 6.75% interest rate.
- Lines of credit also available
If your business doesn’t have many assets, Bank of America’s Business Advantage Unsecured Term Loan provides a clear, straightforward way for your business to secure funding without the need to pledge specific collateral.
Loan Terms
Bank of America offers unsecured term loans starting from $10,000, which can go up to $100,000. As for rates, you can expect to pay close to the industry average, starting at 7.5% and increasing, depending on how strong your credit profile is and how risky the lender deems the loan.
Qualification Requirements
Like any long-term business loan, you’ll need to meet the lender’s criteria. Businesses typically need to have a strong credit history and be in operation for at least two years. Bank of America will also review the business’s revenue and cash flow to ensure that the loan can be serviced appropriately. Your personal credit also plays a factor — you’ll want to have at least a 700 FICO score to be likely to qualify.
Interest Rates
If you are not able to qualify for an unsecured loan, you might still have options. Secured term loans present an alternative route, with starting interest rates slightly lower at 6.75%. You’ll need collateral to back up the loan, but you can often get more favorable terms in return. There are also lines of credit, which offer even more flexibility. Lines of credit from Bank of America branch off into two distinct paths: unsecured and secured, starting at interest rates of 10.00% and 9.50%, respectively.
Bank of America is a great option if you prefer going the old-fashioned way and heading into a bank in person. You can apply online, by phone, or in person at a Bank of America branch. Either way. the process involves providing detailed business information, financial statements, and a clear indication of how the loan funds will be used.
7. SBA Microloan
- Microloan maximum amount: $50,000
- Loans aimed to help small businesses start and expand
- Funds provided through nonprofit community-based intermediaries
- Maximum repayment term: 6 years
- Interest rates: 8% to 13%, negotiated with the intermediary
Another great offering from the SBA, particularly if you don’t need access to as much capital as the larger loans, is known as a Microloan. The Microloan program provides loans up to $50,000 to help small businesses start up and expand. The SBA makes these funds available to intermediary lenders, typically nonprofit community-based organizations with experience in lending as well as management and technical assistance. These intermediaries, in turn, offer microloans to eligible borrowers and provide valuable business advice.
Loan Terms
The maximum repayment term allowed is six years, but this can vary depending on the loan amount, planned use of funds, and the intermediary lender’s requirements. Interest rates on SBA Microloans are negotiated between you and the intermediary lender. They are generally competitive and vary depending on the intermediary’s lending criteria but you can expect between 8% and 13%.
As the name suggests, the SBA Microloan program focuses on smaller loan amounts, with the maximum cap set at $50,000. Many smaller businesses have a hard time finding loans for smaller projects. However, the average microloan is about $13,000, indicating the program’s target demographic is truly small or startup businesses that need only a little bit of capital to get moving.
Qualification Requirements
Your lender wants to see you succeed, but they also need to protect themselves with stringent requirements. Prospective borrowers will need to present a detailed business plan, financial statements, and a description of how they plan to use the loan funds. Additionally, some intermediaries may even require business training or planning sessions as part of the application process.
Guidance from the SBA can be invaluable, especially for a new business owner without many resources. So, this is an excellent option if you don’t require a large loan.
8. TD Bank Small Business Loan
- Term loans range from 1 to 5 years
- Lines of credit offer flexible repayment.
- Offers commercial real estate loans with terms of 3 to 5 years
- Creditworthiness assessed on business and personal history.
- Requires a personal FICO Score of 700+.
- Business must have 2+ years of operation under current ownership.
- Must generate annual revenue of $100,000+.
TD Bank, renowned for its customer-centric approach, offers an array of small business loans designed to cater to various needs, from expanding operations to upgrading equipment. Their small business loans are a great solution if you’re looking for another potential funding source.
Loan Terms
You’ll typically be able to get a term loan of between one and five years, or a line of credit that you can spend and pay back on your own terms. TD also offers commercial real estate loans, with terms ranging from three to five years, ammortized over 20 years.
Qualification Requirements
To qualify you for a loan, TD bank will determine your creditworthiness based on both your business and personal history. A personal FICO Score of 700 or above is typically required. The business should have at least 2 years of operation under its current ownership. And it must also generate an annual revenue of $100,000 or more.
Application Process
Applying for a Small Business Loan at TD Bank involves a review of both the business’s and the owner’s financial history to ensure creditworthiness. But that does not mean it is a difficult process. Since TD has physical branches, you can visit a bank in person to talk directly with a banker. You can also apply online much quicker if that is your preference, though the maximum loan amount will be limited to $250,000 if you go this route.
Once your loan is approved, you’ll get a one-time disbursement of funds, and then you’re all set to put your money to work. Overall, this is a solid company with a great selection of long-term business loans and financing options.
How Long-Term Business Loans Work
Long-term business loans are intended to finance major investments, such as purchasing real estate, expanding operations, or acquiring another business. They provide a lump sum of capital upfront, which is then repaid with interest over the agreed-upon term.
As opposed to types of alternative financing, the duration of long-term business loans usually falls between 5 and 25 years. However, some lenders may offer terms up to 30 years for certain types of loans, such as commercial real estate mortgages.
Long-term business loans often require collateral to secure the loan. This can include business assets such as equipment, inventory, or real estate. The collateral helps reduce the lender’s risk and may result in more favorable loan terms for the borrower.
Long-Term Loan Repayment Structure
Most long-term business loans require monthly payments, which include both principal and interest. Lenders may offer fixed or variable interest rates:
- Fixed-rate loans maintain the same interest rate throughout the loan term, providing predictable payments.
- Variable-rate loans have interest rates that can fluctuate based on market conditions, potentially resulting in higher or lower payment amounts.
Loan Amounts and Interest Rates
The amount your business can borrow through a long-term loan varies widely depending on factors such as your company’s financial health, credit score, and the lender’s policies. Loan amounts can range from $25,000 to several million dollars for larger businesses or significant projects.
Interest rates for long-term business loans are generally lower than those for short-term loans due to the extended repayment period. However, borrowers should be aware of additional fees, such as origination fees, closing costs, and annual servicing fees, which can impact the overall cost of the loan.
How to Get a Long-Term Business Loan
Getting a long-term business loan starts with assessing your business’s financial health. Take a close look at your credit score, cash flow, and revenue projections to determine how much you can afford to borrow and repay. This self-evaluation will help you prepare for the lender’s scrutiny and increase your chances of approval.
Next, gather all necessary documents, including tax returns, financial statements, and legal business documents. These will form the backbone of your loan application. During the underwriting process, the lender will review your application and assess your creditworthiness.
If approved, carefully review the loan offer and negotiate terms if possible. Finally, close the deal by signing the loan agreement and providing any additional documentation required. Maintaining good credit, having a clear purpose for the loan funds, and being realistic about how much you’ll borrow will greatly improve your chances.
Long-Term Business Loan FAQ
What credit score do I need for a long-term business loan?
While requirements vary by lender, most prefer a personal credit score of at least 680 for long-term business loans. Some lenders may consider scores as low as 620, but higher scores typically result in better interest rates and terms.
How much can I borrow with a long-term business loan?
Loan amounts can range from $25,000 to several million dollars, depending on your business’s financials, creditworthiness, and the lender’s policies. Some online lenders cap their loans at $500,000, while traditional banks may offer larger amounts.
Can startups qualify for long-term business loans?
It’s challenging for startups to qualify for long-term business loans as most lenders require at least 2-3 years of business history. Startups may need to explore alternative financing options.
What happens if I default on a long-term business loan?
Defaulting can have serious consequences, including damage to your credit score, legal action from the lender, and potential loss of collateral. The lender may also demand immediate repayment of the entire loan balance.
Are there prepayment penalties for long-term business loans?
Some lenders charge prepayment penalties, while others don’t. It’s important to review your loan agreement carefully and discuss this with your lender before signing. If a prepayment penalty exists, consider negotiating its removal or reduction.
How long does it take to get approved for a long-term business loan?
The approval process can take anywhere from a few days to several weeks, depending on the lender and the complexity of your application. Traditional banks typically take longer (2-4 weeks or more), while online lenders may approve loans in as little as 2-3 business days.
Do I need collateral for a long-term business loan?
Many long-term business loans require collateral, such as real estate, equipment, or inventory. However, some lenders offer unsecured options for businesses with strong financials and credit histories. Secured loans generally offer better interest rates and higher borrowing limits.
Key Takeaways: Long-Term Business Loans
Long-term business loans offer a valuable financing option for companies looking to fund significant investments or expansions. With extended repayment periods and often lower interest rates compared to short-term alternatives, these loans can provide the capital needed to drive growth while maintaining manageable monthly payments.
The diverse range of lenders and loan programs available caters to businesses of varying sizes and financial situations. From government-backed SBA loans to offerings from traditional banks and online lenders, there are options to suit different needs and qualifications. When considering a long-term business loan, it’s crucial to carefully assess your company’s financial health, compare multiple lenders, and thoroughly review loan terms to find the best fit for your business goals.
By understanding the various long-term loan options, qualification requirements, and application processes, you can make an informed decision that supports your long-term success. Remember to consult with financial advisors or loan specialists to ensure you’re choosing the most appropriate financing solution for your unique circumstances.
