Long-term business loans are a great option for businesses that need to make large or long-term investments.
Whether it be for expanding your business, purchasing equipment, or other significant expenses, long-term business loans can give you the funding you need to grow your business.
Long-term business loans typically carry fixed interest rates, repayment terms of up to 10 years, and are usually secured — meaning, you will likely have to put up collateral in order to borrow a long-term loan.
Loan limits vary by lender and can range from $25,000 to $5 million. The more you borrow, the stricter the eligibility requirements will be.
Long-Term Business Loan Benefits
Long-term business loans offer a number of enticing benefits including:
Flexible loan limits
Flexible loan terms
Financing for important business ventures
Fixed interest rates
These benefits, among others, make long-term business loans a great solution for business in need of significant funding.
However, these benefits are reliant on your ability to meet strict financial qualifications. Businesses with a poor credit history or low revenue may not be able to qualify for a long-term loan with favorable terms.
Long-term loans can be difficult to qualify for. The specific requirements will depend on your lender, so it’s important to review your lender’s requirements before applying for a loan.
That being said, some of the basic requirements for a long-term business loan include:
Personal and business credit score of at least 650 (the higher the better)
You must run a for-profit business
A solid business plan
Expected return on investment
Poor credit history may not prevent you from getting a business loan, but you may only be able to qualify for high interest rates.
Where to Get a Long-Term Business Loan
Long-term business loans can be obtained through banks, the Small Business Administration (SBA), or alternative lenders.
- Bank Loans
Traditional bank loans are a common option for businesses in need of financing.
Banks often offer competitive interest rates, high loan limits, and fast approval times. However, bank loans can be difficult to qualify for — making them a poor option for startups and businesses with poor credit history.
- SBA Loans
The Small Business Administration offers several loan programs to help small businesses get financing with favorable terms.
While SBA loans typically offer very enticing interest rates and terms, they can be very difficult to qualify for.
- Alternative Lenders
Alternative lenders include any organization that is not a bank or the SBA. This could include credit unions, venture capitalists, or even family members.
Alternative lenders often have more lenient requirements than banks or the SBA, but typically offer higher interest rates.
How to Apply for a Long-Term Business Loan
Applying for a long-term business loan is easy. Just follow these steps to get started.
- Build Your Credit Score
The interest rate on your loan will be a large factor in determining whether or not you can afford your monthly loan payments.
To qualify for a competitive interest rate, you need to build a good personal and business credit score.
In most cases, you’ll need a credit score of at least 650 (sometimes higher) to qualify for low interest rates. You can build your credit score by making on-time payments on your outstanding debts over time.
- Find a Lender
If you’re borrowing through the SBA, you can use the SBA Lender Match to find an approved lender.
For banks or alternative lenders, it’s important to thoroughly research your options and compare quotes between lenders to find the best offers.
Be sure to read reviews, get pre-approved, and review each lender’s requirements to find the best option for you.
- Gather The Necessary Documents
To apply for a long-term business loan, you’ll likely need the following documents:
Personal and business tax returns
Be sure to check with your lender to find out exactly which documents you need to apply.
- Submit Your Application
Once you’ve gathered the necessary documents, all that’s left is to fill out and submit your application.
If you have already been pre-approved and given an offer, it’s important to submit your application in a timely manner so that your offer doesn’t expire.
After being approved, review your terms one last time to ensure that you are comfortable with the offer.
Then, you can sign your lease agreement and receive your funding.