Whether it's a seasonal slump or a pricey purchase, at some point you’ll likely find yourself needing a business loan.
APR rates on long-term business loans average around 5.5% to 30% from online lenders, which is slightly lower than for short-term loans. The best long term business loans are great for well-established, small businesses with a good amount of collateral. The most appropriate situations for getting a long term business loan include construction, large investments like heavy machinery, working capital, or taking over an existing business, and major capital improvements. However, if you’re using a long-term business loan to finance the purchase of machinery and equipment, you should consider carefully the cost of depreciation and compare that to leasing.
What to Look for When Choosing a Long Term Business Loan
- Flexible rates: When you’re shopping for the best long-term business loan, you want as much flexibility as possible along with good interest rates. Beware of unscrupulous loan providers who hide their extremely high interest rates by highlighting the monthly payment amounts. Because spreading your payment out across a longer period of time brings down each monthly payment, you might not notice that the total amount of interest you pay across the entire term of the loan is overly high.
- Read the small print: As with all business loan lenders and aggregators, it’s important to read the small print to check whether the interest rates are fixed, variable, or change after a certain period of time, hidden fees and extra charges like origination charges, personal check processing charges, and late payment charges. The best long term business loans will have some flexibility in the timing of your payments each month and early repayment.
The 5 Best Long-Term Business Loan Providers:
- Borrow from $2,000 to $100,000
- APR from 5%
- Three months to 15 years
LendingTree is a leading loan provider marketplace which connects businesses in need of a loan with reputable lenders. Since it's a marketplace rather than a direct lender, LendingTree can't say exactly what your APR rates will be; those will be determined by the final lender. The advantage of using LendingTree is that by completing just one application, you'll be able to access loan offers from a number of different lenders. Applying is done online with a basic questionnaire about your business history and financial stability, with applicants receiving initial pre-approved offers within a few minutes before going on to complete the application process with the lender directly.
LendingTree connects you to a range of possible lenders, so you can choose between different options. There’s no fee to arrange the loan and no minimum credit score. Businesses with a range of years in business and credit standing can succeed because credit score and business history requirements vary between different lenders. However, all applicants need to have been in business for at least 12 months and have $8,000 or more in monthly revenue.
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- Credit lines from $2,000 up to $250,000
- Six to 12 month repayment plans
- Loans are possible even if you have fair credit
Kabbage gives businesses credit lines ranging from $2,000 to $250,000, with approval coming in a matter of minutes.
The company is best suite for small business owners who need quick access to capital of up to $250,000. As a line of credit, you withdraw money as you need it, so it's a great service to help a business get a little extra money to get through tough times or make important purchases. You can also order a Kabbage credit card, with a $50,000 monthly limit. You are only charged for the credit you use and the payment plans are either 6 months or 12 months. Because the company is flexible about credit scores, Kabbage is a solid option for business owners who have a less than stellar credit rating, and need a quick influx of capital which they can use as they see fit.
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- Borrow from $1,000 to over $1,000,000
- APR from 5% to 30%
- Loan term from 1 month to 5 years
Lendio is a loan aggregator that provides pre-approved loans from its stable of over 75 trusted lenders to businesses of all sizes. It's hard to say what your APR rates will be since they are determined by the direct lender. Lendio has one of the lowest requirements for long term business loans since it only asks for six months in business, and has very high standards of customer service.
To apply to Lendio, you'll complete a simple online questionnaire that matches you to a loan provider who'll then ask you for a more detailed application. You'll usually need to show a signed loan application, six months of business statements, and a mortgage or landlord verification, if relevant. There's no minimum credit score, but you do need to show average monthly revenue of over $10,000 for the past six months. There are fees for the loan, but those are set by the individual lender.
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- Borrow from $1,000 up to $100,000
- No origination fees
- Early repayment available with no penalty
If your business needs a quick, flexible line of credit, and your personal credit history is less than ideal, take a look at Fundbox.
The company provides loans of up to $100,000 and approval can come within a matter of minutes. One of the big positives of Fundbox is that the company doesn’t decide whether to afford loans based on your credit history. Rather, Fundbox links up to your business’ accounting software and looks at the financial viability of the business before deciding whether or not to approve.
The company does charge fees that can make the APR quite high, ranging from 16.540% to 67.70%. That said, because the repayment plans are 12 or 24 weeks, there is only so much you’ll pay in APR over such a short period of time.
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- Business loans for $3,000 up to $750,000
- No application fee or collateral required
- Approval in less than 24 hours
Wall Street Funding is a business loans company that can provide up to $750,000 in capital that you can use for whatever your business needs. To qualify or a loan, your business must be in operation for at least 60 days with over $10,000 in bank deposits each month. The company states that while the borrower’s credit rating is examined, it “does not play a pivotal role in the approval.”
In other words, if you’ve had the door shut in your face because of your credit rating, Wall Street Funding can be the right address for you. The company states that you can receive the funds within 72 hours of completing the application and that you can always originate new loans after your initial one.
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Conclusion
Long-term business loans can be the best way to free up capital for large investments or purchasing equipment. Each of the five loan providers reviewed here can offer you competitive and flexible long term business loans.