A fixed payment and a date it ends.
Term loans from $25,000 to $5 million with predictable monthly payments, terms up to five years, and no penalty for paying it off early.
The cheapest fast money available to most small businesses
You borrow a set amount, repay it in equal monthly installments over a fixed term, and you know from day one exactly what the total will be.
This is what most owners actually mean when they say "business loan." It is priced as an interest rate, the payment is monthly rather than daily, and the total cost is a fraction of what a short-term advance runs. The tradeoff is that underwriting is stricter and funding takes a few days rather than a few hours.
If you qualify for a term loan, you should almost always take it over an advance.
| Amount | $25,000 – $5,000,000 |
| Term | 12 – 60 months |
| Payment frequency | Monthly (ACH) |
| Speed to funding | 2 – 7 business days |
| Collateral | Varies; personal guarantee typical |
| Pricing model | Annual interest rate |
| Prepayment penalty | None |
| Best for | Planned investments with a return you can forecast |
Where this works — and where it doesn't
Every financing product is wrong for someone. Here is who this one is wrong for.
A good fit when
- The investment has a payback period measured in months or years, not days
- You want one predictable number in your monthly budget
- Your credit and time in business are reasonably strong
- You are consolidating more expensive short-term debt
- You can wait several days for funding
Look elsewhere if
- You need the money in under 48 hours
- Time in business is under a year — approval odds drop sharply
- Revenue is highly seasonal and a fixed monthly payment would strain slow months
- You only need the money intermittently — a line of credit avoids paying for idle funds
- The amount is small and short-term; the paperwork may not be worth it
What it takes to qualify
How this is priced
A straightforward annual interest rate
Term loans are amortized: each payment covers accrued interest plus a slice of principal. Early payments are mostly interest, later ones mostly principal — the standard structure you would recognize from any bank loan.
Rates depend on credit profile, time in business, revenue and term length. Stronger files land near the bottom of the range; thinner files land higher or get routed to a shorter term. Origination fees, where they apply, are disclosed up front and deducted from funding.
There is no prepayment penalty. Pay it off in month four of a thirty-six month loan and you stop paying interest from that point. Not every funder works that way — check before you sign anywhere.
Business Term Loan FAQ
Usually a great deal. A term loan is priced as an annualized rate on a declining balance; an advance charges a fixed total on the full amount regardless of how fast you repay. For the same dollars over the same period, the term loan is typically the lower-cost option by a wide margin. Ask your advisor to put both offers side by side in dollars.
Three months of business bank statements and the application to start. Requests above roughly $250,000 generally also need year-to-date financials, your most recent business tax return and a debt schedule. Your advisor tells you exactly what is required before asking for anything.
It depends on size and profile. Many term loans under $250,000 are unsecured beyond a personal guarantee and a UCC-1 filing on general business assets. Larger loans may require specific collateral. This will be explicit in your offer, not buried.
Yes, and it is one of the better reasons to take one. Consolidating a daily-debit advance into a monthly term payment often frees meaningful cash flow immediately. Bring your current payoff letter to the call so your advisor can model it.
A decision usually comes within one business day of a complete file. Funding typically follows within two to seven business days, depending on size and whether collateral needs to be documented.
Compare other options
One application puts all six in front of you.
Find out what term you qualify for
One application, a decision in as little as four hours, and no impact on your credit score.