Best Long-Term Business Loans
Long-term business loans generally offer financing with repayment terms extending anywhere from five to 25 years.
| Lender | Starting rate | Amount | Term | Time in business | |
|---|---|---|---|---|---|
|
22.45% (suffix) |
$25k – $500k |
6 – 60 months | 24 months |
Long-term business loan lenders at a glance
Best for: Long-term business loan with fast funding – iBusiness Funding
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- Funding available in as little as two business days
- Lower starting interest rate
- Provides dedicated account manager
- Lower maximum loan amount
- Longer time in business requirement
- Doesn’t disclose annual revenue requirement
iBusiness Funding’s standout benefit is its fast funding. Borrowers can receive financing in as little as two business days. In addition, the lender provides every applicant with a dedicated account manager, who can answer your questions and assist you through the application process.
Yet, it has a longer time-in-business requirement than some other lenders on this list and it doesn’t disclose its annual revenue requirements, which means it may not be a good fit for some borrowers. Not to mention that its maximum loan amount is much lower than some of our other lender picks, and it requires a blanket lien.
Read our full iBusiness Funding business loan review.
What is a long-term business loan?
As the name suggests, long-term business loans are generally small business loans that offer longer than usual repayment terms. Typically, these loan terms can extend anywhere from five to 25 years. The major benefit of a long-term loan is that your monthly payment will be lower and you’ll be given more time to pay off your purchase. But, in exchange, you’ll likely pay more in interest charges over time.
How to get a long-term business loan
Applying for a business loan doesn’t have to be overly complicated. Usually, this process can be completed in just a few simple steps.
1. Figure out how much financing you need: Before filling out a loan application, take some time to consider how you’ll be using the funds and how much financing you’ll need. Consider using a business loan calculator to get a sense of what your monthly payment could look like with a variety of different loan amounts. Then, choose an amount that is well suited to both your business needs and your budget.
2. Evaluate your eligibility: Once you know how much you need to borrow, it’s a good idea to research common business loan requirements. Typically, lenders evaluate borrowers on criteria such as how long they’ve been in business, the business’s total annual revenue and their personal and business credit scores.
3. Shop around for a loan: Some lenders offer the opportunity to prequalify for a loan, which shows you your loan terms before you submit a formal loan application. Do your due diligence by reading lender reviews and gathering multiple loan offers before committing to compare rates. Taking this step can help you secure the best loan terms for you and may even help you save money over the life of the loan.
4. Apply for a loan: After you’ve settled on the best small business lender for you, it’ll be time to submit a loan application. Typically, you’ll be able to fill out your application online or over the phone. However, as part of the review process, you may be asked to submit some supplemental documentation, such as a business plan or business tax returns.
Also known as a Uniform Commercial Code 1 (UCC-1) filing, a blanket lien is a public, itemized listing of the assets that are being used to secure your financing. This filing gives the lender the right to repossess those assets if you stop making payments on your loan.
Typically, blanket liens cover all of a business’s assets, including real estate, equipment, vehicles, inventory, cash and intellectual property. They also apply to future assets as well as current ones.
Having a blanket lien in place can make it very difficult to be approved for new financing in the future, including things like equipment loans and commercial auto financing. You may also need your lender’s permission to sell your old equipment.
Not all lenders use blanket liens. Before choosing a lender, consider whether you’re likely to need any additional financing in the future.
How to compare long-term business loans
Once you have a few small business loan offers in hand, make sure you’re using similar metrics to compare them against one another. Here’s a look at what to consider:
Interest rate
Interest rates on business loans can be fixed or variable, depending on the lender. In some cases, the lender may charge a factor rate instead of simple interest.
Repayment term
In addition to long-term business loans, there are also short-term business loans. While long-term loans can help you lower your monthly payment, short-term loans are often more expensive on a monthly basis. However, the latter has the added benefit of allowing you to pay off your loan faster.
Funding time
Some business loan lenders are able to offer same-day funding, but not all have this capability. It can take other lenders several days to fund your loan.
Added fees
Added fees like origination fees and prepayment penalties can add up. Be sure to ask what fees the lender charges ahead of time so that there are no surprises when you’re ready to close on your loan.
Lender perks
Sometimes lenders may offer additional perks, like pairing you with an account manager or providing business coaching. If these benefits matter to you, factor them into your lending decision.
Even a one-point difference in an interest rate can make a huge impact on how much you’ll pay.
For example, if you take out a $50,000 business loan with a 10-year repayment term, a 14% interest rate will cost you $31 less each month and $3,642 less over the life of the loan than a 15% interest rate.
Plus, if you can afford to put some extra money toward your loan each month, you’ll be able to pay it off much faster and save even more. For this example, if you put that additional $31 a month towards the 14% loan, you’d pay it off 9 months early and save an additional $3,921.
All numbers are rounded to the nearest dollar.
| 15% interest rate | 14% interest rate | 14% interest rate with additional payments | |
|---|---|---|---|
| Monthly payment | $807 | $776 | $807 |
| Total interest charges | $46,802 | $43,160 | $39,239 |
| Total repayment | $96,802 | $93,160 | $89,239 |
| Time to pay off loan | 10 years | 10 years | 9 years and 3 months |
Pros and cons of long-term business loans
PROS
- Unlike short-term business loans, long-term loans tend to have monthly repayment schedules, which can be easy to budget around.
- The required payments on long-term loans tend to be smaller than short-term loans.
- Choosing a term loan can help you build credit over time.
CONS
- You’ll likely pay more interest over the life of the loan than you would on a loan with a shorter repayment term.
- Due to their length, the eligibility requirements for long-term loans may be more stringent than other types of business funding.
- The funding times on long-term loans may be longer than with other forms of lending.
Alternatives to long-term business loans
If you don’t think a long-term business loan will be the right fit for you, think about using one of these alternative options instead.
Short-term business loans
As you might be able to guess, short-term business loans have shorter repayment terms than long-term business loans. Typically, their repayment windows span anywhere between four and 24 months.
In addition to paying off the loan faster, you’ll likely face a higher repayment amount than you would with a long-term loan and you’ll probably be expected to make daily or weekly payments on the balance, rather than a monthly one.
Business line of credit
A business line of credit works more like a credit card than a traditional term loan. With this type of financing, you’re able to borrow funds as needed, up to a preset limit. Once you pay down your balance, you can borrow against the limit again. Additionally, lines of credit only charge interest on the amount that you’ve borrowed.
In contrast, with a term loan, you’ll likely have a fixed, monthly payment that repays a portion of both the principal and interest on the loan. You’ll receive the funds in one lump sum and will owe interest on the whole amount from the beginning of the loan term.
Equipment financing
If you’re financing a specific asset, like equipment, vehicles or machinery, you may want to consider equipment financing. This is a specific type of asset-based financing that uses the asset you’re purchasing as collateral to secure the loan.
Frequently asked questions
Yes, the SBA offers loan terms ranging from 10 to 25 years. The 10-year loan term is more commonly seen when financing working capital expenses while the 25-year loan term is typically reserved for fixed assets, like real estate.
The biggest benefit of long-term loans is that they can help you keep your monthly payment amount low by allowing you to spread the cost out over time. This can be especially helpful when you need to purchase expensive assets, like property, vehicles or machinery.
Our methodology: How we chose the best long-term business loans
We reviewed more than 14 lenders to determine the overall best seven long-term business loans. To make our list, lenders must meet the following criteria:
- Available loan terms of five years or more
- Minimum time in business of two years or less
- Minimum credit score below 700
- Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
- Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide unique perks to customers, like a dedicated account representative or free business coaching.
Best long-term business loans summary
- SBA 7(a) loan: Best overall long-term business loan
- SBA CDC/504 loan: Best long-term commercial real estate loan
- Bank: Best secured long-term business loan
- iBusiness Funding: Best long-term business loan with fast funding
- : Best long-term business loan with prequalification
- : Best long-term loan for minority-run businesses
- : Best long-term loan for established businesses