Term Loans

Does your business already have an outstanding SBA or bank loan
but still needs to make a significant investment?

Term loans are offered by banks and alternative lenders and they are likely your best additional option. Here are some different types: 

Bank loans. Commercial loans are generally used to finance business purchases, such as:

  • Equipment
  • Expansion or renovation
  • Real estate purchase or refinance

Banks carry stricter requirements – such as a minimum time in business, high credit score, collateral requirements and solid and consistent profit & loss statements.  Banks typically want to be in 1st or 2nd position.  They are competitively priced ranging from 6 to 13 percent, depending on the size and risk factor.  These interest rates are almost always less than alternative term loans.  The term can range from 2 years to 30 years.

An alternative term loan is usually more flexible than a bank loan.  It is designed for businesses that would otherwise not be eligible for a regular bank or SBA loan.  It’s also used as an add-on to SBA and bank loans.  Let us explain.

In a rising rate environment, a refinance of all your debt may not be appropriate if it means your interest rate will increase significantly for the total balance of debt outstanding.

For example, if your business has a balance of $1,000,000 at 7% fixed, and you’re in need of $200,000 additional capital, it doesn’t make sense to refinance the entire balance and provide you with a rate of 13% for $1,000,000.  Instead, it may make more sense to obtain an alternative loan for $200,000 at 20%.

Some types of alternative loans are: 

  1. Working capital loan
  2. Inventory loans
  3. Expansion loans
  4. Equipment loans
  5. Hard money loans

Rates can range from 12-70+% per annum.

Secured vs. Unsecured.  The main difference between a secured and an unsecured loan is that the secured loan requires collateral.  Secured loans are usually backed by an asset, such as a commercial building or land, and gives the lender the right to repossess the asset should the borrower default on the loan.  Repayment terms are usually more generous for secured loans because they are backed by an asset.

The loan processes vary from lender to lender, and secured vs. unsecured.  The standard loan process includes:

  • Application
  • Interview process
  • Review of financial documents (bank statements, tax returns, profit & loss, balance sheet, aging account receivables and account payables, company history, management structure, etc.)
  • Appraisal of asset(s) – if secured
  • Order title search of asset(s) – if secured
  • Background check of guarantor and business
  • May require an in-person visit
  • Other requirements set forth by each lender

There are pros and cons to all lending options that small business owners should consider in order to come to an informed financial decision that will affect their business. 

There are so many variables to consider before entering into any of these types of loan instruments. Why do a cash advance when you can qualify for something that is longer term AND cheaper? Talk to us first. Our Term Loan rates are extremely competitive.

Calculate Your Loan


(If you qualify, have a true emergency AND have considered all the other options available…our merchant cash advance rates are the most competitive in the industry.)