Spokane Business Term Loan
When considering a loan, business term loans are among the most attractive options for businesses. Some of the main factors for a decision like this include the amount you need to borrow, the reasons for your business financing, and how much you can afford to repay.
A business term loan in Spokane can be a much more affordable option compared to other choices that businesses usually make. The main benefits are the fixed and predictable monthly repayments that allow business owners to plan with confidence, as well as the absence of fees if the loan is repaid at once.
Applying is free and will not affect your credit score.
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What is a business term loan?
By definition, a business term loan is a lump sum of capital that you need to pay back with a specified repayment schedule. The sum also comes with a full repayment schedule and fixed or adjustable principal and interest rates, along with a “factor rate” which is the fixed cost.
A business term loan may vary in duration, and typically goes from 6 to 12 months (short-term loan), 12 to 24 months (intermediate or medium), or 3 to 25 years (long-term loan). Payments are either made monthly, bi-monthly, weekly, or in some cases daily. A business term loan can help your company if you want to:
- Raise capital to invest in technology
- Expand your infrastructure
- Fund a large project
- Cover long-term work orders that require a lot of capital for supply/inventory
- Renovate your facilities
- Invest in equipment or machinery
To choose the right business term loan, you need to ask yourself what is the purpose of the loan and how will that type of financing benefit your company. You can also consult with
our expert advisors at Business Loan Spokane and discover the right type of loan for your needs, whether it be a line of credit, a term loan, a commercial property loan, inventory financing and many more.
Short-term and Long-term Business Loans
If you are researching business term loans, you will find a few different financing options. Short-term and long-term loans are one of the variations that were designed based on the length of the terms a loan is repaid. However, there are also many other differences between them, including their eligibility requirements, loan amounts, and interest rates.
When applying for a short-term loan, your credit history is important. If you have a poor credit rating, you might find that fewer options are available and face higher interest charges. Businesses seek short-term loans as a type of corporate financing when they need quick cash to meet expenses over a short period of time. Despite the higher interest rates than standard loans, short-term loans are a quick solution for businesses with good credit profiles.
On the other hand, long-term loans are what most consider a regular loan type. They offer lower interest rates, higher amounts, and more time to pay back the loan amount. Still, they commit the business to a debt for a longer period of time, and often increase the overall amount you have to repay.
Key Differences
1. Loan Amount
As you probably know, one of the most obvious differentiators between short-term and long-term loans is the actual loan amount. In other words, the exact amount of capital that a lender will offer is different in both term loan types.
The loan amount is based on the borrower’s business loan application, and each lender has different caps on their loan products. Generally speaking, loans look like this:
- Short-term loans: $2,500 to $250,000
- Medium-term loans: $5,000 to $300,000
- Long-term loans: $5,000 to $500,000
- SBA 7(a) loans: Up to $5 million, however the average loan amount for SBA loans has stayed close to $500,000
2. Repayment Period
Another basic and obvious differentiator between these two is the period. Short-term loans carry a repayment period that can be anywhere from 3 to 18 months, while long-term loans need to be repaid in more than 2 years. However, the exact length of a long-term loan depends on the program, the lender, as well as the borrower and their application.
If you want a high-capital loan that you can repay shortly, a short-term loan is a more affordable, more accessible, and for many, more appropriate form of financing for your business. On the other hand, long-term loans are good because they can be repaid over a longer timeframe.
3. Collateral
Additionally, long-term loans often require collateral from the borrower. Whether it’s equipment, real estate, cash, or a blanket lien, these loans carry a risk which is why lenders are precautious and require collateral.
The only way to know which option is better in terms of collateral is by working with a loan specialist and determining your needs. Again, high capital amounts carry a higher risk, which is why they are associated with collateral.
Is A Long-Term Or A Short-Term Loan Right For You?
If you ask most borrowers on their preferred type of term loan, most of them would answer a long-term loan. The truth is, long-term loans are considered more desirable because of the longer repayment period, larger loan amount, and lower interest rates.
However, long-term loans are also tougher to qualify for compared to short-term ones. This means that most small businesses won’t be capable of repaying a loan amount that is too large. The best way to choose a business term loan in Spokane is by evaluating your needs and consulting with an expert. You also need to understand the true cost of your loan, either short or long term, and calculate your cost of debt.
Because of these reasons and many more, small businesses choose online lenders for their short and long term loan needs. If you are in a time crunch, getting a business term loan online can be a great choice. At Business Loans Spokane, we take pride in offering many flexible options for business term loans from $10,000 up to $250,000. Applying for a loan is easy – all you need to do is click the button below and fill out the application form.