Are you planning to expand your small business in the near future? Along with the excitement that comes with a business expansion, are the costs and burdens most owners experience. Expanding your business isn’t easy on the wallet, but fortunately, there are long term loans examples that can help you cover the costs of expansion.
5 Long Term Loans Examples
Long-term business loans typically provide a large amount of money upfront that is often paid back regularly – can be weekly, monthly or quarterly, depending on the lender – over a number of years. This type of loan is best for businesses looking to invest in long-term growth like buying real estate, purchasing equipment, or expanding office space.
Here are five types of business loans you can consider when looking to secure long-term financing:
1. Small Business Association (SBA) Loans
The SBA 7(a) and the CDC/504 loans are perfect for small businesses looking to buy new equipment, purchase real estate, or renovate property. This type of long-term loan has repayment terms that can last up to 25 years, depending on the amount that is borrowed. The loan amounts available range from $100,000 to $5 million with interest rates that generally range from 5.25% to 7.75%.
2. Business Line of Credit
With a business line of credit, lenders assign you a credit limit which you are free to make withdrawals on whenever you need to. You only have to repay for the money you’ve withdrawn plus the interest. As you repay your loan regularly – either weekly or monthly – you’ll be able to withdraw from your line of credit again.
With a business line of credit, loan amounts range from $10,000 to $5 million and interest rates are usually between 5.25% to 29.99%.
3. Equipment Financing
With equipment financing, lenders provide you with the money you need to buy or upgrade equipment. Repayment terms are usually made through affordable scheduled payments. This means you won’t have to pay for the equipment out-of-pocket and the purchased equipment serves as collateral for your loan.
The loan amounts range from $25,000 to $5 million and interest rates run from 5.25% to 24.99%.
4. Multi-Year Term Loan
A multi-year term loan has a repayment schedule of two to five years. In addition to covering the costs of business expansion, a multi-year term loan provides you with sufficient cash flow for daily business operations, and comes with low monthly payments.
The loan amounts range from $25,000 to $5 million and interest rates range from 5.99% to 18.99%.
5. Asset Based Loan
As its name implies, an asset-based loan is a type of financing secured by business assets. Most lenders regard collateral such as inventory, real estate, equipment, accounts receivable, marketable securities, and intellectual property (accounts receivable and inventory being the most important) as acceptable assets that can secure this type of loan
The loan amounts range from $25,000 to $10 million and interest rates are usually set at 7% to 12%.
Are you interested in applying for a long-term loan? The above examples are sure to address the needs of your business. Talk to one of our finance experts today.
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