Understanding Small Business Loan Term Lengths

1. Understanding Small Business Loan Term Lengths

2. Short-Term Loans Short-term loans (<1 year) are suitable for borrowers who have expenses with a limited time horizon. These loans are often funded with less extensive paperwork, and you can gain access to the funds quickly, sometimes within days. The loan amount can vary based on the terms.

3. The Advantages of Using a Short-Term Loan

4. Other Types of Business Loans Short-Term Bridge Loan Short-term bridge loans can help you get fast access to cash for your small business. The term bridge refers to bridging a gap between business needs and when cash flows will satisfy the need and pay off the debt.

5. Invoice Financing Invoice financing, sometimes called invoice factoring, is another type of short-term loan where a small business is advanced money by a lender before accounts receivable are collected. Business Credit Card Business credit cards are another type of financing that may appeal to small business owners. Similar to personal credit cards, business credit cards offer revolving credit and charge no interest if the balance is paid in full every month .

6. When To Consider A Longer Business Loan Term Length Small businesses often choose medium business term loans for expenses such as ordering inventory for a full year, opening a new branch or storefront, standing up a new team quickly or purchasing computer systems for your sales team. The loan repayment period is typically once or twice a month. Interest rates may range from single digits as far north as 30%+. Medium-term loans may also impose prepayment penalties.

7. Companies typically take out long-term loans for major construction initiatives, equipment financing, buying other companies, or investing in major machinery that allows their business to run. These loans may require extensive detailed applications, a minimum credit score, large down payments, and collateral.

8. Why Choose Biz2Credit?

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