Top long-term business loans: Best options for April 2024
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Published 11:00 a.m. UTC March 26, 2024
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Long-term business loans can help business owners secure capital for significant investments, such as expansion, equipment purchases or even refinancing existing debts. These loans generally offer repayment terms longer than two years, which can provide you with affordable monthly payments.
The best long-term business loans of 2024 not only come with these lengthy terms but also a variety of loan amounts, lenient credit score requirements and fast funding.
Best long-term business loans
- National Funding equipment financing: Best for fair credit.
- Kapitus business loan: Best for large loans.
- Rapid Finance business loan: Best for fast funding.
Compare the best long-term business loans
| Product type | Loan amounts | Repayment terms | Min. credit score | Time to fund (after approval) | |
|---|---|---|---|---|---|
National Funding
| Equipment financing
| Up to $150,000
| 2 to 5 years
| 600
| Within 1 to 3 business days
|
Kapitus
| Term loan
| $10,000 to $5 million
| Up to 5 years
| 625
| As soon as the next business day
|
Rapid Finance
| Term loan
| $5,001 to $1 million
| 3 months to 5 years
| Does not disclose
| As soon as the next business day (or faster, in some cases)
|
Methodology
Our expert writers and editors have reviewed and researched multiple lenders to help you find the best long-term business loan. Out of all the lenders considered, the three that made our list excelled in areas across the following categories (with weightings): loan details (40%), loan cost (20%), eligibility and accessibility (15%), customer service (10%) and application process (15%).
Within each major category, we considered several characteristics, including maximum repayment terms, APR ranges, loan amounts, late fees and prepayment penalties. We also considered each lender’s minimum requirements for credit score, time in operation and annual revenue as well as funding time and customer experience.
Why some lenders didn’t make the cut
Of the business loan lenders that we reviewed, only a handful made the cut. This was mainly due to the majority of lenders having maximum terms of only two or fewer years. Some also didn’t receive high enough scores due to not publicly disclosing eligibility information, not disclosing funding speeds or having poor customer reviews.
What is a long-term business loan?
A long-term business loan is a type of term loan that provides a business with a lump sum of capital that can be repaid in installments over an extended period — typically three to 10 years, depending on the lender. This can be ideal for financing major investments, such as the purchase of real estate, the acquisition of another business or large capital projects.
These loans often come with fixed interest rates, which means your rate and payment will stay the same throughout the life of the loan. Another advantage is that by opting for a longer term, you can keep your payments lower and more affordable. However, this also means you’ll pay more in interest over time.
Current business loan rates
Business loan interest rates vary by lender as well as by the type of financing and the borrower’s qualifications. For example, traditional bank loans typically have lower interest rates than alternative lenders like online platforms or peer-to-peer (P2P) lending. As of Feb. 7, 2024, the average rates with private business loan lenders range from 8.49% to 36% for a business term loan, 8% to 60% for a business line of credit and 7.5% to 24% for equipment financing, according to Lendio.
Keep in mind that several factors can affect the rates you’re offered on business loans — including your personal and business credit, how long your business has been in operation and the amount of annual revenue it generates. Generally, you’ll need good credit to qualify for the best interest rates. While some lenders offer business loans for bad credit, these can come with higher interest rates and more fees compared to good credit loans.
Getting approved for a long-term business loan
While qualifications can vary by lender, here are some common requirements that you’ll typically need to meet for a long-term business loan:
- Personal and business credit: Lenders will generally consider your personal credit score when making an approval decision — especially if you have a newer business that hasn’t yet generated significant revenue. A good personal credit score is usually considered to be 670 or higher. A lender might also review your business credit history.
- Time in operation: Your business will typically need to have been in operation for at least six months to two years. This shows stability and a track record of success.
- Annual revenue: Lenders also want to see that your business has stable and consistent revenue streams. In general, lenders prefer an annual revenue of $100,000 to $250,000. They may also look at your profit margins and overall financial health.
- Collateral: Many traditional lenders require collateral to secure a business loan, such as equipment, real estate or other valuable business assets. There are also some lenders that offer unsecured business loans. However, because unsecured loans are riskier for lenders, they can come with more stringent requirements and higher interest rates. Also note that business loans often require a personal guarantee, which is an agreement that you’ll repay the loan with your personal assets if your business defaults.
- Business documentation: A lender might ask to see a solid business plan outlining your goals and your business’s financial statements. You’ll also need to specify how you plan to use the loan funds.
- Industry and market conditions: Lenders will generally consider your business’s size and industry as well as market conditions when reviewing your application. If your business operates in a high-risk industry or if the market is uncertain, you could have a harder time getting approved. Lenders also sometimes restrict the types of industries they’re willing to work with, so be sure to double-check before you apply.
Easier to qualify for newer businesses: Compare the top startup business loans
Credibly business loan
Choosing the best long-term business loan: How to compare
To choose the best long-term business loan for your needs, it’s crucial to carefully compare the available options. Here are some important points to keep in mind when weighing your loan choices:
- Interest rates: Your interest rate will play a major role in your overall borrowing costs. Also keep in mind that some business lenders charge factor rates instead of traditional interest — this is essentially a flat fee based on your original loan amount.
- Loan amounts: Business loans can range from as little as a few hundred dollars up to $5 million, depending on the lender. Be sure to borrow only what you need to keep your repayment costs manageable.
- Repayment terms: While most business loans have terms of two or fewer years, long-term business loans give you more time to repay your loan. Just keep in mind that the longer your term, the more you’ll pay in interest over time. In general, it’s best to choose the shortest term your business can afford to avoid excessive interest charges.
- Eligibility requirements: Remember that you’ll generally have to meet underwriting criteria for credit score, time in operation, annual revenue and more to get approved. However, exact requirements can vary by lender.
- Fees and penalties: Some lenders charge fees, such as origination fees and late fees. These can add to your overall costs.
- Collateral requirements: Consider whether a secured or unsecured loan will better suit your needs. If you opt for a secured loan, be prepared to offer business assets to act as collateral. Also remember that you’ll likely have to provide a personal guarantee.
- Funding speed: Some lenders offer faster processing times than others. If you need the funds right away, you’ll want to work with a lender that offers quick funding speeds.
How to apply for a long-term business loan
If you’re ready to apply for a long-term business loan, follow these steps:
1. Check your credit
Lenders will review your personal credit history (and business credit, in some cases) when you apply for a loan — so it’s a good idea to see where you stand before you apply. You can use a site like AnnualCreditReport.com to review your personal credit reports. To check your credit score, you can use an online credit-monitoring service or see if it’s available through your bank or credit card issuer.
Your business credit report is available through several third-party companies, including Dun & Bradstreet as well as the credit bureaus Experian and Equifax. However, accessing it might come with a fee, depending on the service you choose.
Tip: If you find any errors in your personal or business credit reports, report them to the appropriate credit bureau to potentially boost your credit score.
2. Evaluate your borrowing needs
Consider what type of expenses you need to cover to determine what type of business loan is right for you. For example, you might opt for a general term loan or equipment financing. Also estimate how much you need to borrow and what you can reasonably afford to repay.
Tip: Use our business loan calculator to see what will fit comfortably in your budget.
3. Compare lenders and pick a loan option
Before you apply, take the time to compare your options with as many business loan lenders as possible. This way, you can find the right long-term loan for your needs. Consider important factors like interest rates, loan amounts, fees and eligibility requirements when weighing your choices. After you’ve done your research, pick the loan option that works best for you.
Tip: Some lenders allow you to get pre-qualified with only a soft credit check that won’t hurt your credit score. This will give you an idea of what rates and terms you might get approved for if you apply.
4. Prepare your documentation
Gather all necessary documents, such as business and personal tax returns, financial statements, business licenses and a business plan.
5. Apply for financing
After you’ve gathered your documentation, you’ll need to submit a formal application. Depending on the lender, you might be able to complete the full application process online while other lenders require you to discuss your options with one of the company’s loan specialists.
6. Get your funds
If you’re approved, the lender will have you sign a loan agreement before the funds are disbursed. You might get your funds as soon as the same or next business day, depending on the lender.
Alternatives to a long-term business loan
While long-term business loans are a popular financing option for many businesses seeking stability and extended repayment periods, there are alternative financing solutions that could be more suitable depending on your business’s needs, financial health and growth stage. Some options to consider include:
- Business line of credit: If you prefer flexible access to a revolving credit line, a business line of credit could be a good choice. With this option, you can borrow as needed and will pay interest only on the amount you use.
- Short-term business loan: A short-term business loan will generally have a repayment term of two or fewer years. This can be ideal for businesses that need quick funding for immediate needs.
- SBA loan: The Small Business Administration (SBA) backs these loans, which in turn reduces the risk for lenders. Because of this, SBA loans can come with more competitive rates and terms compared to traditional business financing.
- Business credit card: If you need to cover small, routine expenses, a business credit card can be a good choice. Some cards also provide rewards and perks to help you build business credit. However, you can’t charge some types of business expenses, such as inventory and payroll.
- Invoice financing: With this option, you’ll sell your unpaid client invoices to a factoring company in return for a fee. The company will be responsible for collecting client payments for you, and you’ll get an advance on the amount you’re owed. While this can help with cash flow, you’ll lose some of your funds to the interest and fees charged by the factoring company.
- Personal loan for business use: A personal loan can be a viable option for sole proprietorships or startups without an established business credit history. Note that many personal loan lenders don’t allow their loans to be used for business purposes. However, others do, such as Upstart.
- Angel investors or venture capital: These funds are investments from individuals or firms in exchange for equity in the business. If you have a startup with high growth potential, working with an angel investor or venture capitalist could be worth pursuing.
Which is right for your business’s needs? Business loans vs. business lines of credit
Frequently asked questions (FAQs)
The longest term for a private business loan is generally 10 years — though maximum terms will vary depending on the lender. Government-backed SBA loans, on the other hand, sometimes come with longer terms, depending on the type of loan. For example, you could have up to 25 years to repay an SBA 7(a) loan for real estate.
Yes, it’s possible to get a business loan with a 10-year term. However, remember that terms vary by lender, and you might have to meet more stringent requirements to qualify for the longest terms.
While lenders generally don’t offer 30-year repayment terms on business loans, you might be able to negotiate a longer term with your lender if you’ve been approved. For a successful negotiation, you’ll likely need strong credit and a well-established business history. You might also need to offer collateral to secure a longer term. You might also have an easier time negotiating with a lender you’ve previously worked with, provided you were a good customer.
Interest rates on long-term business loans vary by lender. As of Feb. 7, 2024, the average rate for a business term loan ranges from 8.49% to 36%. Remember that your rate will also depend on your creditworthiness, market conditions and other factors.
The average term of an SBA loan varies by program. For example, SBA 7(a) loan terms extend up to 10 years for equipment, working capital or inventory, but they can range up to 25 years for real estate. SBA 504 loans are also available for up to 25 years.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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