When you think easy money, the words “long-term business loan” don’t leap to mind. That’s because this type of financing has more stringent qualifications than its short-term alternative.
But long-term business loans are the way to go when you have an extra-large expenditure, such as a major piece of equipment or real estate. With a longer repayment period comes lower monthly payments, making large investments easier to afford.
They are also a good option if you have an established business with strong finances. To qualify, you’ll need solid personal credit, strong annual revenue and cash flow, and depending on the lender, collateral.
Here are a few of the best lenders for long-term business loans and the qualifications for each.
SmartBiz offers the best long-term business loan if…
1) you have a strong business
2) you don’t mind paperwork
SmartBiz originates SBA loans that have a 10-year repayment term, which means monthly payments are much smaller than those of other loans. The loan amounts range from $30,000 to $350,000.
With an APR that ranges from 7% to 8%, SmartBiz’s business loans are also among the most affordable you’ll find, which makes them a great option for buying or renovating real estate, or refinancing high-cost debt. There’s no prepayment penalty for repaying the loan early.
Minimum qualifications:
- Your business needs to have been in operation for at least two years.
- You must have no outstanding tax liens, and no bankruptcies or foreclosures in the last three years
- You must have no recent charge-offs or settlements.
- You must be current on government-related loans.
Since SmartBiz takes a lien on your business’s assets and requires owners who own more than 20% of their business to sign a personal guarantee, this could make you personally liable for repaying the debt. Because these loans are backed by the U.S. Small Business Administration, more paperwork is required.
Although SmartBiz doesn’t have minimum revenue or credit score requirements, the typical SmartBiz borrower has an average annual revenue of $1 million and an average personal credit score of 705. Below are the average stats for a SmartBiz borrower.
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Typical borrower profile
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Learn More
Apply on SmartBiz’s secure site |
Lending Club offers the best long-term business loan if …
1) You have a good personal credit score
2) You have at least $75,000 in annual revenue
Lending Club provides term loans that range from $5,000 to $300,000, and must be repaid monthly over a period of one to five years. With a long repayment time frame, it’s a good option for a business expansion, such as purchasing new equipment or opening a new location.
While the APR on a loan can be as low as 8%, it can reach 32%, depending on your personal and business credit profiles. Lending Club loans do not carry a prepayment penalty.
Minimum qualifications:
- You must have been in business for at least two years.
- You must have no recent bankruptcies or tax liens.
- You must have a minimum annual revenue of $75,000 and own at least 20% of the business.
- You must have a personal credit score of at least 600.
If your loan is over $100,000, Lending Club files a lien on business assets, which gives it the right to seize those assets if you default on the loan. You must sign a personal guarantee for loans of less than $100,000, which makes you personally responsible for paying the debt if your business can’t cover it.
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Typical borrower profile
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Learn More
Apply on Lending Club’s secure site |
Funding Circle offers the best long-term business loan if …
1) Your business is profitable
2) You have at least $150,000 in annual revenue
Businesses that need more than $300,000 can turn to Funding Circle, which provides loans of up to $500,000 that must be repaid monthly over a period of one to five years. The APR on Funding Circle’s loans can range from 7% to 26%, which compares favorably with Lending Club’s. The lender also doesn’t charge a prepayment penalty if you choose to repay the loan early.
Minimum qualifications:
- Your business must be profitable for at least one of the last two years.
- You must have no bankruptcies in the last seven years.
- You must make a minimum annual revenue of $150,000 — double Lending Club’s minimum requirement.
- You need a personal credit score of at least 620.
Qualifying may be a little difficult if you own a small business. See the box below for a profile of the average stats for a Funding Circle borrower.
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Typical borrower profile
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Learn More
Apply on Funding Circle’s secure site |
The bottom line: Long-term business loans
Long-term business loans can give you the cash you need to invest in your company’s future. Before choosing a loan, carefully compare the qualifications required by each lender, APRs, length of the repayment term, and whether there is a prepayment penalty.
Find and compare small-business loans
NerdWallet has created a comparison tool of the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.
Steve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: Steven.N@nerdwallet.com. Twitter: @StevenNicastro.
To get more information about funding options and compare them for your small business, visit NerdWallet’s small-business loans tool. For free, personalized answers to questions about financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.
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