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Here are 7 of the best long-term business loans
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
SBA 7(a) loan with Fundera by NerdWallet | Best for Repayment terms up to 25 years | $5,000,000 | 650 | with Fundera by NerdWallet |
Bank of America Business Advantage Unsecured Term Loan | 5.0/5 Best for Low interest rates | Undisclosed | 700 | Read Review |
Funding Circle - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Fast funding | $500,000 | 660 | with Fundera by NerdWallet |
SBA CDC/504 loan | Best for Financing commercial real estate | $5,000,000 | 680 | Read Review |
Accion Opportunity Fund - Small Business Working Capital Loan | 5.0/5 Best for Startups | $250,000 | 570 | Read Review |
SBA Microloan with Fundera by NerdWallet | Best for Bad credit | $50,000 | 620 | with Fundera by NerdWallet |
JR Capital Equipment Financing with Fundera by NerdWallet | 4.0/5 Best for Equipment financing | $10,000,000 | 620 | with Fundera by NerdWallet |
Here are 7 of the best long-term business loans
Best for Repayment terms up to 25 years
Best for Low interest rates
Best for Fast funding
Best for Financing commercial real estate
Best for Startups
Best for Bad credit
Best for Equipment financing
I'M INTERESTED IN:
Our pick for
Repayment terms up to 25 years
SBA 7(a) loans typically offer repayment periods of up to 10 years, but can go up to 25 years when a portion of the loan is used for property improvements or purchases.
SBA 7(a) loan
Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Lowest interest rate
Max loan
$5,000,000
Min. Credit score
650
Apr range
11.50-15.00%
Our pick for
Low interest rates
Bank of America’s unsecured business loans have low interest rates and repayment terms up to five years. These loans don’t require collateral, but you’ll need to be an established business with good credit to qualify.
Bank of America Business Advantage Unsecured Term Loan
Max Loan Amount
Undisclosed
Min. credit score
700
Bank of America’s term loan offers competitive interest rates and flexible repayment terms — with no collateral required.
Max loan
Undisclosed
Min. Credit score
700
Our pick for
Fast funding
Business term loans offered by Funding Circle can be used for almost any purpose including purchasing inventory, covering payroll or financing expansion costs. You can receive funds in as little as two days.
Funding Circle - Online term loan
Max Loan Amount
$500,000
Min. credit score
660
Est. APR
15.22-45.00%
Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
May fund quickly
Max loan
$500,000
Min. Credit score
660
Apr range
15.22-45.00%
Our pick for
Financing commercial real estate
SBA 504 loans, available through community-based partners, are designed to finance large fixed assets including the purchase of real estate and buildings as well as improvements to existing facilities.
SBA CDC/504 loan
Max Loan Amount
$5,000,000
Min. credit score
680
Est. APR
5.00-7.00%
SBA 504 loans are designed to promote business growth and job creation through the purchase or upgrade of major fixed assets.
Max loan
$5,000,000
Min. Credit score
680
Apr range
5.00-7.00%
Our pick for
Startups
Accion Opportunity Fund offers business loans with terms up to five years. You may be able to qualify with just one year in business.
Accion Opportunity Fund - Small Business Working Capital Loan
Max Loan Amount
$250,000
Min. credit score
570
Est. APR
8.49-24.99%
Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.
Max loan
$250,000
Min. Credit score
570
Apr range
8.49-24.99%
Our pick for
Bad credit
SBA microloans can offer more flexible qualifications for borrowers because each intermediary lender determines its own lending and credit requirements. Repayment terms are available for up to seven years.
SBA Microloan
Max Loan Amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%
SBA microloans are small-sized loans funded by the U.S. Small Business Administration and issued through approved intermediaries, typically nonprofit and community lenders.
Max loan
$50,000
Min. Credit score
620
Apr range
8.00-13.00%
Our pick for
Equipment financing
With repayment terms up to six years, JR Capital allows established businesses to finance new and used equipment purchases.
JR Capital Equipment Financing
4.0
NerdWallet rating with Fundera by NerdWallet
Max Loan Amount
$10,000,000
Min. credit score
620
Est. APR
6.99-18.00%
JR Capital provides fast equipment loans and leases, specializing in trucks, trailers and heavy equipment.
4.0
NerdWallet rating Max loan
$10,000,000
Min. Credit score
620
Apr range
6.99-18.00%
with Fundera by NerdWallet
How to compare long-term business loans
The best long-term loan for your business will likely be the one with the most affordable rates you can qualify for that meets your needs. Here are some factors to consider as you compare loan options:
- Loan type. You should consider the types of business loans that a lender offers — and which type is best suited for your needs. If you’re looking to finance a car purchase, for example, you might look for a lender that offers dedicated business auto loans.
- Repayment terms. Some long-term business loans offer repayment terms up to 10 — or even 25 years. Although longer repayment terms will have smaller monthly payments, keep in mind that you’ll also pay more in interest over the total loan period.
- Interest rates. To get the most competitive business loan rates, it’s helpful to be an established company with good credit and strong finances. Online lenders may offer more flexible qualification requirements, but they typically charge higher rates. You’ll want to compare multiple options to find the lender that can offer you the lowest rates.
- Funding speed. Long-term business loans can be slower to fund, especially when issued by banks and SBA lenders. Online lenders can offer faster business loans with streamlined applications — but you might pay a little more in interest as a result.
- Customer service. Customer support options and additional perks vary from lender to lender. Credit unions, for example, are often well known for their personalized customer service. Nonprofit lenders, on the other hand, may be able to offer general business training in addition to financing support.
What is a long-term business loan?
A long-term business loan is one with a lengthy repayment period, often defined in years instead of months. The repayment period typically ranges from three to 10 years; although, some loans, like SBA loans, can have even longer terms of up to 25 years.
Long-term small-business loans can be a good option for purchasing real estate, financing equipment, purchasing company vehicles, renovating or expanding your business, hiring new employees, refinancing existing debt and more.
Long-term business loans vs. short-term business loans
Short-term business loans usually have repayment terms of 12 months or less — although they may extend to 24 or 36 months. Here’s an overview of the key differences between long-term and short-term business loans:
- Repayment schedule. Long-term business loans typically have monthly repayments, whereas short-term loans may require weekly or daily payments.
- Interest rates. Short-term business loans generally have higher annual percentage rates compared to long-term business loans — although the interest rate you receive will vary based on the lender and your business’s qualifications.
- Borrower requirements. Lenders often have stricter business loan requirements for longer-term funding; you may need strong annual revenue, multiple years in business and good personal credit to qualify. Short-term lenders are usually more lenient and may work with startups or borrowers with bad credit.
- Funding speed. Long-term financing can be slower to fund, especially with large business loans. Short-term loans, on the other hand, may fund in as little as 24 hours.
- Use cases: Whereas long-term loans are best used for large investments in your business growth or expansion, short-term loans are well suited for working capital needs and covering emergency expenses.
» MORE: Best working capital loans
How do long-term business loans work?
Long-term business loans provide borrowers with lump sums of capital. They are usually repaid on a monthly basis, with fixed, equal payments over the course of the term. Generally, this type of financing follows an amortization schedule, where you pay more toward interest at the beginning of the loan and more toward the principal at the end.
Depending on the loan product, you may have a choice between a fixed or variable interest rate. Long-term business loans are offered by banks, online lenders and credit unions, among other types of lenders.
Types of long-term business loans
Here are some of the most common types of long-term business loans:
SBA 7(a) and SBA 504 loans
These government-backed small-business loans typically have some of the lowest rates and the longest repayment terms in the market. To qualify for these long-term business loans, you work with banks and other lenders, approved by the U.S. Small Business Administration. The typical repayment period for SBA loans is up to 10 years, but you may receive up to 25 years for large fixed asset or real estate purchases.
SBA microloans
The SBA also offers microloans, which are distributed through nonprofit community institutions. These institutions often focus on working with underserved business owners, such as minority business owners and women business owners. SBA microloans have terms up to seven years — but they are only available in amounts up to $50,000, which may not be ideal for funding larger projects.
Bank and credit union business loans
Traditional lenders provide long-term business loans, often with repayment terms between five to seven years. Bank business loans used to purchase commercial real estate may have longer terms of up to 25 years, in some cases. Banks tend to offer lower interest rates than online lenders, but your exact rate will depend on your qualifications.
Aside from big banks, you can also apply for a long-term business loan at your community bank or credit union.
Online business loans
If you don't qualify for an SBA loan or bank loan — or you want funding faster — consider long-term business loans from online lenders, such as Funding Circle. This online lender offers repayment terms of up to 84 months.
Although online lenders tend to have less stringent requirements than traditional lenders, they typically charge higher interest rates and may offer smaller loan amounts.
Pros and cons of long-term business loans
Pros
May have low interest rates.
Fixed monthly payments over a longer period of time make cash flow easier to manage.
Can be used for a variety of business purposes.
Cons
Can be difficult to qualify; strong credit and revenue typically required.
May be slow to fund, with extensive documentation needed.
Often require physical collateral.
How to get a long-term business loan
You can follow these steps to get long-term financing for your small business.
1. Evaluate your financing needs
You’ll want to determine how much funding you need and why you need it. This will help you orient your loan search in the right direction. If you’re looking to purchase a truck for your business, for example, dedicated semi-truck financing might be the best option.
2. Review your qualifications
To qualify for a long-term business loan, you may need to meet strict eligibility requirements. Many lenders want to see at least two years in business, good credit and strong finances. You may also need to provide collateral.
If you have a lower credit score or less than one year in business, you might consider alternative options:
- Compare the best business loans for bad credit.
- Learn more about startup business loans.
3. Compare business lenders
Once you have an understanding of your financing needs and qualifications, you can start researching and comparing lenders. The best small-business lender will offer the product you need, has requirements you can meet and charges affordable interest rates.
🤓 Nerdy Tip
When comparing loan options, consider how the repayment term affects the overall loan cost. For example, let’s say you can get a $100,000 term loan with an APR of 10% and a term of 10 years. With this loan, you’d make monthly payments of approximately $1,322, for a total repayment of $158,581, which includes $58,581 in total interest.
If you repay this same loan over seven years, on the other hand, you’ll have a larger monthly payment (about $1,660), but you’ll save over $19,000 in interest. Your interest costs will be $39,450.08 for a total repayment of $139,450.08.
Use our business loan calculator to estimate a loan’s monthly payment and costs.
4. Gather your documentation and apply
The application process will vary based on your lender and loan type. Banks and credit unions may ask for extensive documentation and require you to visit a branch location to apply. Online lenders, on the other hand, typically offer streamlined applications with fewer documentation requirements.
In general, you may need to provide:
- Basic information about you and your business.
- Personal and business bank statements.
- Personal and business tax returns.
- Business financial statements.
- A description of your collateral, if necessary.
5. Sign your loan agreement and get funds
Once your application is approved, your lender will send you a business loan agreement to review and sign. You’ll want to read through the agreement carefully and ensure you understand all of the terms and conditions. If you have any questions or concerns, you should reach out to your lender directly for clarification.
After you’ve signed the agreement, your lender will typically transfer your funds directly into your business bank account. This process may take a few days, depending on your bank.
Frequently asked questions
Most long-term business loans have a maximum repayment term of 10 years. But some types of loans, like commercial real estate loans or construction equipment financing, may have longer terms. For instance, the maximum term for SBA loans used for commercial real estate purposes is 25 years.
Many lenders will require that you have strong personal credit in order to qualify for a long-term business loan. If you have bad credit, however, you may be able to access capital through an SBA microloan. These loans max out at $50,000 but are distributed through nonprofit organizations, which often have more flexible requirements and are willing to work with newer businesses or those with bad credit.
It depends on the interest rate and term length of your specific loan, but in general, the longer the loan term, the more interest you’ll pay over the life of the loan. Although you may pay less in total interest on a short-term loan, your monthly payment will typically be higher than with a long-term loan of the same amount.
Long-term business loans are often used when a business needs a lump sum of cash for expenditures such as the purchase of real estate or equipment, renovation of an existing business, business expansion or refinance of existing debt.
Last updated on July 23, 2024
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms.
- Flexible payment options.
- Fast funding times.
- Accessible customer service.
- Reporting of payments to business credit bureaus.
- Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.
Wondering if you qualify?
It���s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
Learn more