What Are Typical Small-Business Loan Terms?

Repayment terms are just one of the factors borrowers should consider before applying for a small-business loan.
May 23, 2022

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Small-business loan terms determine how long a small-business owner has to pay back their borrowed money, plus interest. Typical loan terms, also referred to as repayment terms, can vary from a few months to 25 years — it depends on your lender and the type of business loan.

How Much Do You Need?

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You and your lender will establish a repayment schedule that shows how much you’ll pay per week or month. While reviewing repayment terms, consider eligibility requirements and annual percentage rates, which take into account interest rates and other fees associated with the loan.

Typical loan terms overview

Loan type

Repayment term

Best for

Term loans

Up to 10 years.

Business expansion.

Microloans

Up to six years.

Startups and businesses with smaller funding needs.

SBA loans

Up to 25 years.

Small businesses with good credit and available collateral.

Business lines of credit

Up to five years.

Short-term, flexible financing.

Invoice financing

A few months.

Cash advances based on unpaid invoices.

Equipment financing

Up to 10 years.

Equipment purchases.

Business loan repayment terms

Term loans: Up to 10 years

Small-business term loans provide a lump sum of cash upfront that borrowers pay back over time. Online lenders and traditional banks offer them, and maximum amounts range from $250,000 to $500,000. Term loans fall into either the short-term or long-term category — for example, a long-term loan may have a repayment term of 10 years while a short-term loan from an online lender might only give the borrower from three months to two years to pay it back.

Microloans: Up to six years

Nonprofit, community-driven lenders offer microloans to small-business owners in specific regions and underserved communities. While smaller loan amounts typically mean shorter repayment terms (and this is true for some microloans), SBA microloans have terms of up to six years.

SBA loans: Up to 10 years for working capital and fixed assets; up to 25 years for real estate

SBA loans range anywhere from thousands of dollars to $5 million and generally have low interest rates. The maximum 7(a) loan term for working capital is 10 years, although according to the SBA, seven years is common. Borrowers have up to 25 years to pay off loans used for real estate.

Business lines of credit: Up to five years

With a business line of credit, small businesses pay interest only on the money that they borrow, and funds can be available within days. Some business lines of credit require weekly repayments instead of monthly repayments.

Invoice financing: A few months

Invoice financing provides businesses with a cash advance while they wait on their unpaid invoices. Like a business line of credit, invoice financing is a quick way to access cash and is one of the shortest-term financing options available. Terms mostly depend on how long customers take to pay their invoices.

Equipment financing: Up to 10 years

Equipment financing is used to pay for large equipment purchases, and then that same equipment serves as collateral. Terms vary and usually depend on how long the equipment you’re financing is expected to last.

What is a loan maturity date?

A loan repayment term describes how much time you have to repay the loan, plus interest; you might also hear this referred to as loan maturity. This is not to be confused with the loan maturity date, which is the final day of your repayment term. On the loan maturity date, the entirety of the loan and any extra associated costs should be paid.

What is a prepayment penalty?

Some lenders charge borrowers a fee for paying off their loan ahead of schedule. Typically, this is to offset the lost interest the lender expected to receive over the full term of the loan. For example, SBA borrowers with a 15-year-plus loan term are penalized for prepaying 25% or more of the loan balance within the first three years of their loan term. Check your business loan agreement to see if your lender charges this type of fee.