Best Long-Term Business Loans

A closer look at the best long-term business loans

How to compare long-term business loans

The best long-term loan for your business is the one with the most affordable rates you can qualify for and 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 may 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 may 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

Not sure if you need a long-term loan or if a short-term business loan will suffice? Here are the key differences:

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, 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 loans

These government-backed small-business loans typically have some of the lowest rates and the longest repayment terms in the market (up to 25 years, for some of them). To qualify for an SBA 7(a) or 504 loan, you work with banks and other lenders, approved by the U.S. Small Business Administration.

SBA microloans are distributed through nonprofit community institutions that work with underserved business owners, such as minority business owners and women business owners. They have terms up to seven years but are only available in amounts up to $50,000.

» MORE: Compare the best SBA and nonprofit microlenders

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 offer some of the lowest interest rates on the market, but your exact rate will depend on your qualifications. You can also apply for a long-term business loan at a local community bank or credit union.

Online business loans

If you need fast funding — or can’t qualify for an SBA or bank loan — consider a long-term business loan from an online lender. iBusiness Funding (formerly Funding Circle), for example, 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.

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 may be the best option.

2. Review your qualifications

To qualify for a long-term business loan, you may need to meet strict 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, consider some 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 offers the product you need, has requirements you can meet and charges affordable interest rates.

When comparing loan options, consider how the length of the repayment term affects the overall loan cost.

Say, for example, you get a $100,000 term loan with an APR of 10% and a term of 10 years. With this loan, you’ll make monthly payments of approximately $1,322, for a total repayment of $158,581, including $58,581 in interest.

But if you repay this same loan over seven years, you’ll have a larger monthly payment (about $1,660); however, you’ll save over $19,000 in interest costs over the life of the loan. Your total interest costs would be $39,450 for a total repayment of $139,450.

4. Gather your documents 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.

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.

» MORE: How to apply for and get a business loan

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.

To come up with our list of the best long-term business loans, we selected lenders with term lengths of 5 years or more and strong NerdWallet star ratings.

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.