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Long-Term Business Loans: Best Options of December 2021

Long-term business loans provide financing with typical repayment terms from three to 10 years, and in some cases as long as 25 years.
Randa KrissNovember 2, 2021
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When your business is looking to expand or make a large investment, a long-term business loan is the way to go. Long-term business loans are available from banks and online lenders, with repayment terms from three to 10 years — and in some cases, as long as 25 years.
The benefits of long-term loans include more time to repay and lower monthly payments than you’ll find with short-term business loans. The challenge: It may be harder to qualify because you’ll likely need an established business and strong finances.
As with any small-business loan, always compare the costs and terms of each loan carefully.

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LenderBest ForEst. APRMin. Credit ScoreNext Steps

SBA 7(a) loan

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Best for Long-term business loans up to 25 years5.50-8.00%650
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SBA CDC/504 loans

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Best for Long-term business loans up to 25 years2.60-3.20%680
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Funding Circle - Online term loan

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Best for Long-term business loans up to 5 years12.18-36.00%660
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Credibility Capital - Online term loan

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Best for Long-term business loans up to 5 years6.99-24.99%650
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SBA Microloan

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Best for Long-term business loans for bad credit8.00-13.00%620
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Summary of Long-Term Business Loans: Best Options of December 2021

Our picks for

Long-term business loans up to 25 years

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SBA 7(a) loan

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Est. APR

5.50-8.00%

Min. Credit Score

650

7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.

Pros

  • Available as a term loan or line of credit.
  • Interest rates are capped.
  • Long repayment terms available.

Cons

  • Personal guarantee is required.
  • Collateral is typically required.
  • Longer processing times than online lenders.
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Qualifications:

  • Be a for-profit U.S. business.
  • Must first use alternative financial resources, including personal assets.
  • Financial qualifications determined by individual lender.
Lowest interest rate
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SBA CDC/504 loans

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Est. APR

2.60-3.20%

Min. Credit Score

680

You cannot put an SBA CDC/504 loan toward working capital, existing debt or a rental real estate investment.

Pros

  • Low down payment required.
  • Repayment terms of up to 20 years.
  • Competitive interest rates.

Cons

  • Personal guarantee is required.
  • Collateral is required.
  • Longer processing times than online lenders.
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Qualifications:

  • Be a for-profit U.S. business.
  • Net worth of less than $15 million.
  • Average net income of less than $5 million for the two years prior to your application.
  • Financial qualifications determined by individual lender.

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Long-term business loans up to 5 years

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Funding Circle - Online term loan

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Est. APR

12.18-36.00%

Min. Credit Score

660

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.

Pros

  • Cash can be available within 3 business days.
  • Competitive rates among online lenders.
  • No minimum revenue requirement.

Cons

  • Requires business lien and personal guarantee.
  • Not available in Nevada.
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Qualifications:

  • Minimum credit score: 660.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: None.
  • No bankruptices in the past 7 years.
May fund quickly
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Credibility Capital - Online term loan

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Est. APR

6.99-24.99%

Min. Credit Score

650

Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.

Pros

  • Competitive rates among online lenders.
  • No prepayment penalty.
  • Extra monthly payments can save interest cost.

Cons

  • Requires high minimum credit score and revenue.
  • Requires business lien and may require personal guarantee.
  • Not available in Nevada, North Dakota, South Dakota or Vermont.
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Qualifications:

  • Minimum credit score: 650.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $200,000.
  • No bankruptcies in the past 5 years.

Our pick for

Long-term business loans for bad credit

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SBA Microloan

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Est. APR

8.00-13.00%

Min. Credit Score

620

The average microloan is roughly $13,000 according to the Small Business Administration.

Pros

  • Less strict eligibility requirements than other government loans.
  • Available from nonprofit lenders.

Cons

  • Personal guarantee is required.
  • Collateral is typically required.
  • Small borrowing maximum.
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Qualifications:

  • Be a U.S. business.
  • Financial qualifications determined by individual lender.

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How long-term business loans work

Long-term business loans are lump sums of capital paid back over a set period of time — typically from three to 10 years. Some loans, like SBA loans, have even longer terms of up to 25 years.
Long-term loans 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.
Long-term small-business loans can make sense for purchasing equipment or real estate, renovating or expanding your business, hiring new employees, refinancing existing debt and more.

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. You work with U.S. Small Business Administration-approved banks and other lenders to qualify for these long-term business loans of up to $5 million. The typical repayment period is 10 years for SBA loans for working capital and equipment, and up to 25 years for large assets such as land and facilities.
How to qualify: SBA loan requirements typically include being in business for at least two years and having strong annual revenue. Generally, you'll also need a good personal credit score of 690 or higher (although some SBA lenders may have lower score requirements). In some cases, you may need to provide collateral.
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 six years and are typically easier to qualify for than other types of SBA loans — but they are only available in amounts up to $50,000, which may not be ideal for funding larger projects.

Bank loans

Traditional lenders provide long-term business loans with repayment terms from five to seven years. Banks offer low interest rates, averaging from 2.54% to 7.02% APR, according to a 2021 report from the Federal Reserve Bank of Kansas City; your exact rate will depend on your qualifications. Aside from big banks, you can also apply for a long-term bank loan at your community bank or credit union.
How to qualify: You typically need to be an established business with strong annual revenue and a good personal credit score (likely in the 700s or higher) to get a long-term business loan with a competitive rate. Banks also may require collateral.

Alternative business loans

If you don't qualify for an SBA loan or bank loan — or you want funding faster — consider long-term loans from alternative lenders, such as Funding Circle or Credibility Capital. Both online lenders offer repayment terms of up to five years.
How to qualify: Online lenders have less stringent requirements than banks. You may not need to meet a minimum annual revenue to qualify, and credit score requirements may not be as high. Some online lenders will require a personal guarantee, but won’t require that you put up physical collateral on the loan.

Long-term business loans vs. short-term business loans

Long-term business loans typically have repayment terms ranging from three to 10 years, whereas short-term business loans usually have repayment terms of one year or less.
Business loans with terms from one to three years are sometimes referred to as medium-term loans — however, there is no set industry standard for this terminology. In some cases, short-term loans encompass loans with terms up to three years.
The chart below highlights some of the important differences between long-term and short-term loans.
Long-term business loans
Short-term business loans
Term length
Typically three to 10 years; up to 25 years in some cases.
Typically one year or less; in some cases up to three years.
Repayment schedule
Usually monthly repayment.
Usually weekly or daily repayment.
Borrower requirements
Typically need strong annual revenue, multiple years in business and good personal credit to qualify.
Startups and business owners with bad credit may still be able to qualify.
Funding speed
Varies based on lender; bank and SBA loans are slow to fund, but online lenders can offer capital in a few days.
Some online lenders can provide funds in as little as 24 hours.
Best for
Purchasing equipment or real estate, renovating your business, expanding to a new location, hiring employees, refinancing existing debt.
Working capital, emergency expenses, making payroll, bridging cash flow gaps, purchasing inventory, taking advantage of a new opportunity.
In addition, short-term business loans generally have higher APRs compared to long-term business loans — although the interest rate you receive will vary based on the lender and your business’s qualifications.

Cost of long-term loans vs. short-term loans

With a long-term business loan, you’ll have smaller monthly payments spread out over a longer period of time. With short-term business loans, you’ll usually have larger payments that you need to make more quickly — especially if your repayment schedule is daily or weekly.
Here’s an example of how the repayment costs break down:
Let’s say you have 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 roughly $1,322, for a total repayment of $158,581, which includes $58,581 in total interest.
The same loan paid over a two-year term, on the other hand, would require weekly payments of $1,062 ($4,248 per month), for a total repayment of $110,429, which includes $10,429 in total interest.
Although you’d be paying less in total interest on the short-term loan, the amount you’d pay each month would be more than three times higher than with the long-term loan.
Use NerdWallet’s business loan calculator to figure out your loan’s monthly payment and costs.

Compare more small-business loans

Compare loan options with NerdWallet’s list of small-business loans that are best for business owners. All of our recommendations are based on the lender’s market scope and track record and on the needs of business owners, as well as rates and other factors, so you can make the right financing decision.
Last updated on November 2, 2021

To recap our selections...

Long-Term Business Loans: Best Options of December 2021

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