Long-Term Business Loans: Financing for Growth

Types of long-term business loans

SBA loans: The government-backed small-business loans typically have 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 up to $5 million. 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.

• Best for: Financing an expansion, renovating real estate or consolidating debt.
• How to qualify: You'll typically need to have been in business for at least two years and have strong annual revenue. You'll also need a good personal credit score of 600 or higher. In some cases, you may need to provide collateral.

Bank loans: Traditional lenders provide long-term business loans with repayment terms between five to seven years. Interest rates range based on your qualifications. Besides big banks, you can apply for a long-term bank loan at your community bank or credit union.

• Best for: Expansion, equipment.
• How to qualify: You typically need to be an established business with strong annual revenue and personal credit score 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 a SBA or bank loan, or you want funding faster, consider loans from alternative lenders, such as Funding Circle or Currency. Both online lenders provide repayments terms up to five years.

• Best for: Expansion, equipment.
• How to qualify: Online lenders have less stringent requirements than banks. Some don't require a minimum annual revenue, while others require a year or less in business.

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

One major difference between a long-term business loan and a short-term business loan is monthly repayment costs.

For example, a $100,000 term loan with an 10% annual percentage rate would require monthly payments of $1,322 over 10 years, while the same loan with a five-year term would require monthly payments of $2,125. Figure out your loan’s monthly payment and costs by using NerdWallet’s business loan calculator.

Compare more 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.