Business Term Loan

Business term loans are a common financing option that small businesses use to fund large expenses while keeping cash flow stable. One of their advantages is a fixed repayment schedule. With fixed daily, weekly or monthly payments businesses can easily forecast expenses and manage debt.

Businesses often use term loans to cover the cost of essential needs such as purchasing equipment, expanding operations or covering cash flow gaps. For example, in the construction industry, term loans can help fund the purchase of new machinery or bridge cash flow gaps during slower building seasons. Landscaping businesses often use term loans to invest in tools and supplies in preparation for the busy season. In healthcare, term loans can support the purchase of advanced medical equipment or help manage operational costs.

The flexibility of a small business term loan allows it to address industry-specific needs and helps businesses plan for growth and stability.

Term loans can help borrowers with a number of business needs. A few examples of the uses for term loans include:

Expansion. Small business term loans can be used to fund the renovation of your current space or the opening of a new location. This can help you grow your business without putting too much strain on your operating budget.

Cash flow. Things like seasonal shifts and unexpected business expenses can cause cash flow issues. A cash flow loan can help you navigate gaps and take care of your business needs.

Equipment. Equipment loans can help you purchase expensive hardware for your business, whether its heavy machinery for construction or upgraded tech for your office.

Inventory. Inventory loans can provide you with the capital to purchase inventory in bulk. This can help you maximize your savings when you take advantage of the bulk discounts some vendors offer.

The interest rates on term loans can vary depending on several factors. Different lenders will have different eligibility requirements, but in general they will try to assess the overall financial health and creditworthiness of your business before setting the loan terms.

Lenders will often look at things like your business or personal credit score, the amount you want to borrow, the length of the term and the overall health of your business finances to determine the interest rate on your term loan. Comparing offers from different lenders could help you find the most competitive rates.

Working capital loans are essentially a type of business term loan, the key difference comes down to how they’re used. Working capital loans are short-term loans used to cover daily operations or fix temporary cash flow gaps. They are typically unsecured loans and terms can be as short as a few months.

Business term loans are often for a larger sum of money and have longer terms. Business terms loans are often used to fund long-term investments like expanding your business or purchasing expensive equipment.

The “term” of a term loan refers to the length of the repayment period. They are commonly broken down into two types of loans — short-term and long-term.

Short-term loans. Short-term business loans can have a repayment period of up to two years. These can be great for smaller, immediate financial needs.

Long-term loans. These types of loans have repayment periods that last longer than two years. Some examples include small business administration, or SBA loans, and loans from traditional lenders like banks. Long-term loans can be good for long-term investments such as purchasing commercial real estate.

OnDeck offers loans with terms of up to two years, providing flexibility to small businesses to manage their cash flow, invest in growth or cover unexpected expenses.

Plus, if you find yourself in need of more cash, OnDeck makes refinancing easy. If you choose to refinance with OnDeck, we’ll waive the remaining unpaid interest on your loan, and you could qualify for a reduced origination fee.

Business line of credit. A business line of credit is a form of revolving credit. If approved, you’ll gain access to a credit limit you can draw from. As you repay, the funds become available to borrow again. Business term loans can help you manage cash flow and are good for ongoing expenses.

Business credit card. Business credit cards are another type of revolving credit. You’ll charge purchases to the card’s credit limit and as you pay the balance down, the credit limit becomes available for use again. They can help you manage smaller, day-to-day expenses.

Equipment financing. Equipment financing is a type of secured term loan used to purchase expensive equipment for your business. They work similarly to a term loan in that they provide a lump sum that you repay over time. However, since these loans are typically secured — the equipment often acts as the collateral.

Merchant cash advance. Merchant cash advances are not technically loans. Instead of borrowing money, you’ll sell a portion of your future revenues. The provider is essentially paying an upfront lump sum of cash for a portion of your future credit card sales.

Yes. If you qualify for our 100% prepayment benefit option, you can pay your loan off early in full and have all remaining interest waived without any penalty or fee.^‡ If you don’t qualify for the 100% prepayment benefit option, you’ll be responsible for repaying 75% of the remaining unpaid interest if you repay early.

Payments for OnDeck’s term loan are fixed, so you’ll pay the same amount from the beginning to the end of your repayment term. This allows you to manage your cash flow with no surprises or large costs upfront.