6 Best Long-Term Business Loans For Small Businesses

Looking for a loan for your small business? These lenders offer term lengths of more than three years, plus low interest rates.

Shannon has been writing for Merchant Maverick about small business software and financing since 2015. She started writing professionally about business topics in 2005. Shannon has been featured in the Washington Post, Reader's Digest, US News, MSN, Yahoo Finance, Business Insider, and other publications. She has a bachelor's degree in English from San Diego State University and currently resides in San Diego, California.

• WRITTEN & RESEARCHED BY

  Shannon Vissers Shannon has been writing for Merchant Maverick about small business software and financing since 2015. She started writing professionally about business topics in 2005. Shannon has been featured in the Washington Post, Reader's Digest, US News, MSN, Yahoo Finance, Business Insider, and other publications. She has a bachelor's degree in English from San Diego State University and currently resides in San Diego, California.

  Senior Staff Writer



Jun 9, 2023

UPDATED

Long-term business loans are desirable to many business owners looking to finance a major expenditure. Long-term business loans can be used to expand business operations with a long-term investment, such as a new location, or to acquire an existing business. Though a long-term business loan gives you a longer period of time to repay your debt, an extended business loan term length also has its downsides.

Learn whether a long term loan is right for your needs and see the best long-term small business loan options currently available.

Learn More About Our Top Picks

Company	Term Length	Next StepsTerm Length
BusinessLoans.com Read More	Offers: Term loans Max. borrowing amount: $3 million Max term length: 5 years	Offers: Term loans Max. borrowing amount: $3 million Max term length: 5 years Visit Site Read More
Funding Circle Read More	Offers: Term loans & SBA 7(a) loans Max. borrowing amount: $500K Max term length: 10 years	Offers: Term loans & SBA 7(a) loans Max. borrowing amount: $500K Max term length: 10 years Apply Now Read More
Lendio Read More	Offers: Term loans, SBA loans, business acquisition loans Max. borrowing amount: $5 million Max term length: 30 years	Offers: Term loans, SBA loans, business acquisition loans Max. borrowing amount: $5 million Max term length: 30 years Apply Now Read More
SmartBiz Read More	Offers: Term loans, SBA loans, custom financing Max. borrowing amount: $350K Max term length: 10 years	Offers: Term loans, SBA loans, custom financing Max. borrowing amount: $350K Max term length: 10 years Apply Now Read More
Upstart Read More	Offers: Personal loans Max. borrowing amount: $50K Max term length: 5 years	Offers: Personal loans Max. borrowing amount: $50K Max term length: 5 years Apply Now Read More
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Live Oak Bank Read More	Offers: Term loans & SBA loans Max. borrowing amount: $15 million Max. term length: 25 years	Offers: Term loans & SBA loans Max. borrowing amount: $15 million Max. term length: 25 years Visit Site Read More
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Read more below to learn why we chose these options.

What Are Long Term Business Loans?

Long-term business loans are loans used to finance large, long-term business investments over many years. Term lengths for this type of business loan tend to range from 3 to 10 years—or up to 25 or 30 years for real estate business loans. Interest rates tend to be lower than those for short-term loans, though borrower requirements may be more stringent.

When To Use A Long Term Business Loan

You’re a business owner, and you’ve encountered a financial hurdle in the form of a large business expense. This expense could be completely unanticipated, such as the sudden breakdown of equipment, or it could be planned, such as a business expansion through improving your facilities, or purchasing commercial real estate.

No matter what it is, a big expense can be difficult to pay upfront. When it’s an unexpected or emergency expense, the situation can be even worse. However, many smart business owners have found a solution for these large expenses: long-term business loans.

If spreading out the cost of a major expense or investment over a longer period sounds appealing to you, this financing option may be the right choice for your business.

You can also use a long-term loan to buy a business.

3 Types Of Long-Term Business Lenders

Most business owners turn to three main sources for their long-term financing needs: Small Business Administration lenders, banks and credit unions, and alternative/online lenders.

SBA Lenders

The SBA offers several long-term loan programs. The most popular is the 7(a) program, which offers up to $5 million for almost any purpose with a maximum repayment term of 10 years. Falling under the 7(a) umbrella is the Community Advantage Loan which offers the same competitive rates and terms for businesses in underserved communities, while the Veterans Advantage program offers long-term loan options for military veterans and service members.

The SBA Microloans program is another option for smaller financing needs. These loans provide up to $50,000 that can be repaid over a maximum term of six years.

For businesses that want to improve their facilities or purchase real estate, 504 loans provide 40% of funding toward these projects. A maximum of $5 million can be distributed through this program, with repayment terms set at a maximum of 25 years.

SBA loans can be obtained from intermediary lenders, including SBA-approved banks, credit unions, nonprofits. and alternative lenders.

Banks & Credit Unions

Banks are a very popular source for obtaining long-term business loans because of low interest rates and favorable terms. However, qualifying for these loans can be difficult. Credit scores must be very high, the application and approval process can be lengthy, and banks often have strict requirements in terms of time in business and annual revenues. Businesses that do qualify, however, will find bank loans are easily one of the most affordable loans on the market.

Credit unions also offer very competitive rates and terms, and many businesses prefer to work with these lenders because of the more personalized service they receive. Credit unions may have a bit of flexibility in terms of their requirements, but all borrowers should come to the table with a high credit score and a stable business history.

Alternative Lenders

Alternative lenders offer some benefits that banks, credit unions, and most SBA intermediaries do not, including fast funding and lower credit score requirements. However, there are also several drawbacks to working with alternative lenders (also sometimes referred to as “online lenders”). Higher interest rates are one of the biggest drawbacks. Lower maximum loan amounts are another.

Most alternative lenders set their maximum repayment terms at five years. Depending on the amount borrowed, this could mean higher monthly payments, especially with higher interest rates.

However, the return on investment may be enough for a business to move forward with one of these loans. These loans are best for businesses that don’t meet other lenders’ qualifications, including but not limited to credit score, time in business, or annual revenue.

The 6 Best Long Term Loans For Businesses

The best long-term business loans are from SBA lenders, banks, and reputable online lenders. Here are our top picks for small business long term loans for a variety of business needs and funding requirements, with term lengths ranging from 3 to 30 years.

1. BusinessLoans.com: Best Long Term Business Loans For Bad Credit

BusinessLoans.com	Visit Site Read our Review

Get Started With BusinessLoans.com

Read our in-depth review

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2. Funding Circle: Best For Established Businesses

Funding Circle	Apply Now Read our Review

Get Started With Funding Circle

Read our in-depth review

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3. Lendio: Best For Large SBA Loans

Lendio	Apply Now Read our Review

Get Started With Lendio

Read our in-depth review

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4. SmartBiz: Best For Smaller SBA Loans

SmartBiz	Apply Now Read our Review

Get Started With SmartBiz

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5. Upstart: Best For Startups

Upstart	Apply Now Read our Review

Get Started With Upstart

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6. Live Oak Bank: Best Bank Loan

Live Oak Bank	Visit Site Read our Review

Get Started With Live Oak Bank

Read our in-depth review

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Short-Term VS Long-Term Business Loans

Short-term and long-term business loans have some major differences, and the differences are not just limited to the length of the term. Here are the major differences between short-term loans and long-term loans:

Long-Term Loans

• Smaller Monthly Payments: Large expenses can be broken down into affordable monthly payments by taking out a long-term business loan.
• Higher Borrowing Amounts (Usually): Long-term business loans often have higher maximum borrowing amounts of up to $1 million to $5 million. However, alternative lenders that offer long-term loans may not offer loans this large.
• Lower Interest Rates: Borrowers with the highest credit scores can take advantage of interest rates as low as 5% (or sometimes lower), making this one of the most affordable loan options. The longer your term is, though, the more you will pay for the loan in total.
• Collateral Requirements: For most long-term loans, business collateral is required. In some cases, the collateral will be the item being purchased with the loan proceeds, such as equipment, a vehicle, or real estate.
• Higher Credit Score Requirements: A long-term loan can be one of the most difficult loans to obtain. A great credit score (with no negative items on your credit history) is required to get the most affordable funding. While some lenders may work with borrowers with lower scores, interest may be much higher and terms not as favorable.
• More Documentation Requirements: Because long-term loans are often for very large amounts of money, lenders want to ensure that all borrowers can pay back the loan. This means that there is a lot of paperwork involved in the application process. Borrowers must come prepared to take the time needed to provide the lender with all documentation to qualify for the loan.
• Longer Approval Process: Depending on the lender, getting approval for a long-term business loan could take weeks or even months — not ideal for a business that needs immediate funding.
• Better For Long-Term Investments: Because you will be paying the loan off for a number of years, long-term loans are more suitable for long-term business investments. For example, you don’t want a 3-year loan to pay off 3 months of inventory.

Short-Term Loans

• Much Shorter Term Length: While long-term loans have years-long terms, STL terms are measured in months or weeks. Any loan with a term length of one year or shorter is considered an STL, but many STLs have a term length of just 3 months.
• Larger, More Frequent Loan Payments: Short-term loans usually require weekly or even daily repayments. And when the term is short, the repayments are large and can be difficult for some businesses to afford.
• Lower Borrowing Amounts (Usually): Short-term loan borrowing amounts often cap out at $250,000 or $500,000, or sometimes less. Though that’s the max, most short-term business loans are for much smaller amounts—around $20,000.
• Relaxed Borrower Requirements: These loans are much easier to qualify for than LTLs, in that they have low credit score requirements, low business revenue requirements, and minimal time-in-business requirements.
• Higher Interest Rates & Fees: Short-term loans can be an expensive way to borrow capital. If you have bad credit, you might pay more than 50% of the borrowing amount. This means that on a $20,000 loan, you would be charged $10,000 in interest and fees, and will have to pay back a total of $30,000 over the next 12 months (or whatever your term length is).
• Different Fee Structure: STLs usually have a different fee structure than standard term loans. Rather than charging interest in the traditional sense, the borrower is charged a fixed fee, called a factor rate. There’s also usually an origination fee that is taken out of your loan proceeds.
• No Specific Collateral Requirements: You usually won’t have to put down any specific collateral, such as property or specific business assets. However, you will likely have to sign a personal guarantee and/or agree to a blanket lien before the loan is disbursed.
• Shorter Approval Process: Short-term loans usually have a very fast approval process. You can often get approved the same day you apply and see your funds in your account as soon as the next business day. You do still need to fill out some forms and supply some documentation, but overall the approval and funding process is much quicker than with a long-term loan.
• Better For Short-Term Investments: Because you’ll have to repay the loan quickly, short-term loans are better for short-term investments, such as payroll, inventory, or other working capital needs.

All in all, it doesn’t really make sense to say that long-term loans are better or short-term loans are better. It depends more on your specific situation—what you need the loan for, how soon you need the funds, and what type of financing you qualify for.

Long-Term Business Loan FAQs

Final Thoughts On Long Term Business Loans

A long-term business loan can be a smart and affordable way to manage large expenses. However, to get the most out of this type of financing, it’s important to do your research to find the lowest interest rates and best terms. Taking some time to evaluate why you need the money and what kind of return you expect on your investment will help you choose the best small business loan to suit your long-term goals.

A major benefit of long-term business loans is you have longer to pay your loan off. Just remember that with a longer term comes a longer amount of time for interest to accrue—and some lenders will penalize you for paying off your loan early. If you are not sure about making such a long-term commitment, consider a short-term business loan instead.

In Summary: The 6 Best Long Term Loans For Businesses

1. BusinessLoans.com:
   • Offers: Term loans
   • Max. borrowing amount: $3 million
   • Max term length: 5 years
2. Funding Circle:
   • Offers: Term loans & SBA 7(a) loans
   • Max. borrowing amount: $500K
   • Max term length: 10 years
3. Lendio:
   • Offers: Term loans, SBA loans, business acquisition loans
   • Max. borrowing amount: $5 million
   • Max term length: 30 years
4. SmartBiz:
   • Offers: Term loans, SBA loans, custom financing
   • Max. borrowing amount: $350K
   • Max term length: 10 years
5. Upstart:
   • Offers: Personal loans
   • Max. borrowing amount: $50K
   • Max term length: 5 years
6. Live Oak Bank:
   • Offers: Term loans & SBA loans
   • Max. borrowing amount: $15 million
   • Max. term length: 25 years

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Shannon Vissers

Senior Staff Writer at Merchant Maverick

Shannon has been writing for Merchant Maverick about small business software and financing since 2015. She started writing professionally about business topics in 2005. Shannon has been featured in the Washington Post, Reader's Digest, US News, MSN, Yahoo Finance, Business Insider, and other publications. She has a bachelor's degree in English from San Diego State University and currently resides in San Diego, California.

@ShannonVissers

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