Business term loans, explained plainly.
A term loan gives your business a lump sum up front that you repay on a fixed schedule. It is the classic way to pay for something big and one-time: an expansion, a renovation, a second location or a large purchase.
Full Port Financial is not a lender. Financing is provided by third-party funding partners.
What term loans are
With a term loan, a lender advances a set amount and you repay it, plus interest and any fees, in regular payments over an agreed term. Because the schedule is fixed, you know what each payment will be before you sign.
Term loans come from banks, credit unions and online lenders. Banks tend to offer longer terms and lower costs but ask for more history and paperwork. Online lenders usually decide faster and accept a wider range of businesses, often at a higher cost. Full Port Financial is not a lender; we help you understand which kind of lender may fit and connect you with funding partners.
Often used for
- Expanding into a new space or second location
- Renovations and build-outs
- Large one-time purchases
- Refinancing more expensive short-term debt
- Hiring ahead of a signed contract
- Projects with a clear payback period
The terms that matter
Fixed payments on a set schedule, usually monthly. Some online lenders collect weekly.
Interest plus any origination or closing fees. Compare offers by APR and total repayment, not the payment alone.
Some term loans are secured by business assets; many require a personal guarantee from owners.
Ask whether paying early saves interest or triggers a prepayment fee. It varies by lender.
What funding partners usually look at
Every funding partner sets its own requirements. These are the factors that come up most often.
- Time in business, since lenders weigh operating history heavily
- Steady monthly revenue deposited into a business account
- Personal and business credit history
- Existing debt and how much of your cash flow it uses
- A clear use of funds
- No recent bankruptcies or unresolved tax liens
What to have ready
You don't need these to make the first call. Having them ready later speeds things up.
- Three to four recent months of business bank statements
- A government-issued photo ID for each owner
- A voided business check or bank letter
- Basic business details: legal name, entity type, EIN and start date
- Business tax returns and a year-to-date profit and loss statement for larger requests
Understanding what it really costs
The cost of a term loan has two parts: the interest rate and the fees. Two offers with the same monthly payment can cost very different amounts over their full term, so ask each lender for the APR, the total amount you will repay and every fee in writing.
A longer term lowers each payment but usually raises the total you pay. Pick the shortest term your cash flow can comfortably carry.
From first call to funded in three steps.
Tell us about your business
Your industry, your revenue and what the money is for. A few minutes on the phone with a funding advisor.
Compare your options
See options from funding partners that fit your profile, side by side, with your advisor walking you through them.
Get funded
Choose the offer that works for you, sign with the funding partner, and receive your funds.
Questions, answered.
What is the difference between a term loan and a line of credit?
A term loan gives you the full amount at once and you repay it on a fixed schedule. A line of credit lets you draw only what you need, when you need it, and you generally pay interest only on what you have drawn.
Do I need collateral for a business term loan?
Not always. Some term loans are secured by business assets such as equipment or receivables, and many lenders ask owners for a personal guarantee instead of, or in addition to, collateral. Requirements vary by lender.
Will checking my options affect my credit?
Talking with Full Port Financial does not affect your credit, because we do not pull credit reports. A funding partner may review your credit later as part of its own review, with your permission.
How should I compare term loan offers?
Compare the APR, the total amount you will repay, every fee, the payment frequency and any prepayment terms. The lowest payment is not always the lowest cost.
Does Full Port Financial charge a fee?
No. Full Port Financial does not charge applicants a fee to apply or to talk with an advisor. When a funding partner funds a business we introduced, the partner may pay us a commission.
Can a newer business get a term loan?
It is harder, because most lenders want an operating history. Newer businesses sometimes qualify for equipment financing or other products that rely more on the asset or on recent revenue. Call and we will tell you honestly what may fit.
Related guides
Your money is one call away.
Tell us about your business and what the money is for. An advisor will walk you through the options that may fit, with no pressure and no obligation.