Thinking of expanding your business, buying equipment, or financing an advertising campaign, you will need a business loan. Acquiring a term loan will assist you in achieving your business goal by ensuring that you get a one-time lump sum of money. This blog explains what a term loan is, the types of a term loan, and the pros and cons of acquiring the loan.
What is a Term Loan?
A term loan provides an upfront financing solution for local and small entrepreneurs and is repaid in regular installments over a fixed period.
Types of Term Loan
You can request a short-term, intermediate-term, or long-term loan if you choose a term loan.
A short-term loan is easier to apply for with a repayment period of one to two years, increasing their payment rates. These loans are convenient for the day-to-day expenditures of your business.
Intermediate-Term Loans are for investors reaching out to increase operations to generate more revenue. The repayment period is two to five years, and you can access a maximum of $500000.
Long Term Loans are suitable for established traders with outstanding financial records seeking funding for long-term projects. You can get your financing in millions of dollars, and the repayment period can take 25 years.
What are the Pros and Cons of Term Loans?
Like all financing options, a term loan has pros and cons that you must deliberate on before choosing the way forward.
Term loans are suitable for both short- and long-term business goals.
Term loans are easily accessible depending on your past financial records.
These loans have favorable and flexible payment rates that will make it easier to pay without straining your business.
Paying your monthly installments on time improves your business credit.
You need a good credit record and a detailed financial statement to qualify for the loan.
Some lenders will demand security If your lender deems your company a financial risk.
You might incur extra costs such as processing and prepayment fees.
A loan can be a great way to get the money you need to finance your business venture. However, there are several things you should know from your financial expert. For more information, get in touch with DAL Commercial Capital.