Can small businesses apply for long term business loans?

Small businesses can apply for long-term business loans, although lenders will typically require you to have been in business for more than 2 years. If you are a startup or a new small business, you will find it a challenge to obtain a long-term business loan, but it is possible. The best long-term small business loans, whether you are a startup or more established, are offered by the Small Business Administration (SBA). These are particularly popular loans as they are guaranteed by the government for up to 95% so pose a much lower risk to lenders. They also boast competitive interest rates and terms with high loan amounts, although this does mean that there is a lot of competition for this type of loan and so the requirements are particularly strict. If you are unable to qualify for an SBA loan, alternative lenders also offer long-term small business loans which are easier to qualify for, and you may even qualify if you have been in business for less than two years, you will just have to present a strong business plan and future revenue projections. However, as mentioned above, these lenders will have very high interest rates so you should weigh the costs carefully.

What are the different types of long-term business loans?

Banks

A bank loan is generally the type of long-term business loan that you should look to secure, with their low interest rates and long terms, although it can be particularly difficult to qualify. You will need an excellent credit score, at least 2-3 years in business, and strong annual revenues. If you are lucky enough to qualify for a bank loan, you will find that the application process is lengthy, meaning it could be months until you receive funding, however, they are one of the most affordable types of long-term business loans on the market.

SBA Loans

We touched on these above, but let?s look at the specific types. The most popular long-term SBA loan is the SBA 7(a) program which offers funding amounts up to $5 million with maximum repayment terms of 10 years and can be used for almost any business expense. The SBA Microloans program offers funding amounts up to $50,000 with maximum repayment terms of 6 years. They also offer specialized long-term business loans for underserved communities, known as the Community Advantage Loan, and for military veterans or service members, known as the Veterans Advantage program.

Alternative/Online Lenders

If you are looking for quick financing, your best option is likely to be an alternative lender. You will find that you can get fast approval, even with a lower credit score, and funding may even be received within a week. However, long-term business loans from alternative lenders do come with particularly high interest rates, sometimes exceeding 30%, their loan amounts are typically lower, and you may have to make your repayments in as little as 5 years, so your monthly payments are likely to be much higher. If you can?t meet the qualification requirements of other lenders, such as credit score, annual revenue, and time in business, looking to alternative lenders may be your only option.

How do I qualify for a long-term business loan?

The requirements you need to meet in order to qualify for a long-term business loan will vary depending on the lender, but typically they are:

• you must have a genuine business expense that requires funding
• you, as the borrower, must own at 20%+ of the business
• you must have a credit score of at least 600
• you must have been in business for at least 2 years
• you must be able to provide collateral if your loan amount is more than $100,000

How do I apply for a long-term business loan? The application process for a long-term business loan also depends on the lender. In general, banks will have the longest application process, asking you to present the relevant paperwork in-person. Online lenders have a much faster application process with all the relevant documents and information submitted online. It may only take you minutes to complete, and you can often be pre-approved in hours or less. The documentation you will have to submit does vary, but typically includes:

• a solid business plan
• a statement for how the funds will be used
• your business licenses and permits
• bank statements (business and personal)
• financial statements
• tax returns (business and personal)
• credit score (business and personal)
• an existing debt schedule, if applicable
• collateral documentation

A long-term business loan is the perfect financing to cover large business expenses, whether that be to expand your business or cover unexpected costs. They can be a very affordable option if you have a good to great credit score and allow you to repay large loan amounts over a long period of time. If you are able to qualify for a traditional bank loan this is the most affordable way forward, but with strict qualification requirements, this can be very difficult. Thankfully, there are online lenders who are more lenient with their requirements and so you will find them much easier to qualify with. At?Acorn Finance, we?re here to help you get the funding you need to expand your business. Simply fill out a short application form to receive your pre-qualified offers, choose one that best suits your needs, and we will connect you to the lender so that you can receive your funding with competitive payment options. Start your application by clicking Get Started below.