How fixed-term business loans work | finder.com

Get a fixed-term business loan with predictable monthly payments

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Resolve your business’ cash flow problems with a loan while you repay over a fixed period.

Whether you need new equipment, want to open a new location or just need funds for increasing expenses, the right fixed-term business loan could help boost your business.

When you apply for a fixed-term business loan, you enter into an agreement with the lender to make repayments over a fixed period of time. Lenders consider your business profile, the loan amount and what you can afford.

Most business loan lenders require you to have been in business for at least a year and meet certain revenue criteria. If you have a newly established business, check out our guide on startup loans.

LoanBuilder, A PayPal Service Business Loans

Our top pick: LoanBuilder, A PayPal Service

Customizable business loans with no hidden fees.

  • Min. Amount: $5,000
  • Max. Amount: $500,000
  • One-time fixed fee charged over the life of the loan
  • Acclaimed customer service
  • Requirements: $100,000+ annual revenue, 1+ years in business, 600+ personal credit score

    How does a fixed-term business loan work?

    If your application for a fixed-term loan is approved, the lender provides you with the loan amount and you agree to repay the amount over a set period of time. The terms offered depend on the purpose of the loan and the lender.

    Many fixed-term business loans have periods of up to 10 years. If you’re considering a larger loan for purchasing property, a vehicle fleet or heavy machinery, lenders may provide loan options with repayment periods of up to 15 years or longer.
    Compare business term loans to lines of credit

    Compare business loans from top lenders

    Rates last updated December 18th, 2018
    Unfortunately, none of the business loan providers currently offer loans for these criteria.
    Name Product Product Description Min Loan Amount Max. Loan Amount Requirements
    LoanBuilder, A PayPal Service Business Loans
    Customizable loans with no origination fee for business owners in a hurry.
    $5,000
    $500,000
    Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
    LendingTree Business Loans
    Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
    Varies by lender and type of financing
    Varies by lender and type of financing
    Varies by lender, but you many require good personal credit, a minimum business age and minimum annual revenue.
    Credibly Business Loans
    Funding to cover business expenses with daily or weekly repayments.
    $5,000
    $250,000
    500+ personal credit score, 6+ months in business, $15,000+ average monthly deposits
    Lendio Business Loan Marketplace
    Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
    $500
    $5,000,000
    Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
    National Funding Small Business Loans
    Working capital loans and equipment financing, some high-risk industries may be eligible.
    $5,000
    $500,000
    Be in business at least one year and make at least $100,000 in annual sales. Other loan types have additional requirements.
    LendingClub Business Loans
    With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
    $5,000
    $300,000
    12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better
    OnDeck Small Business Loans
    A leading online business lender offering flexible financing at competitive fixed rates.
    $5,000
    $500,000
    500+ personal credit score, 1+ years in business, $100,000+ annual revenue
    Fora Financial Business Loans
    No minimum credit score requirement and early repayment discounts for qualifying borrowers.
    $5,000
    $500,000
    Business age 6+ months. Monthly revenue $12,000+. No open bankruptcies.

    Compare up to 4 providers

    How to compare fixed-term business loans

    There are several types of business loans available, so it’s important to compare options before applying. Here are a few factors to consider:

    • Secured vs unsecured. If you’re applying for a secured fixed-term loan, you will need to declare your assets of value as collateral. In the event that you can’t make repayments, the lender will sell some or all of your assets to cover what you owe. An unsecured loan doesn’t require collateral, but the application requirements may be strict to minimize the lender’s risk.
    • Loan amount. Different lenders have different lending criteria. Lenders assess your personal and professional profiles, credit history, business type, the purpose of the loan and the value of your assets. You will then be offered a loan amount based on what you can afford to repay.
    • Interest rates. Rates can either be fixed or variable (or both) over the fixed-term of your loan. While your repayment amount might fluctuate, the repayment period remains fixed. Some loan products feature an introductory fixed rate for a certain period, after which it reverts to the standard variable rate for the rest of the loan term.

    Benefits and drawbacks of fixed-term business loans

    Pros

    • Regularity. You have peace of mind with regularly timed repayments. The amount itself might vary depending on interest rate fluctuations, but the term remains unchanged.
    • Investment. You’re most likely taking out a business loan to invest in improvements for your business that’ll pay off in the long run.
    Cons

    • Jeopardizing assets. Secured fixed-term business loans require assets as collateral. The lender can seize your assets if you can’t repay the loan.
    • Penalties for early repayment. Settling the outstanding amount before the end of the loan period is a good way to save on interest. However, the lender loses out on that interest, so you may be penalized for ending the fixed-term loan contract.

    Important things to consider with fixed-term business loans

    • Can you afford it? While a business loan can fix cash flow problems, lenders won’t approve a loan if your business can’t afford to repay it.
    • Early repayment policies. Some lenders might charge a penalty fee if you repay the whole loan before the end of the fixed-term. Check lenders’ policies before accepting loan terms.
    • Repayment period. If you’re taking out a small loan amount, you can consider repaying it over a shorter period. Spreading your repayments over a longer period will chip away at your business’s profits because of interest charges. But if the loan term is too short and the repayments are too high, they could become unmanageable.

    Frequently asked questions about fixed-term business loans

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