What is a Term Loan? Defined & Explained
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Term Loan Definition: What is a Term Loan?
Term Loans, Explained
Types of Term Loans
Short-Term Loans
Intermediate-Term Loans
Long-Term Loans
What Type of Term Loan is Right for Your Business?
Short-term Loans
Quick funding time Easier qualification process Debt is paid off faster
High-frequency payment schedule Interest rates may be high for lower-credit borrowers Smaller loan limits
Intermediate-term Loans
Larger loan amounts Repayment period not drawn out too long Payments usually made on a monthly basis
Business must be established More in-depth approval process compared to short-term loan
Long-Term Loans
Large loan amounts More manageable payments with longer loan term Payments made on a monthly basis
Rates may be higher for longer loan terms Rigorous application process Could take months to receive approval and funds
Compare Small Business Term Loans
Personal and business credit Time in business Annual revenue Collateral Down payment Personal guarantee
Interest rate and APR Origination fees Late payment fees Early payoff penalty
The Takeaway
About the Author
Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.
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