Businesses often lack sufficient capital to take advantage of growth opportunities. However, these situations can be mitigated by applying for and obtaining a term loan. Here is some information that can help you determine whether a term loan can meet your company’s funding needs.
Term Loan Basics
A term loan is a one-time infusion of funding that you receive from a lender and pay back with interest over an agreed-upon period. Smaller amounts may have short payment periods of a year or more, while the payment terms for larger amounts of a million dollars or more may be up to 25 years. There are also intermediate amounts and terms between these extremes. Although in the past businesses used to look to credit unions and banks as sources of term loans, nowadays alternative online lenders are becoming increasingly popular term loan providers. Alternative lenders generally have easier application processes, quicker approval, and expeditious distribution of funding.
Advantages of a Term Loan
You can use the funding from a term loan for business or personal expenses, and these loans are versatile because they can provide financing for either short or long-term requirements. The rates are lower than for other methods of funding. Additionally, if you make timely payments each month, taking out a term loan can help you build a stronger credit score.
Obtaining a Term Loan
You will need to gather documentation such as bank statements, tax returns, business, and personal credit histories, your company’s EIN (Employer Identification Number), income statement, and profit and loss statement. Apply to a range of lenders so that you can compare the APR (annual percentage rate), terms for repayment, and any additional fees that the lender might charge. Once you have found a suitable lender, close on the loan and obtain your funding.
For more advice on financing your business with a term loan, get in touch with WHW Capital.