Although the world of small business lending has expanded dramatically over the last decade or so, the cheapest capital you can find is still at a bank. That said, qualifying for a bank loan is pretty difficult. Large banks reject about 75% of small business applicants. It’s particularly hard to get a bank loan for small amounts of capital because these loans just aren’t profitable for the banks.
On top of this, the process can be very time-consuming. If you need cash fast, this may not be the best option. But if you can afford to wait, you should because a bank loan is the most affordable loan on the market, with business loan interest rates starting on average as low as 4%.
With a traditional bank term loan, you borrow a set amount of money upfront, and pay back the money, with interest, every month for a certain number of years. Bank terms loans tend to have large business loan amounts and long-terms.
Reasons why you might use a term loan include:
- Buying real estate
- Acquiring another business
- Investing in remodeling or renovating commercial space
- Planning long-term business expansion
- Term loans are the definition of loans in most business owners’ eyes. However, they are difficult to qualify for. In addition to an established business, you should have strong credit and finances.