The best long-term business loans will provide the most flexible repayment terms possible, along with a reasonable interest rate. That means terms of at least five years or more, and APRs well under 30% – even if you have mediocre credit and a less than established business history. (With excellent credit and a solid business record, you should be able to get an APR well under 10%.)
Traditional lenders like your local bank or credit union are going to be able to offer you the best rates and repayment terms on any long-term loan, provided you can qualify for one. This is especially true for Small Business Administration (SBA) loans, which are partially guaranteed by the federal government and offer loan amounts up to $5 million, repayment terms of up to 25 years, and rates between 4-10%. In the end, the best long-term business loan for you is going to be the one that you can get approved for. To find the best deal, you’ll need to apply through multiple lenders and compare their rates.
The Best Long-Term Business Loans of 2020
SmartBiz is a technology platform that connects borrowers with one of three traditional lending partners that offer SBA Loans. It allows you to quickly compare rates and find the best SBA loan that you qualify for. For the service, it charges a 4% fee, along with closing costs, but this is similar to the fees you’ll find at most platform lenders.
No minimum credit score is specified, but borrowers are expected to have “good” personal credit and to have been in business for at least two years. Most of SmartBiz’s qualifying borrowers have $50,000 to $5 million in annual revenue, one to 40 employees, and are profitable with positive cash flow. Funds are released within as little as seven days, or as long as four to six weeks, depending on the size of the loan.
Who it’s good for: Borrowers with good credit who need loans of $350,000 or less and who want a repayment period between five to 10 years.
Who should pass: Borrowers who need more than $350,000. If that’s you, consult the SBA lender directory to find an SBA lender near you, and then apply directly. Just remember: It’ll take several weeks, and an ample amount of paperwork to apply.
Other Lenders to Consider
- Loan Range: $5,000–$300,000
- Repayment Terms: Up to 5 years
- APR Range: 5.99% to 29.99%
- Minimum Credit Requirements: 600+ credit score, two years in business
Lending Club is a credit marketplace or “peer-to-peer lender” that connects borrowers with loans that are funded by groups of investors. There are no prepayment penalties, so this is a good choice for obtaining a long-term loan if you think you’ll pay it off relatively quickly, and you could save a significant amount in interest by doing so.
Who it’s good for: Borrowers with decent-to-good credit (600+) who need to borrow $300,000 or less.
Who should pass: Borrowers who need more than $300,000, or who can qualify for an SBA loan.
Funding Circle is another peer-to-peer lender, but offers the lowest interest rates on long-term business loans of any online lender, along with some of the highest borrowing limits. For the service, you’ll be charged an origination fee between 0.99%–6.99% of the loan amount and a late fee (only for late payments) of 10% of the total missed payment amount. The application process is a little more in-depth too, and includes sharing your tax returns (business and personal) along with business bank statements. Even more documentation is required for loans larger than $300,000.
Who it’s good for: Established businesses with strong revenues (over $150K annually) that need larger loan amounts up to $500,000. Funding Circle loans are available for residents of all U.S. states except for Nevada.
Who should pass: Companies with revenues less than $150,000 or less than 2 years in business, or more established companies that can qualify for an SBA loan at an even lower rate.
The Best Long-Term Business Loans
Plus 4% upfront fees and closing costs
Origination fee of 1.99% - 8.99%
$50,000 in annual revenue
A minimum 20% ownership of the business
Origination fee ranging from 0.99–5.99%
$150,000 in annual revenues, with 1 year of profitability
How I Found the Best Long-Term Business Loans
I defined “long-term” business loans as any that offered repayment terms between five to 10 years. In addition to the time allowed to repay the loan, I also looked for the following when researching lenders:
Competitive rates: Platform lenders typically can’t offer as low of rates as a bank, but depending on your credit score and repayment terms, many of these lenders still offer competitive APRs between 6-30%.
Flexible terms: The best lenders tend to have multiple options for repayment terms, so you can make your loan repayments fit into your monthly budget.
Fast release of funds: If you need fast cash, some of the best lenders can release funds to you in just a few weeks – even for a long-term loan.
Range of loan amounts: Whether you need a loan of $5,000 or $500,000, the best lenders will be have the resources to lend you what you need.
Overall reputation: Good lenders have a solid track record of positive reviews from customers, financial strength, and a favorable reputation within the financial services industry.
Simple application process: It should be easy and relatively fast to apply for a loan.
The Bottom Line
You’ll always find the lowest rates on long-term business loans through traditional lenders; especially from SBA lenders. If you have good credit and an already established business, but can’t find an SBA loan lender near you, use Smart Biz to quickly get connected with one online. If you can’t get approved for an SBA loan through your local bank or SmartBiz, online peer-to-peer lenders like Lending Club and Funding Circle are your next best option. Their rates tend to be slightly higher than traditional lenders’, but their loan requirements are also less demanding, and the application process is much faster. Ultimately, the best loan for you is going to be the one that you can qualify for.