Lendio offers business term loans through its online financial marketplace that helps connect small businesses with lenders who can help them obtain financing access. Established in 2011 by experienced business professionals, Lendio believes that America flourishes when it supports small businesses. To that end, they have worked to develop a system that assists small businesses with obtaining the funding they need to hire employees, purchase equipment, or keep the doors open. Since their founding, Lendio has helped small businesses get more than 216,000 loans, with a value of more than $10,000,000,000.
When you’re starting a new business, it can be extremely difficult to obtain financing. In fact, about 80% of small business loan applications are rejected by banks. Lendio offers business owners a way to get the loans they need through partnerships with more than 75 lenders and a low-income business assistance program, “Lendio Gives”. Lendio term loans provide small business owners with a little extra help, whether it’s to expand the business or cover unexpected expenses.
What is a Business Term Loan?
A business term loan, also known as a small business loan, is a common tool used by small businesses to establish, improve, or otherwise support their business. The business borrows a lump sum from a bank or financial institution and then pays that amount back over a period of time. The amount of these installment payments, payment frequency, and length of the repayment period are all outlined in the terms of the loan.
What Are The Typical Terms of a Business Loan?
The terms of business loans differ based on the lender, loan type, and borrowed amount. If you opt for a long-term loan, you may be paying for more than 20 years, while a short-term loan may have a repayment term of only a few months. Long term loans are ideal for businesses who want lower payments over time to prevent too much cash flow restriction. For operations that just need a quick injection of cash to temporarily make ends meet, a short-term or microloan may be best.
Repayment Term Length
Your business loan’s term length is mainly governed by your ability to pay the loan back and the reason for your loan. Repayment periods for term loans typically range from 1 to 10 years for short-, medium-, and long-term loans. With a short-term loan, you can expect repayment terms between 3 to 18 months, while medium-term loans are typically 1 to 5 years. Long-term loans usually range anywhere from 5 to 10 years. Non-traditional lenders are more likely to offer short-term loans. In contrast, loans with longer repayment terms are more likely to be provided through traditional financial institutions such as banks and credit unions.
Fees and Interest
Your business term loan will usually include a flat fee or fixed interest rate so that you can make regular installments throughout your loan’s lifetime. With fixed interest rather than variable interest, you can budget your payments and calculate your financing to ensure that you can adhere to the loan repayment terms.
The amount you can borrow on your business term loan will be determined based on your intended use, business revenue, type of loan, and your business and personal credit score. Business term loans can be obtained for amounts ranging from hundreds of dollars to millions. Certain types of loans have borrowing caps in place, especially for loans backed by the Small Business Administration (SBA). If your business has a high income and good credit score, you are more likely to be approved for a higher loan amount, lower fees, and interest rates, and you will be able to negotiate more flexible loan term lengths.
What Can You Use Business Term Loan Funds For?
Business term loans are designed to assist business owners in a wide range of capacities. Lenders understand that every small business has unique challenges and needs, so term business loans have a great degree of flexibility regarding how you use them. Typically, businesses will apply for a business term loan to invest in one-time improvements. For example, you can obtain financing to hire more employees for your establishment, renovate your business space, or get real estate for a business expansion.
What is a Good Credit Score to Get a Business Term Loan?
When applying for a business term loan, your business will need to meet specific credit and income requirements. Be prepared to provide documentation for the following information with your application:
1. Credit Score
Most traditional banks or credit unions will expect your credit score to be 650 or higher, while alternative lenders may accept applications with credit scores as low as 500. Alternative lenders offer financing to businesses with lower credit scores, but you will likely pay higher fees and interest, and your repayment terms may be less flexible. A higher credit score may help you obtain more financing, while a lower score may limit the amount you can borrow.
Suppose you do not have sufficient business credit history. In that case, lenders may look at your personal credit score to determine your creditworthiness, so be sure to pay attention to both your personal and business scores when completing your application.
2. Time in Business
Lenders will want you to show that you have been in business for more than 1 year. This lets them know that you are a safe investment, and you are less likely to default on your loan repayment due to business failure or bankruptcy.
3. Predictable Annual Income
Your lender will ask you to provide proof of annual revenue in the form of bank statements or a Profit and Loss (P&L) statement. They will look for steady income, preferably of $100,000 or more, depending on the amount of financing you have requested. If your business has extreme fluctuations or a steady pattern of losses, lenders may consider you a risky investment and decline to offer financing.
When considering your business term loan application, the lender will want to know what assets or collateral you will have to guarantee the loan. IN short, they want to be sure that if you fail to repay the loan, they will recoup the value of the loan by obtaining those assets. Collateral may include real estate, equipment, vehicles, and inventory.
Overall, the process of compiling the documentation and applying for loans can be time-consuming and confusing, especially if you are trying to compare terms through traditional banking institutions. Fortunately, businesses like Lendio offer an easier solution.
How to Get a Business Term Loan with Lendio
Lendio offers a modern approach, with a user-friendly online application that you can complete in about 15 minutes. The application is then submitted to Lendio’s network of 75+ vetted lenders. You can compare offers and choose the best loan terms for your needs. Once you’ve received approval, you can quickly obtain your funds, sometimes as soon as 24 hours from approval.
Overall, Lendio business term loans are an excellent option for small business owners looking for a little extra liquidity but don’t want to deal with time-consuming applications for individual lenders. Lendio requires the same information as other lenders, so be sure to have documentation handy for your credit score, time in business, revenue, and collateral. With Lendio, however, you get to complete the full application online, even if they need to request additional documentation. What’s more Lendio doesn’t charge any application fees. Apply, compare your lending options, and get your funding with one quick, hassle-free application.
If you think a term loan is not the right one for your business, Lendio can help you explore other options, since they can also help with: