What Are Term Loans?
Term business loans are a standard debt financing facility with standard payments (usually monthly) and a maturity and amortization schedule ranging from six months to 30 years in length (depending on use). Term loan sizes for small and medium-sized businesses can be as small as a few thousand dollars and can range up to $5,000,000 for loans with SBA enhancements and well above that for other traditional facilities. The repayment associated with most term loans is made monthly, although some alternative lenders will require payback to be made on a weekly or even daily basis.
Term loans vary in size, structure, and use depending on the commercial lending institution. A term loan from a bank may have very different underwriting criteria than that of a mid-prime lender that specializes in buying out high-interest merchant cash advances. Term loans are usually collateralized with the borrowing company's assets (buildings, land, equipment, accounts receivable, cash flow, etc.). While each lender has their own requirements, it is common for a blanket lien to be placed on all the company's assets when a term loan is provided to the business.
While each lender is different, a term loan provided by a conventional, private investment bank or SBA-preferred lender usually requires an extensive amount of business and personal financial documentation for due diligence during the underwriting of the loan. Traditional commercial lenders will require that the business prove it has an acceptable debt-service-coverage ratio to ensure the lender will get paid back.
Looking for term loans? Contact us today at (801) 532-1763 to find the right solution.