Is a Commercial Bank Term Loan Right For You?


There are many types of commercial financing options available to you, and perhaps the most traditional form of financing available to small business owners is the commercial fixed term loan. The Great Recession that gripped the nation in recent years has changed the landscape of commercial financing considerably, however, and these loans are now being used less frequently because of stricter bank underwriting guidelines. You may be wondering if you should apply for a commercial fixed term loan or another type of alternative financing to get your small business the funding that it needs. A closer look at what a commercial fixed term loan is may be revealing.

What Is a Fixed Term Loan?
With a fixed term loan, the principal is amortized over a specific number of months, and this can range from 24 months to 120 months or longer depending on the term of the loan. Because these loans are fixed terms, the monthly payments are established so that the entire loan balance will be paid in full by the end of the term. Generally, there is one straight draw on the loan, as opposed to a line of credit or a credit card where there may be repeated draws.

Different Types of Fixed Term Loans
There are two main types of fixed term loans used in the commercial arena, and these are intermediate and long term loans. Intermediate term loans are often termed as working capital loans, but they may also be used to purchase equipment and machinery. Long term loans, on the other hand, are very rare for small businesses to obtain. When banks do extend long term loans to small businesses, they are usually for real estate or major equipment or machines that have a very long life span.

Deciding Which Loan is Right for You
A fixed term loan is often just one of several loan options available to small businesses, and there are alternative forms of financing that may be used to provide working capital or funds used for other needs. When determining which loan is right for you, it is important to review loan terms such as the interest rate, prepayment penalties, the term length, the up-front and closing fees and other factors. In addition, review underwriting guidelines, such as credit score requirements, net income requirements and more. By taking these steps, you likely will be able to narrow down your choices to the top few solutions that are best for you.

Small business loans as well as alternative financing solutions generally have lower loan amounts, and you may need to string together multiple forms of financing to achieve the results that you want. You can take time to research the different financing options today before you apply for a loan or a line of credit, and doing so may reveal more information that can help you take greater control over your financial situation. If you’d like to know more about how we can help you get money for your business, call us for a FREE Business Funding Consultation at (800)416-7713.

Rick Anderson @FundingExpert1

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Rick Anderson is the CEO and Senior Small Business Funding Specialist with Small Business Money Solutions. A company that helps small business owners and self employed professionals get the financial solutions they need to GROW and thrive. Rick has been in business for over 22 years, and his company has helped 22,485+ small business owners and counting. Rick has also written a book on small business finance entitled 10 Easiest New Money Sources For Business Owners.

Connect with him or if you would like to ask him a question, send it to [email protected] If you’d like a FREE ‘Business Funding’ Consultation, call him at (800)416-7713.