Best Long-Term Business Loans

Final Verdict

If you’re looking for a larger SBA loan, Live Oak Bank is an excellent first stop. If you happen to live within PNC Bank’s footprint, it’s also a solid choice for a reputable bank that may be more willing to work with you than, say, Bank of America. And if you have trouble applying elsewhere, consider an alternative lender like Rapid Financing or Fundit—just be aware that these loans may come with high costs than other options so you’ll need to consider these options carefully.  

Compare the Best Long-Term Business Loans

Guide to Choosing the Best Long-Term Business Loans

Types of Long-Term Business Loans

There are a few different types of long-term business loans you might see advertised on lender websites:

• SBA loan: These loans, ranging up to 25 years in length, are offered through lenders and backed by the Small Business Administration. They often feature lower rates.
• Business term loan: Most banks, credit unions, and online lenders advertise a generic “business term loan” that can be used for a wide range of purposes and generally come with term lengths of one or more years. Loans may be secured or unsecured.
• Equipment financing: Some lenders offer “equipment financing,” a type of secured loan or lease used to purchase expensive equipment and pay it back over several years.
• Commercial real estate loan: A very large and long-term business loan used to buy the largest investment of all for many businesses: real estate.

What to Consider When Applying for a Long-Term Business Loan

Taking out a business loan is a big decision, especially one that you’ll be repaying for an extended period of time. Here are some points to consider before you apply for a loan:

• Loan purpose: There are many types of business loans available depending on what you need. You wouldn’t necessarily take out a long-term business loan to pay for short-term working capital, for example, and you wouldn’t use a working capital loan to buy real estate.
• Loan term length: The longer the loan, the smaller your monthly payments, and the less risk your business will have of defaulting. On the flip side, you will be at risk of default for longer and you’ll pay more in interest. 
• Creditworthiness: Consider how a lender would evaluate your business using your credit score, time in business, and annual cash flow. You may have better luck with alternative lenders if your business isn’t very creditworthy, but that can be expensive.
• Urgency of loan need: If your business isn’t very creditworthy, consider whether you can afford to take some time and grow your credit or seek other ways to grow your business until you’re better able to get approved for a loan. 
• Your cash flow and reserves: Make sure you have a budget for your business so you can verify whether you’d actually be able to make your loan payments. Also consider what happens if your business goes through a downswing—do you have enough cash reserves to weather a storm?

How to Apply for a Long-Term Business Loan

If you’re a smaller or newer business, you’ll need to do a lot of legwork to make sure you get the funding you need. Here’s a good strategy to boost your odds of success:

• Decide on financing: Research the different types of business financing options so you’re crystal-clear on what type of business financing product you need, what the requirements are, and what the application process looks like. 
• Put together an application packet: Gather up the documents you’ll need. Most business loans require the same few items: a formal business plan, business license or registration records, business formation documents, a current profit and loss statement, bank statements, and your most recent business and personal tax returns.
• Research lenders: Take some time to research different lender options. Take note of what rates, terms, and loan amounts each offers, along with any publicized approval requirements. If the lender offers loan pre-approval with a soft credit check, go ahead and see what rates it can offer you.
• Submit a business loan application: Pick your favorite option and submit a complete business loan application. Keep an eye out for any additional documents the lender might require, along with any requests for more information after you submit the application. 
• Sign the contract and receive funds: If the lender approves your application, read through the contract so you know exactly what you’re signing up for. Keep a close eye out for any prepayment penalties and the lender’s policies if you have trouble making payments. You can decline the loan anytime up until you sign on the dotted line. 

Methodology

Investopedia is dedicated to providing readers with unbiased, comprehensive reviews of financial products and services. To rate long-term business loan lenders, we collected hundreds of data points across 20 top lenders, including interest rates, fees, loan amounts, and repayment terms. We also considered the prospective borrower’s shopping experience: availability of key pricing and terms information, ease of application, depth of customer support resources and information.