Business Term Loans

The short answer: A business term loan is a lump sum of capital repaid in fixed installments — usually monthly — over a set term, typically one to five years. It's the most familiar form of business borrowing and the benchmark other products are measured against.

Qualification

Term loans generally require solid credit, time in business, and demonstrated cash flow sufficient to cover fixed payments. Online lenders relax these standards somewhat versus banks but charge more for the added risk.

Speed

Slower than an MCA — often days to weeks. Online lenders move faster than traditional banks, and SBA loans are slower still.

Repayment structure

Fixed monthly payments of principal and interest over the agreed term. The predictable schedule makes budgeting straightforward, but it also means the payment hits regardless of how the business performed that month.

Cost structure

Interest-based and usually cheaper than an MCA, more expensive than an SBA loan. The catch: you pay interest on the entire lump sum even if you only needed part of it, which is where a line of credit can win for intermittent needs.

Appropriate use cases

• A defined, one-time investment — equipment, expansion, a buyout.
• Projects with a clear return that justifies a fixed monthly cost.
• Refinancing more expensive short-term debt into a cheaper, longer structure.

Potential disadvantages

Harder to qualify for than faster products, and you commit to a fixed payment for years. If you're weighing a term loan against an MCA, our MCA vs. business loan comparison and calculator show the cost difference directly. See the full business funding guide for the broader landscape.