Funding upfront, repayment you can plan.
A business term loan gives you a lump sum of capital upfront, repaid over a set term on a predictable schedule. Learn how term loans work, what they really cost, and how to compare offers from multiple lenders — then apply in minutes.
Compare offers from multiple lenders with a single application — and checking your options won't affect your credit.
Illustrative only, using the same 14% sample rate as the cost example below. Your amount, rate, and term will vary by lender.
What is a business term loan?
A business term loan is one of the most common — and most straightforward — ways to finance a company. You borrow a fixed amount of money, known as the principal, and receive it as a single lump sum. You then repay that amount, plus interest, in regular installments over an agreed period called the term. Because the amount, the term, and the payment schedule are all set before you accept, a term loan is predictable from the very first day.
That predictability is exactly what makes term loans well suited to planned, one-time investments with a clear payoff — buying equipment, renovating a location, consolidating higher-cost debt, or funding an expansion. Unlike a revolving business line of credit, there's nothing to draw, reuse, or renew: you know precisely what you're borrowing, what you'll pay, and the date the loan will be fully repaid.
How does a business term loan work?
Once the loan is funded, three things shape how it behaves day to day: how it's repaid, the type of interest rate, and whether it's backed by collateral.
How repayment works
Most term loans are amortizing, which means each payment is divided between interest — the cost of borrowing — and principal, the balance you still owe. In the early part of the term, a larger share of each payment goes toward interest; as the balance shrinks, more of every payment goes toward principal. By the final scheduled payment, the balance reaches zero and the loan is complete. For example, on a hypothetical $50,000 loan repaid over three years, each payment steadily reduces the balance until nothing is left — there's no lingering balance to manage and nothing to renew.
Fixed vs. variable rates
Term loans can carry either a fixed or a variable interest rate. A fixed rate stays the same for the entire life of the loan, so your payment never changes — the easiest structure to budget around. A variable rate can move up or down over time as market benchmarks shift, which means your payment can change from period to period. Which one you're offered depends on the lender, the product, and your business's profile, and it's one of the first things to check on any offer.
Secured vs. unsecured
Term loans can also be secured or unsecured. A secured loan is backed by collateral — equipment, real estate, or other business assets — which lowers the lender's risk and can translate into a larger loan amount or a lower rate. An unsecured loan doesn't require specific collateral, so it can be faster to fund, though lenders often price that added risk into the rate or ask for a personal guarantee. Neither is automatically better; the right choice depends on what you're financing and what your business is able to pledge.
What a business term loan really costs
Two loans can advertise the same interest rate and still cost thousands of dollars apart. Here's why the rate alone never tells the full story.
When comparing term loans, most business owners look straight at the interest rate — and stop there. But the rate on its own doesn't tell you what a loan will actually cost. The true cost of a term loan is set by the whole structure: the amount, the term length, the type of rate, the fees, and how often you repay.
How the term length changes the cost
The length of the term is one of the biggest cost drivers, and the most misunderstood. A longer term lowers each individual payment, which can feel more affordable month to month — but you also pay interest for longer, so the total amount you repay is higher. A shorter term raises the payment but reduces the total interest. As the example shows, the same $50,000 at the same rate can cost roughly $12,000 more on a five-year term than on a two-year term. The "cheaper" loan is often the one with the higher monthly payment, not the lower one.
Watch the fees, not just the rate
Fees can quietly change the real cost of a loan. Many term loans carry an origination fee taken out of the amount you receive, and some include prepayment penalties or servicing charges. A loan with a slightly lower rate but a steep origination fee can easily cost more than one with a higher rate and no fees. Always ask for the total repayment amount and the annual percentage rate (APR), which folds fees into a single, comparable number.
Factor rates vs. APR
Some lenders quote a factor rate — a decimal such as 1.2 — instead of an APR. A factor rate is applied once to the full amount borrowed, so a "1.2" is not a 20% APR; converted to an annualized rate, it is usually much higher. Whenever an offer uses a factor rate, convert it to an APR before comparing it against a rate-based loan, or you'll badly underestimate what it costs.
Repayment frequency and cash flow
Finally, how often you repay affects both cost and cash flow. Monthly payments are the easiest to plan around; weekly or daily payments pull money out of your account faster and can strain a seasonal business, even at the same nominal rate. When you weigh two offers, compare the payment frequency alongside everything else.
| Same loan | 2-year term | 5-year term |
|---|---|---|
| Monthly payment | $2,400 | $1,163 |
| Total interest | $7,600 | $19,800 |
| Total paid | $57,600 | $69,800 |
Same amount, same rate — but the 5-year loan's lower monthly payment costs about $12,200 more overall, because interest is charged for longer. The lower payment is not the cheaper loan.
*A sample 14% rate is used to isolate the effect of term length. Actual rates and terms vary by lender.
How to compare term loan offers
Knowing what drives cost is only half the job. The other half is lining offers up the same way — apples to apples — so the real differences surface.
Offers rarely arrive in the same format, which makes a low headline number look better than it is. Before you judge any of them, put them on equal footing: convert any factor rate to an APR so the pricing is comparable, weigh the total you'll repay rather than the rate alone, and hold the term steady where you can — a longer term almost always advertises a smaller payment even when it costs more. Then confirm the same details on every offer:
- Amount and term
- Total repayment — the full amount, start to finish
- Rate type — fixed or variable
- Fees — origination, prepayment, servicing
- Repayment frequency — monthly, weekly, or daily
- Prepayment terms — is early payoff cheaper?
The hardest part is getting comparable offers in the first place. Applying to lenders one at a time is slow, and every application can feel like starting from scratch. With a single application through Fundur, you can line up complete offers from multiple lenders side by side — then use the checklist above to see which one truly costs your business the least.
- One application, offers from multiple lenders.
- Complete offers to compare — term, total cost, and fees.
- No credit impact to check the options you qualify for.
- No obligation to accept any offer you receive.
When a term loan is the right choice
A term loan shines when you have a specific, one-time expense with a clear return and a defined payoff timeline.
Because you receive the full amount upfront and repay it on a fixed schedule, a term loan is built for investments you can plan around — where you know the cost in advance and expect a measurable return. These are some of the most common uses:
When another option may fit better
A term loan isn't always the answer, and knowing when to reach for something else is just as important. If your need is ongoing or unpredictable rather than a one-time project, a different product usually fits better. The comparison below shows exactly how a term loan lines up against a business line of credit, equipment financing, an SBA loan, and a working capital loan, and which each one is built for.
Strengths
- Predictable, fixed payments that are easy to budget
- Full lump sum available upfront
- Helps build business credit history
- Often lower rates than short-term financing for qualified borrowers
Considerations
- Less flexible than a revolving line of credit
- Interest accrues on the full amount from day one
- May require collateral or a personal guarantee
- Paying off early doesn't always reduce total cost
Term loan vs. other business financing
A term loan is one of several ways to finance a business, and each is built for a different job. Here's how it compares across our network's main products.
| Term Loan | Line of Credit | Equipment Financing | SBA Loan | Working Capital Loan | |
|---|---|---|---|---|---|
| Structure | Lump sum, fixed term | Revolving credit limit | Loan secured by the asset | Government-backed term loan | Advance repaid from revenue |
| Best for | Planned, one-time investments | Ongoing, unpredictable needs | A single machine or vehicle | Large, long-term growth | Fast, short-term gaps |
| Repayment | Set schedule to a zero balance | Pay only on what you draw | Set schedule over asset life | Set schedule, longer terms | Frequent, revenue-based |
| Funding speed | Fast to moderate | Fast | Moderate | Slower, more paperwork | Fastest |
| Cost & flexibility | Predictable; less flexible | Most flexible access | Purpose-specific | Lower cost; stricter to qualify | Higher cost; flexible access |
Some lenders refer to a working capital loan as a Merchant Cash Advance (MCA). Structures, terms, and rates vary by lender across Fundur's network.
Many businesses use more than one product — a term loan for a major purchase and a line of credit for everyday cash flow. With a single application, you can compare the right options for your situation side by side, instead of applying to each lender separately.
What lenders look at
Requirements vary from lender to lender, but most build a picture of your business from the same few signals — and knowing why each one matters helps you understand where you stand before you apply.
When a lender reviews your application, it's really weighing two questions: can your business comfortably afford the payments, and how likely are you to repay as agreed? No single number answers both, so lenders look at several signals together rather than judging you on one figure alone.
Typical qualification guidelines
To help you gauge where you stand, here are common ranges across business lenders. These are general industry guidelines, not Fundur requirements — every lender sets its own criteria.
- Time in business
- Often 6 months to 2 years; banks and SBA loans frequently expect 2 or more years.
- Annual revenue
- Commonly around $100,000 or more, though some online lenders start lower.
- Personal credit score
- Frequently 600+ with online lenders; roughly 660–680+ for banks and SBA loans.
- Collateral
- May be required for larger or secured loans; unsecured options exist, often at a higher rate.
Guidelines only — actual criteria, minimums, and rates vary by lender, and a strong business can offset a weaker area.
Documents you may be asked for
To verify that picture, lenders typically request a few documents — having them ready can speed up funding. Commonly requested items include recent business bank statements, business (and sometimes personal) tax returns, a government-issued ID and business formation documents, and occasionally a profit-and-loss statement or balance sheet.
Different lenders weigh these factors differently, so falling short on one doesn't necessarily rule you out — it's one more reason comparing several offers is worth the effort. Exact minimums vary by lender, and every loan is subject to the lender's approval.
How to get a business term loan
Applying through Fundur takes three steps, and you can start in just a few minutes.
Apply
Tell us about your business and how much you're looking to borrow. Checking your options won't affect your credit.
Compare offers
Review complete offers from multiple lenders side by side — amount, term, total cost, and fees — and see what each really costs.
Get funded
Choose the offer that fits, finish with the lender, and receive your lump sum. Then repay on the schedule you agreed to.
There's no cost to see what you qualify for and no obligation to accept an offer. If a term loan isn't the right fit, an advisor can help you weigh other products in our network.
Business term loan FAQs
How much can I borrow with a business term loan?+
Loan amounts vary widely by lender and depend on your business's revenue, time in business, and credit profile. Fundur's network spans a broad range, and you'll see the amounts you actually qualify for after you apply.
Are term loan payments fixed or variable?+
It depends on the loan. Many term loans have a fixed rate, so the payment stays the same for the life of the loan; others carry a variable rate that can change over time as benchmarks move. Each offer will state clearly which applies.
Is a business term loan secured or unsecured?+
Both exist. A secured loan is backed by collateral and can offer a larger amount or a lower rate; an unsecured loan doesn't require specific collateral and can fund faster, though it may carry a higher rate or a personal guarantee. Which is available depends on the lender and your business.
How is a term loan different from a line of credit?+
A term loan gives you a lump sum upfront that you repay on a fixed schedule — best for planned, one-time expenses. A business line of credit is revolving: you draw what you need, repay, and reuse it, paying interest only on what you use — best for ongoing or unpredictable needs.
What credit score do I need?+
There's no single cutoff across the network. Lenders weigh credit alongside revenue, time in business, and cash flow, so a strong business can offset a lower score. Checking your options through Fundur won't affect your credit.
How fast can I get funded?+
Funding speed depends on the lender, the loan size, and how quickly you can provide documents. Some term loans fund quickly; larger or government-backed loans take longer. Having your paperwork ready is the best way to speed things up.
Can I pay off my term loan early?+
Sometimes early payoff saves you interest; other lenders still charge the remaining interest or a prepayment fee. It's an important detail to confirm before you accept, and it's one of the items we recommend comparing across offers.
What can I use a business term loan for?+
Most business purposes are fair game — equipment, expansion, renovation, hiring, debt consolidation, or inventory for a known opportunity. Term loans are best suited to specific, one-time investments rather than ongoing day-to-day costs.
What's the difference between a factor rate and an APR?+
An APR expresses annual cost as a percentage, including most fees, so it's directly comparable between loans. A factor rate is a decimal applied once to the full amount — it isn't an annual rate, and converting it to an APR usually reveals a much higher cost. Always compare on APR where you can.
Will applying affect my credit score?+
Checking your options through Fundur is designed not to affect your credit. If you move forward with a specific lender, that lender may perform a hard credit check as part of their final review — they'll let you know before they do.
Do I need collateral for a business term loan?+
Not always. Secured term loans require collateral such as equipment or real estate; unsecured term loans don't require specific collateral but may ask for a personal guarantee. Which is available depends on the lender and your business profile.
Is Fundur a lender?+
No. Fundur is a financing marketplace. We connect businesses with lenders in our network and help you compare offers; the lenders provide the funds, set the terms, and make the approval decision.
Trusted by business owners across the Fundur network
“We used a term loan to fund our second location in one shot and budgeted the exact same payment every month. Comparing complete offers — not just the rate — saved us more than the lowest-rate option would have.”
Business owner · Term loan · [pending approved testimonial]
Find the term loan that truly fits your business
See the offers you qualify for, compare the total cost of each — not just the rate — and move forward with the one that fits. Checking your options won't affect your credit.
Fundur is a financing marketplace, not a direct lender. We match businesses with lenders in our network. Loan amounts, rates, terms, fees, and funding times vary by lender and are subject to approval. Examples on this page are illustrative only and not an offer of credit.