Learn more about Business Term Loans
- Competitive Rates
- Flexible Terms
- Collateral secured by business assets, vehicles or equipment
- Third-party closing costs may apply
Consider a business term loan from the American United Federal Credit Union if you need flexible, affordable funding for your small or medium-sized business. With a term loan, business owners receive the approved amount in a lump sum, then repay a set amount with interest monthly, weekly, or twice a month for the agreed-upon loan term. We offer our small business clients term loans for a range of purposes, usually with lower interest rates and access to higher capital than you can access with business credit lines and other funding options.
Understanding Types of Business Term Loans
If you need short-term financing, consider a term loan of 12 months or less. This type of funding can support daily operations or provide a remedy for temporary cash flow limitations, which are common with seasonal businesses.
For larger purchases such as equipment and inventory, a medium-term business loan makes the most sense. With this loan, you can spread out payments for one to five years. Medium-term business loans can also pay off company credit cards or loans with high-interest rates.
Long-term business loans provide significant capital with repayment over at least six years and up to 20 years. Consider long-term funding for major expenses such as heavy equipment, real estate purchases or renovations, and new construction.
Regardless of the length of your business term loan, your company can use the funds as needed for growth and expansion. Use the loan proceeds to support:
- • New product development, testing, and marketing
- • New business locations
- • Upgrades for existing business locations
- • Purchase of a vehicle or fleet of vehicles
- • Outfitting locations with heavy equipment
- • Workforce recruitment, training, and payroll
Qualifying for Business Term Loans
A company usually has to have at least two years of operating history to be eligible for a small business term loan. The minimum business credit score to qualify for a term loan is about 620, though lenders may require up to 680 for long-term or high-capital funding. You must also prove a minimum annual income of $10,000 to $20,000 and show a low debt-to-income ratio. That number, which compares your company’s debt to its income, gives lenders an idea of your ability to pay back the term loan.
If your company does not have the history, income, or credit to qualify for an unsecured business term loan, you may be eligible for a secured term loan. This type of financial requires collateral such as inventory, equipment, or real estate.
To apply for a business term loan with American Federal Credit Union, you must become a member. Membership is open to anyone who attends school or worships, works, or lives in Tooele County or Salt Lake County. Credit union members can also invite their family members to join.
Choosing the Right Business Term Loan
In general, business term loans and rates are fixed between 7% and 30%. While variable-rate loans may offer lower introductory rates, payments will increase over time if the federal interest rate rises. For this reason, fixed-rate loans offer more predictability and security. Most business term loans provide funding of $25,000 to $500,000, though some companies can access up to $1 million in borrowed capital.
Term loans are a good choice if you need cash for your business fast. Qualifying candidates can often access funds within just a few days of submitting an application.
Before deciding on a loan, carefully review the terms and conditions. Avoid term loans with prepayment penalties, since these fees prevent you from paying off the loan early if you can afford to do so.
Take your enterprise to the next level today with a business term loan from American United Federal Credit Union. Our members benefit from our commitment to meet underserved financial needs for clients throughout Utah, a commitment we have honored since our first location opened in 1952. Contact us today to explore our diverse, flexible business funding options and take advantage of our competitive interest rates and fair terms and conditions.