Getting a sustainable funding option for your business is essential for its growth. The availability of banks and other alternative lending options makes it easy to secure funds. It is, however, important to settle for a financing option that suits your needs. For any small business, taking a business term loan should be an option. But how do term loans work?

What is a Term Loan?

A term loan provides you with the funds needed for business or personal needs upfront and in a lump sum. The amount you get comes with an interest fee that determines the total repayment. With term loans, you get the amount over a fixed period or as agreed with the lender. The amount and the repayment period also vary depending on your business or personal needs.

How Term Loans Work

Like most loans, the borrower makes an application with the lender and waits for feedback. Usually, the lender looks at the borrower’s credit history and legibility to determine if they are a good fit before approval. Upon agreement and approval, the lender deposits the funds in the borrower’s bank account, making it accessible. As the borrower, sticking to the repayment agreement with the lender is vital. With term loans, failure to make timely repayments attracts penalties.

The Pros of a Term Loan:

Suits Short-Term Financial Needs

You can count on term loans to handle short- and long-term financial needs in your home or business. You easily grow your operations, buy new assets and maintain proper cash flow in your business using a term loan.

Builds Business Credit

One way to build business credit fast is by securing a term loan. Making timely payments on the loan you took makes improving and building a positive credit history possible. Your business remains attractive to available lenders, making it easy to get funded and remain successful.

Lower Interest Rates

Compared to other types of loans, a term loan has a lower interest rate, making it suitable for small businesses. The flexible repayment terms help businesses meet their immediate and long-term financial needs effortlessly. The low rates make navigating your business’s financial needs easy.

When seeking a personal or business financing option, finding one that sustains your needs is vital. With term loans, you easily meet your expectations. At Green Apple Funding, we help you determine the relevance of a term loan to your needs. Reach out and let our experts guide you.