One of the most common forms of business financing, a term loan is a medium or long term loan option with terms ranging from one to ten years. These loans make a large amount of funding available to the business in a single sum. As a medium-term loan provider, for example, Sky Business Loans offers small business debt financing for one to three years, for amounts up to $ 1 million.
Term loans have numerous benefits and probably the most doable option for providing funds for new projects, such as employing new personnel, opening a second branch; investing in fresh equipment, or the purchase of a vehicle to accelerate production or services.
Depending on the reason for the loan, term loans have many advantages over other forms of debt financing. However, before deciding which loan option is the best choice, it is important to research all the alternatives and tailor the financial need to the life expectancy of the investment. Depending on their duration, term loans are the best for financing the long-term growth of a business and are generally used to buy assets that will not be converted into cash in a year.
Advantages Of Term Loans
- A Simple and streamlined application process
Unlike many other lenders, Sky Business Loan applicants benefit from a simple and streamlined online application process and know within 48 hours if the loan is approved. Once the loan is approved, financing takes place within seven days.
- Lower interest rates
Due to their longer duration, term loans are available at lower interest rates than short term ones. Also, the interest rates on term loans are fixed and do not vary during the term of the loan.
- Allow operational cash flow to be used elsewhere
Term loans give the borrower opportunities to use its cash flow in other areas, while the loan provides the financing necessary for larger investments in the business. For example, a term loan can give a business the capital it needs to hire a new employee, covering the time it takes to train the employee and allow them to settle in the business before to start contributing to the bottom line.
- Facilitates quick approval and Preserve shareholders’ equity
For businesses that need cash quickly, a term loan can be approved in a short period – from 2 days to 2 weeks, depending on the lender. This option is much faster than other forms of funding. Also, since a term loan is debt financing, it does not affect the interests of the shareholders and keeps the equity of the company intact.
Term loans are flexible: the length, amount, and interest rate of the loan must all be negotiated before the loan is given. The better the credit ratings of businesses and business owners, the more likely and flexible these conditions are to be.
- Accounting and tax benefits
The interest on a term loan is tax-deductible, and the regular payment amounts allow for simple budgeting.
- Receiving a term loan and making payments on time increases your credit rating
Whichever lender a company chooses, the loan can be used as an example of creditworthiness, making it easier to apply for and receive other loans in the future. By repaying a term loan on time and under the terms defined in the agreement, the business can improve its credit rating, which can ultimately lead to other financing opportunities at competitive interest rates.
How Term Loans Can Improve Your Business
Your small business may need quick access to capital from time to time, either to ease seasonal lulls or to increase or hire more employees. Sky Small Business Loans is there to help you and your small business; here, we will describe exactly how a term loan can boost your success.
Small business loans can benefit your business in several ways. From expanding cash flow to hiring additional staff, taking out a line of credit can help your business grow and succeed. Here are some of the ways a term loan can help your business flourish:
Stay in control
If you need financing, you might consider working with a co-owner of your small business. However, by doing so, you are giving up some control over your business as well as lost profits if you decide to sell your business. A small business loan allows you to keep total control of your small business and any potential profits.
Protect your business
Sometimes small business owners are tempted to pay out of pocket to finance their business. Avoid mixing your personal and professional finances, as this can lead to complications later. The IRS requires a separate account for business and individuals. By mixing the two, your financial history will be complicated, making it more difficult to file tax returns. It can also cause a lot of damage to your credit on both sides.
Purchase/rental of new equipment
Upgrading your equipment can be a very costly venture, but if old equipment affects your small business, an upgrade is necessary. By using a Local term loan company, you can buy or rent new equipment for your small business without having to dip into your savings or cash flow.
Hire more staff
As your small business grows, you will take a lot more on your plate. You may not yet have the funds to increase your workforce. A small business loan can give you the funds you need to hire new employees – part-time, full-time or freelance – that will help you grow your business faster.
Grow your business With Sky Business loans
You may want to expand or open an online store for your business, or you are tired of working from home and want to rent an office. A line of credit from Sky Small Business Loans allows you to hire a freelance graphic designer and a web designer as well as a marketing expert to facilitate online expansion. You can also examine certain real estate without financial worries. Feel free to visit us to evaluate your loan options. Contact us today.