Medium to long-term business loans
Most businesses need a financial helping hand to either get them off the ground or expand and a medium to long-term business loan can be one of the best ways to get funding. It’s not as easy as it once was to find business loans, but the major banks still all offer them and if your business plan, credit score and homework is all in place, it’s certainly worth applying.
You can get insurance from these companies through MoneySuperMarket, but this doesn’t include every single insurer on the market.
Fee free small business loans from 1,000 up to 35,000
Pay back terms to suit you – borrow for one year, or up to 10 years
Small Business Loan
Rates from 4.5% per year. Terms from 6 months – 5 years
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How our site works
When you’re looking for a medium to long term business loan, we want to give you as much choice as possible, so you can choose what’s best for you. Some lenders don’t want to be included on comparison websites, so we can’t promise to show you every single one. We show high street banks at the top of the list, with other lenders further down. We rotate the other lenders on the 1st of every month, so the ranking order changes regularly. You can find out more about how we work here.
Medium to long-term business loans
Setting up a business or expanding your current one can be expensive. Some people opt to fund it themselves but for many, this is impossible and chances are you’ll need financial support.
The reason many business owners prefer a medium to long-term business loan is so they can be certain that they will have funding in place to support their enterprise for several years. In turn, this will help them plan and budget.
Here, we take a closer look at some of the advantages and disadvantages of medium to long-term business loans…
Longer term loans
A medium to long-term business loan typically enables you to borrow money to help your business for one to five years.
The loan is repaid in monthly instalments, with interest added to the amount you owe. There are two types of business loan:
- Fixed rate of interest: Your payments won’t change over the term of the loan.
- Variable rate: The amount you owe could vary over the loan term.
Make sure you know which you are getting into as this could have a real impact on budgeting for your business.
Advantages of a medium to long-term loan
A medium to long-term business loan can help with all the costs associated with setting up a business, from cashflow to expenses and paying staff.
The longer the term of your loan, the lower your monthly payments will be, as you are spreading the cost over a longer period of time. This can be useful when you are trying to get your business off the ground, as it means you won’t have to make high monthly payments at a time when there will invariably be plenty of other set-up costs to consider.
Disadvantages of a medium to longer term loan
Taking out a business loan over a longer period may mean that your payments are lower than if you’d opted for a shorter term loan, but remember that ultimately this means you will pay more interest overall.
How much interest will you pay?
The amount of interest you must pay on a business loan will depend on your individual circumstances, including how much you want to borrow and over what period of time. If your business is just starting out, the lender will usually want to look at your personal credit rating to give them an idea of how responsibly you manage your money. The higher your credit score, the more likely you are to be offered a loan at a competitive rate of interest.
Alternatives to medium to long-term business loans
As well as loans, there are several other ways that business can secure funding. You may, for example want to use a business account overdraft which can provide you access to funds as and when you need them, making them useful for any unforeseen expenses. Business overdrafts are usually available for any period up to 12 months.
Alternatively, you may want to consider a business credit card. These can provide a useful way to manage staff spending and usually give up to 56 days interest-free credit.
Other options include cashflow finance, which enables companies to borrow against the value of their unpaid invoices, and borrowing against assets, for example your business’s property or equipment.
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Choose a fixed or variable rate Business Loan.
- Make extra payments, which could reduce interest paid over the life of the loan
- Option to swap between interest only or principal and interest repayments
- Redraw allows you to make extra payments and access these funds later.
- Provides certainty in knowing what you’re up for with each repayment
- Protects you from potential future interest rate movements.
Make tax time less taxing
Keep track of your Business Loan balance and financials online (and at tax time, export details of interest paid to your accounting software).
Terms and loan security
The term of your Business Loan will vary depending on security offered (you may swap if your situation changes):
- Loan term up to 30 years when residential property used as security
- Loan term up to 25 years when commercial or rural property used as security.
- Loan term up to 5 years when unsecured (guarantee may be required)
- Establishment fee
- Monthly loan maintenance fee
- Other fees apply.
Here are some important points to consider before applying for a business loan:
- Security – depending on your circumstances, business loans can be unsecured or require security in the form of residential, commercial or rural property. A guarantee will also be required by company directors for corporate borrowers
- Credit history – all borrowers, owners, directors and guarantors must have clear credit records. All statutory payments and ATO liabilities need to be up to date and not under arrangement
- Banking and borrowing history – existing bank accounts and lending products must be within their approved limits
- Domicile – your business must be registered in Australia
Looking to borrow less than $50,000?
Consider our range of business credit cards. Terms and Conditions apply.
Small Business Loan
A small business loan is an amount of money borrowed from a financial institution by a small business person to start, run, or expand a small business.
Getting a Small Business Loan is Difficult
Unfortunately, financial institutions are notoriously reluctant to lend to small businesses – according to a recent survey by ondeck of over 10,000 business loan applicants in the U.S,, 82% were denied financing by their bank.
Loaning to small businesses, especially startups, is a riskier proposition for banks than mortgage lending or lending to larger, established businesses.
In addition, given that the underwriting costs for evaluating, verifying, and processing a small loan is roughly the same as for a larger one, banks can increase their profits by focusing on larger loans to bigger businesses (small businesses typically request loans of less than $500,000). As well as being rejected for financing more often, smaller businesses also typically pay higher interest rates on loans than big businesses.
Consider that you may have an excellent credit rating and a solid business plan and still not be able to get a small business loan because you have no collateral. Even established business people can find themselves in this position, if they do not own enough tangible assets, such as houses or other property.
In other words, the small business loan is not being granted on the status of your business; it s being granted on your personal financial status.
That s why it s important that your personal financial house is in order before you apply for a small business loan.
You will also find that many lenders just don t provide seed money. While they re perfectly willing to give a small business loan to help a business grow, they don t want to take the risk of lending to a start up.
All that being said, you have a better chance of getting a small business loan if you know where to look and are prepared to meet the lender s expectations. Keep in mind that the overarching consideration of lenders is risk management and approval will hinge on their assessment of your ability to pay back the loan.
Increasing the Odds of a Successful Loan Application
Aside from sufficient collateral, financial institutions will need the following before considering a loan application:
- A business plan document that outlines your company, products, target market, staffing, cash flow and other financial projections, etc. Banks scrutinize business plans to reassure themselves that the business they are lending to is likely to be successful. As such, the business plan needs to demonstrate a solid business model backed by sound management.
- If you are an established business, information such as loans/credit history, bank accounts, and other supporting financial information. You should also include accounts receivable and accounts payable statements, and references from vendors that indicate that you have a solid history of making payments on time. Finally, include balance sheets, corporate tax returns, and (if possible) audited financial statements for the previous few years of business.
- A personal financial summary, including details of assets such as property, vehicles, investments, etc. and liabilities such as mortgages, loans, credit card debt, etc.
Note that banks will often also require creditor insurance on business loans, which covers repayment of the loan in the case of death or disability of the business owner(s).
For more on increasing your chances of getting a small business loan, see How to Get a Small Business Loan.
Credit Unions May Be a Better Choice Than Banks
Credit unions are an increasingly important source of financing for small businesses. According to the Huffington Post: From June 2007, the onset of the financial crisis, to December 2015, small business loans outstanding at credit unions more than doubled—growing by slightly more than 130% over the period.
Those loans at banks actually shrank by 10% during that time.
Credit unions are smaller, more locally oriented institutions and as such are more likely to lend to small businesses in their communities. Banks on the other hand, have gotten larger and more national (and international) through mergers and acquisitions. The larger the institution the less likely decisions (such as lending policy) are made at the local level.
Examples: Steven s application for a small business loan was rejected because he didn t have any collateral.
Government Small Business Loans
Government small business loans help put your own business within reach. First there’s the quest for a decent location, then comes building a customer base, followed by all the initial hiccups of generating a cash flow before your business grows roots and gains momentum. The beginning of a business is crucial because it’s when you gain or lose market credibility. If you disappoint your customers, they may not give you a second chance. If your business gets off to a rocky start (most do), and you believe you can recover but need further financing to make this happen, you can apply for government small business loans.
For-profit lenders are reluctant to issue loans to anyone who does not have a strong credit report and financial history. That is not the case with government small business loans. Obviously, a decent credit report is important, and you will have to follow the guidelines regarding the repayment period and the interest rate set by the government, but usually the interest rates charged by government loans are lower than those you could expect in the private sector.
More about Government Small Business Loans
Government loans are typically offered through banks and credit unions that partner with the Small Business Administration (SBA). The SBA is a U.S. government body, with the motive of providing support for small businesses and entrepreneurs. For each loan authorized, a government-backed guarantee offers serious credibility, since the lender knows that even if you default, the government will pay off the balance. These loans can be applied to a number of uses, such as:
- Purchase of new equipment, machinery, parts, supplies, etc.
- Financing leasehold improvements
- Commercial mortgage on buildings
- Refinance existing debt
- Establishing a line of credit
Government small business loans benefit both small businesses and the lending agency. For small businesses, it is beneficial because this is money capital they may not have access too. For banks, the loan’s risk is decreased due to the loan being backed by the SBA.
Different SBA Government Loans
The SBA extends financial help through various lending programs it has to offer. Some of the more popular loans are:
- 7(a) Loan Guarantee Program: aimed primarily in helping a small business start or expand its services. The maximum size of such a loan is $5 million.
- MicroLoan Program: mostly used for short-term purposes, such as purchase of goods, office furniture, transportation, computers, etc. The maximum amount is fixed at $50,000.
- 504 Fixed Asset Program: featuring fixed-rate and long-term financing, these loans are aimed at applicants whose business model will benefit their community directly, either by providing jobs or bringing needed services to an underserved area. Again, the maximum amount is $5 million.
- Disaster Assistance: under this program, loans are sanctioned to renters or homeowners with a low-interest, long-term plan for the restoration of property to its pre-disaster condition.
In most cases, maintaining a good business credit report is enough to qualify. In addition, it instills confidence not only in the lender, but also in you. There is at least one SBA office in every state in America. If you contact them regarding the startup status of your business model and plan, you can get started on a government small business loan that will give you the financing to make your dreams a reality.
Vehicle equipment finance
When you don’t want to use cash flow to purchase new assets.
- Business vehicle finance: Buy, hire or lease the latest model without tying up your cash
- Business equipment finance: Buy, hire or lease – the choice is yours when it comes to financing plant and equipment.
Provides cash flow relief with funds to cover business expenses, such as invoices and wages until you’re paid.
- Unsecured Business Overdraft: Up to $50k. No asset security taken. Director’s Guarantee required for Corporate borrowers
Great for purchasing an existing business or franchise, or investing to grow.
- Westpac Business Loan: Borrow from $20,000 and choose between a fixed rate with predictable repayments or variable rate with flexible repayments
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Credit criteria, fees, charges, terms and conditions apply. Talk to your banker for product details.
Conditions, fees and charges apply. These may change or we may introduce new ones in the future. Full details are available on request. Lending criteria apply to approval of credit products. This information does not take your personal objectives, circumstances or needs into account. Consider its appropriateness to these factors before acting on it. Read the disclosure documents for your selected product or service, including the Terms and Conditions or Product Disclosure Statement, before deciding. Unless otherwise specified, the products and services described on this website are available only in Australia from Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.
SBA Disaster Loan Application Deadlines Nears
AUSTIN, Texas – Two important deadlines are ahead for Texans who are considering a loan through the U.S. Small Business Administration for recovery from the April storms and flooding.
Most survivors who registered with FEMA for disaster assistance were contacted by the SBA with information on the agency’s loan-interest disaster loans, as well as instructions on how to complete the loan application.
The deadline to submit the application for physical damage is June 24, 2016. The deadline for businesses to submit a loan application for economic injury is Jan. 25, 2017.
The SBA is the federal government’s primary source of money for the long-term rebuilding of disaster-damaged private property, offering low-interest disaster assistance loans to businesses of all sizes, private nonprofit organizations, homeowners and renters.
Survivors may apply online using the electronic loan application via SBA’s secure website at disasterloan.sba.gov/ela.
Disaster loan information and application forms are also available from SBA’s customer service center by calling 800-659-2955 or emailing [email protected] Individuals who are deaf or hard‑of‑hearing may call 800-877-8339. For more disaster assistance information or to download applications, visit sba.gov/disaster.
Completed applications should be mailed to:
U.S. Small Business Administration
Processing and Disbursement Center
14925 Kingsport Rd.
Fort Worth, TX 76155
SBA loan applications should be submitted even as disaster survivors await an insurance settlement. The loan balance is reduced by the settlement. SBA loans may also be available for losses not covered by insurance.
Both FEMA and the SBA encourage Texans who suffered damage or loss from the April storms and were provided a loan application to complete the application. There is no obligation to take a loan if offered. If approved, and a survivor does not accept the loan, it may make them ineligible for additional federal assistance.
Homeowners may borrow up to $200,000 from SBA to repair or replace their primary residence.
Homeowners and renters may borrow up to $40,000 to repair or replace personal property.
Businesses may borrow up to $2 million for any combination of property damage or economic injury. SBA offers low-interest working capital loans—called Economic Injury Disaster Loans—to small businesses and most private nonprofit organizations of all sizes.
FEMA’s mission is to support our citizens and first responders to ensure that as a nation we work together to build, sustain, and improve our capability to prepare for, protect against, respond to, recover from, and mitigate all hazards.