A Business Term Loan is the most traditional type of small business loan. This is when a business receives a one-time lump sum of capital that is repaid at a fixed rate within a fixed period of time. Typically, the majority of business owners use such proceeds for major capital investment in their business.
Since business term loans have traditionally been a bank product, the approval process is longer, as the applicant is held to a very high standard. The bank typically looks for business owners with strong business credit scores and high personal Fico/Credit scores along with positive cash flow from their business. These type of loans are usually used for long-term investment of the business such as expansion, buying property, or purchasing expensive equipment.
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