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✅Borrow larger amounts and spread the repayments over time
Borrow larger amounts Access the funds you need to really grow your business.
With a longer repayment term, interest rates are often more competitive.
Spread the cost of your loan to make repayments more manageable.
Use the funds for a wide range of business needs, from purchasing a property, to covering costs.
A long term business loan is a type of funding that provides your business with a lump sum, which you repay over several years. The repayment period typically ranges from 24 months to 5 years, although some may have even longer terms. This means your monthly repayments (including both the loan amount and interest) will be lower than those of short term loans as they’re spread out, making it easier on your cash flow.
Long term loans are usually only available to businesses with a strong financial history, a good business credit score, and / or assets to secure against the loan.
A long term business loan gives your business a lump sum of money upfront, which you repay over several years in fixed monthly payments. Each payment includes part of the original loan amount (the principal) and interest. The exact length of the loan depends on your agreement with the lender, typically it will be over several years.
Here's how it works to get a long term loan:
To be eligible for a long-term loan, you generally need to meet these criteria:
Businesses with a strong financial history are more likely to qualify for a long term loan. Long term loans are riskier for lenders because they are repaid over a longer period, making the borrower’s financial stability harder to predict. Changes in business performance, asset value, or the risk of default can make it more difficult for lenders to recover the loan. To mitigate this risk, long term lenders tend to have stricter requirements.
If you haven’t been trading for long, offering an asset as collateral may still help you secure a long term loan. However, if you're not eligible for a long term loan, there are plenty of alternative funding options available. You can speak with one of our funding specialists to learn more.
Open a new shop, increase office space, or launch a new product.
Buy a property, machinery, vehicles, or technology.
Pay for staff, manage cash flow, and keep your business running smoothly.
Swap expensive short term loans for a more manageable long term loan.
| Advantages | Disadvantages |
|---|---|
| Because the loan is paid back over a longer period, the monthly payments are typically lower, making it easier to manage your monthly cash flow. | You are committing to making payments for a long time, which might not be suitable if your business's financial situation changes. |
| Long term loans typically allow for larger borrowing limits. | Even though the monthly payments are lower, you may end up paying more in total interest over the life of the loan compared to a short term loan. |
| Many long term business loans have fixed interest rates, so your monthly payments stay the same over the life of the loan. This predictability helps with budgeting and financial planning. | Long term loans often require the business to provide some form of security, such as a personal guarantee or a business asset. |
Interest rates for long term loans depend on several factors, including the lender, the business's financial health, and whether there is an asset used as collateral. Secured loans, which require collateral, generally come with lower interest rates. However, unsecured loans are riskier for the lender, so they often have higher rates, though they are usually quicker to access.
Long term loans typically have lower interest rates compared to short term loans. However, since they are repaid over a longer period, the total interest paid over the life of the loan could be higher, even if the annual interest rate is lower.
| Loan type | Description |
|---|---|
| Asset finance | Used to buy business assets like machinery or vehicles, these loans are secured against the asset itself. |
| Commercial mortgage | A loan to purchase or refinance commercial property. These loans will require a deposit and will be secured against the property itself. Term lengths of up to 25 years are available. |
| Unsecured long term loans | These loans do not need a business owner to provide security in the form of an asset or property. Instead the lender will use the business’ credit score, financial health and revenue to assess affordability. This offers faster access to funds, but usually comes with higher interest rates than secured. |
| Secured long term loans | These loans require collateral (such as property or assets), as security. They usually offer lower interest rates and higher borrowing limits than unsecured long term loans. |
It’s unlikely, as bad credit presents a higher risk for lenders. Since long term loans usually involve larger sums of money and are repaid over a longer period, lenders are more cautious. If your business credit score is poor, lenders may be concerned about your ability to repay the loan, making it harder to qualify. However, if you have high-value assets, you may be able to use them as collateral, making a long term loan a viable option in some cases, even with a poor business credit score.
The term length for a business loan depends on the type of loan, the lender, and your business needs. For example, long term commercial property loans can go up to 25 years, while unsecured long term loans typically range from 3 to 5 years.
Many lenders require a personal guarantee for long term business loans. This means the business owner is personally responsible for repaying the loan if the business can’t. There are some lenders that offer loans without a personal guarantee, so if you’d prefer not to offer one, you can search for funding with Capitalise. Our funding specialists will help you understand which options could be available.
The amount you can borrow depends on several factors, including your business credit score, annual revenue, and the value of any assets you can use as collateral. Generally, the stronger your financial profile, the more you may be eligible to borrow. You can sign up to Capitalise to check how much you could be eligible to borrow, based on these factors. You can also use our business loan calculator to estimate your monthly repayments and see how much you could afford to borrow.
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