Are you eligible for a better rate?
The Pros and Cons of Term Loans
The Cons of Term Loans
- High Credit Requirements
Term loans require a high credit score. Strong financial data may work if your credit score isn’t great, but you’ll likely be stuck with a high interest rate.
New companies without an established history — such as startups — could have a tough time securing any term loans, let alone one with an affordable interest rate.
Fortunately, startups have plenty of other options. If you can’t get a term loan for your startup, Fundvisor can help you find another financing source that fits your business.
- May Require a Personal Guarantee
A personal guarantee is an agreement under which you, as an owner of the business, will be held personally responsible for business debt.
In other words: if your business can’t pay the term loan, you have to tap your personal funds to cover the debt.
- Less Flexibility Than a Credit Line
Terms loans are flexible in terms of what you can use them for. However, you don’t have as much flexibility in access and repaying them as you do with credit lines.
With a credit line, you can spend as much as you need (up to your credit limit). As long as you pay down your credit line, you can continue to access more funds.
- The Application Process
Banks often take days to get back to you about your application. When you need funding fast, the speed of the approval process may not cut it.
- Industry Restrictions
Banks have to weigh the riskiness of your business against their return. If you operate in an industry the bank deems to be risky, they may deny your application.
Is a Term Loan Right For You?
Overall, term loans are best for more established businesses. Banks like to see strong credit and healthy financials — two types of data that younger firms may struggle with. Even if you have the data available, you have a business to run — there isn’t time to analyze different financing options.
Whether you’re a startup or an established enterprise, Fundvisor can help you get funding that works for your business. By analyzing your financials and working with you to understand your business better, we can match you to the perfect source of funding — whether or not that’s a term loan. 
We’ll handle the stress and tedium of the application process so you can get back to growing your business. Schedule your free 30-minute consultation with Fundvisor today.
Fundvisor is here to help if you aren’t sure which short-term financing source is right for you. We’ll deal with the paperwork and phone calls for you so you can get the funding you need without wasting valuable time.
Helpful Tips & Information
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Are you eligible for a better rate? Loan TypeTerm LoansSBA LendingLine Of CreditAsset Based LendingCommercial Real State MortgagesEquipment FinanceHedge Fund CapitalRoyalty Capital FundingSaas CapitalYearly RevenueUnder $100,000$100,000 - $250,000$250,000 - $500,000$500,000 - $750,000$750,000 - $1,000,000$1,000,000 - $2,000,000$2,000,000 - $3,000,000$900,000 And Above$3,000,000 And AboveTime in Business2 or more years1-2 years6 months - 1 yearStarting a businessCredit ScoreExcellent (720+)Good (680-719)Fair (640-679)Poor (639 or less) First Name Last Name Email The Pros and Cons of SBA LoansSmall Business Administration (SBA loans) are loans backed by the Small Business Administration. The SBA doesn’t lend the money; banks and other lenders do that. The SBA simply guarantees a large portion of each loan to reduce the lender’s risk. Types of SBA Loans There are several SBA loan types. SBA 7(a): The main type of SBA loan. You can borrow up to $5 million in 7(a) loans. SBA Express: A smaller 7(a) loan with a faster approval process. SBA 504: Designed for acquiring fixed assets. CAPLines: An SBA line of credit. There are several types of CAPLines, each for a different purpose. Export Working Capital: Used to fund operations related to export sales. Export Express: A faster turnaround version of the Export Working Capital loan. Microloans: Small [...]
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