How long are Business Loans?

You’ve probably seen the terms ‘long-term business loans’ and ‘short term business loans’ dozens of times in your search for a suitable option. At some point, you would have asked, “Just how long are business loans?” The term of a business loan has important implications for the cash flow of your business. After all, repayments are another expense to be paid. The truth is that business loans vary widely from lender to lender in terms of length.

What is the average length of a business loan?

Most short term loans are usually about 6 months while long term loans typically run for up to 7 years with a variable rate. The exact length depends on multiple factors- what you intend to use the loan for, your cash flow position, the loan provider’s terms and conditions. While it’s true that traditional lenders typically provide longer repayment periods than online lenders, they usually have more restrictive terms and conditions. Online lenders are more flexible in this regard. The repayment schedule is another key factor. For example, daily repayments might reduce the term of the loan versus monthly replacements. Short term loans generally have shorter repayment schedules while long term loans typically run for longer. When talking to a loan advisor, ensure you specifically ask how long are business loans - someof them can often have different repayment periods, even with the same provider.

What is the maximum term for a business loan?

Short term loans in Australia can run for a maximum of 18 months. On the other hand, long term loans can stretch from1 to 30 years, depending on the lender. A long term loan comes at a higher risk to a lender so they will decide on the maximum term on a case-by-case basis after reviewing your application. This can include your business as well as personal credit along with business income and expense statements and/or tax returns. If you have a good credit score, you can naturally expect a longer repayment schedule compared to someone who doesn’t. If your credit score isn’t good, you might secure a longer term by opting for a secured loan.

How much can I borrow for a business loan?

Most Australian lenders will fund short-term loans worth $50,000 to $500,000 without security. If you need a higher amount, you will likely need to provide collateral or a personal/third-party guarantee.  

 

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