What is a Bank Term Loan?

Here at OnDeck, we’ve been sharing a variety of small business financing options, from business credit cards to receivables financing to business equipment leases, and more. This week, we’ll be talking about bank term loans.

What is a bank term loan?
Bank term loans are issued by a bank and have long-term repayment plans – typically extending beyond one year. These loans normally come with fixed interest rates, and they allow banks to distribute funds in a way similar to lines of credit. Business owners can use bank term loans to draw funds as needed and must pay a fixed amount based on the remaining balance.

What are the different types of bank term loans?
Long-term bank term loans can run for as long as 10 or 20 years, and they often require collateral. Bank term loans can also run for much shorter periods, however, such as two to three years. Banks often refer to the shorter-term options as intermediate term loans.

How long does it take to apply, and how much does it cost?
This depends entirely on your bank, but you can expect the process to take several weeks. After filling out your application, the bank will conduct a full credit analysis of both you and your business. They’ll also analyze your holdings, revenue, cash flow and other financial factors.

Why do businesses obtain bank term loans?
Bank term loans are used for many different reasons, and are entirely dependent on the business in question. Common uses include purchasing real estate, a new facility, or equipment.

What is the difference between a bank term loan and an OnDeck loan?
A bank-term loan is dependent on your personal credit, and banks tend to lend to more established businesses looking for large loan amounts. OnDeck, on the other hand, looks at a variety of factors – not just personal credit – to evaluate the health of a small business. With our streamlined loan application process, you can receive funding in as fast as one business day.

A bank term loan might be an option for you, but always make sure to fully evaluate what works best for your business.

OnDeck is a Google Ventures-backed company with an A+ rating with the Better Business Bureau. The company offers small business loans nationwide to over 725 different industries. For more information about OnDeck small business loans, click here.