A term loan is the plainest deal in business finance: you get a lump sum today and pay it back in scheduled installments over months or years. That simplicity hides a lot of variation. Two lenders can both call their product a “five-year term loan” and differ by tens of thousands of dollars once you account for the rate, the fees, how often payments come out, what they lien and what it costs to pay early.
This guide compares the lenders actually making term loans right now, from big banks to SBA specialists to online lenders, and shows you the parts of a term sheet that most comparison sites skip: lien position, covenants, prepayment rules and payment frequency. It also helps you pick the right term length for what you’re buying, which matters more than most owners realize.
Eight Straight Answers Before You Apply
Short versions first. The detail follows.
For a strong borrower at a bank, high single digits to low double digits right now. U.S. Bank advertises 7.99% to 11.99% fixed on secured loans. Anything above about 20% APR means you’re in online-lender territory.
Most bank and online term loans max out at five years; iBusiness Funding goes to seven. SBA 7(a) loans run up to 10 years for working capital and most equipment, and up to 25 for real estate.
Typically two years in business and at least $100,000 in annual revenue. Chase also asks for a 660 FICO score and no change in majority ownership in the past two years.
Not in the conventional sense. Wells Fargo focuses on lines of credit and SBA loans for small businesses; it doesn’t offer standard unsecured term loans.
Usually, but check the fee. U.S. Bank charges a small fee in year one; Chase applies prepayment fees above $250,000; iBusiness Funding charges none. With factor-rate loans, paying early often saves nothing unless there’s a payoff discount.
Fixed, for most term loans. The Fed raised rates in September and has signaled another increase may come; a fixed rate protects your payment for the life of the loan.
Often. Secured loans name specific collateral; many lenders also file a UCC blanket lien on all business assets. Almost all require a personal guarantee.
Yes, with care. The Kansas City Fed’s latest survey shows stronger loan demand at banks of every size for the first time since early 2022, while standards kept tightening and approval rates rose at small and large banks.
How Term Loan Lenders Actually Differ
Rate is only one dimension. Speed, term length, payment frequency and how much paperwork you’ll face all vary by lender type.
When we lined up the published terms side by side, the pattern was consistent. Banks win on price but want history, revenue and often collateral. SBA lenders win on term length, which keeps monthly payments low, but the paperwork and the wait are real. Online installment lenders fill the space for businesses a bank won’t approve, at roughly double to triple a bank’s rate. Short-term online lenders are fastest and most lenient, and the price reflects it.
The Federal Reserve’s latest Small Business Credit Survey, based on more than 6,500 employer firms, captures how this feels from the borrower’s side. Applicants at small banks were the most likely to be fully approved, while 60% of online-lender borrowers said their costs turned out higher than they’d expected. Speed of decision was the top reason firms gave for applying online.
The Best Business Term Loan Lenders, and Who Each Fits
We picked these by reading each lender’s current product pages and disclosures, then running the same sample loan through each. The low end of every advertised range goes to the strongest applicants.
U.S. Bank publishes its rates, which is rare. Its secured business term loan advertises fixed rates from 7.99% to 11.99% for credit-qualified applicants, with terms of 49 to 60 months, fixed monthly payments and a $0 origination fee. Loans over $100,000 get an extra 1% rate discount, and the advertised rate assumes automatic payments from a U.S. Bank account. An unsecured version goes up to $50,000 over as long as 48 months.
Watch for: a personal guaranty is required, and repaying within the first year triggers a 1% prepayment fee, capped at $100. Rates were effective as of late September and can change.
Chase’s small business term loans run up to $500,000, typically for up to five years, with monthly installments and a $0 origination fee. Requirements are clearly stated: at least $100,000 in annual revenue, a 660 FICO score and no change in majority ownership or management in the past two years. Relationship pricing can trim 0.4% to 1.2% off the rate on new loans or lines over $500,000.
Watch for: prepayment fees apply on loans over $250,000. Chase doesn’t publish rates; you’ll need to talk to a banker.
An unsecured term loan starting at $10,000 with terms of one to five years and a $150 origination fee if approved. You’ll need two years in business under the current ownership and at least $100,000 in prior-year revenue. Bank of America has been advertising a 0.50% rate reduction on new accounts. A secured business loan with terms up to five years is also available.
Watch for: rates aren’t published, and “two years under existing ownership” rules out recently acquired businesses.
Live Oak was again the nation’s largest SBA 7(a) lender by dollar volume in the fiscal year that ended September 30, with about $2.6 billion approved, down 9% as SBA rules tightened. In the prior year it approved 2,280 loans totaling more than $2.8 billion. High-volume SBA lenders matter because they know the rules cold and move files faster. Rates are capped by the SBA; at today’s 7.00% prime, variable caps run 10% to 13.5% depending on loan size, and comparison data lists Live Oak from 9.50% variable.
Watch for: SBA upfront fees of 2% to 3.75% of the guaranteed portion on most loans approved since October 1, and the SBA’s requirement that every owner be a U.S. citizen or national.
After buying Funding Circle’s U.S. business, iBusiness Funding continues offering term loans from $25,000 to $500,000 with terms from six months to seven years and monthly payments. Interest rates start at 7.49%, though comparison data shows APRs starting around 22.45% once fees are included. There’s no prepayment penalty. Published minimums vary slightly by source: roughly a 640 to 660 personal credit score, two years in business, and annual revenue of at least $50,000 to $100,000.
Watch for: the gap between the interest rate and the APR. Ask for the APR and every fee in writing.
OnDeck’s term loans go up to $400,000 for top applicants, with terms up to 24 months and same-day funding possible. Minimums are a 625 FICO score, one year in business and $100,000 in revenue. It reports payments to business credit bureaus. OnDeck’s own disclosure puts its average term-loan APR at 56.4% for loans originated in the first half of 2025, with APRs starting around 35%.
Watch for: daily or weekly payments and a blanket lien on business assets.
Working capital loans from $5,000 to $500,000 over 4 to 24 months, priced with factor rates starting at 1.10 plus an origination fee of 1% to 3%. Unlike most factor-rate lenders, National Funding doesn’t charge a prepayment penalty and instead offers an early payment discount. Equipment loans run 24 to 60 months from a 4.99% simple rate.
Watch for: daily or weekly payments, and a factor rate that converts to a much higher APR on short terms. Ask for the exact size of the payoff discount.
Fora Financial and Credibly market to businesses with lower credit, with minimums around 550 to 570 and about $240,000 in annual revenue. Both quote factor rates starting around 1.11 to 1.13. A factor rate isn’t an interest rate: on short terms with frequent payments, a 1.13 factor can mean an APR several times higher. These can be useful for owners whom banks have declined, but compare them using APR, not the factor.
Side-by-Side: Term Lenders Compared
Use this to shortlist, then request written offers from two or three.
| Lender | Amount | Term | Price | Fees / prepay | Minimums |
|---|---|---|---|---|---|
| U.S. Bank | To $250K secured; $50K unsecured | 49–60 mo | 7.99%–11.99% fixed | $0 orig; 1% (max $100) yr 1 | Credit-qualified, guaranty |
| Chase | To $500K | Up to 5 yrs | Not published | $0 orig; prepay fee >$250K | 660 FICO, $100K rev |
| Bank of America | From $10K | 1–5 yrs | Not published | $150 orig | 2 yrs, $100K rev |
| Live Oak (SBA) | To $5M | 10–25 yrs | SBA-capped | SBA guaranty fee | SBA rules |
| iBusiness Funding | $25K–$500K | 6 mo–7 yrs | From 7.49% rate | No prepay penalty | 640–660, 2 yrs |
| OnDeck | To $400K | Up to 24 mo | ~56% avg APR | Origination possible | 625, 1 yr, $100K |
| National Funding | $5K–$500K | 4–24 mo | Factor from 1.10 | 1%–3% orig; payoff discount | ~600–660 |
Pick the Term Before You Pick the Lender
The most common term-loan mistake isn’t the wrong lender. It’s the wrong length. A loan should end around the time the thing it paid for stops earning money.
Here’s why it matters. Finance a delivery van over two years and the payment may crush your cash flow, even though the van will work for seven. Finance a holiday inventory buy over five years and you’ll still be paying interest on goods you sold four Christmases ago. Both are expensive, in different ways.
Shorter is cheaper in total interest, longer is easier on monthly cash flow. If cash flow is comfortable, take the shorter term. If it’s tight, take the longer one with no prepayment penalty, then pay extra when business is strong. That combination gives you the safety of a low required payment and most of the savings of a short loan.
Payoff Planner: See What Early Repayment Really Saves
Enter an offer and the month you think you’ll pay it off. The planner shows the true APR with fees, the payment, and how much paying early actually saves, depending on how the loan is priced.
Estimates only. Your loan agreement is the final word.
With the defaults, a $100,000 five-year loan at 9.99% paid off after two years saves about $10,630 in interest. Now switch the pricing to “Factor rate / flat fee,” enter 1.20 and an 18-month term, and set payoff to month 9. Unless there’s a discount, the savings drop to zero: you owe the full $20,000 fee whether you take 9 months or 18. That’s the most important structural difference between interest-rate loans and factor-rate loans, and it’s why we weighed prepayment rules so heavily in our picks.
We also found that a penalty can quietly erase the benefit of refinancing. Enter a 3% prepayment penalty on the defaults and you’ll see about $2,000 of the interest savings disappear. If you think you’ll refinance into an SBA loan or a cheaper bank loan within a year or two, the prepayment clause may matter more than the rate.
The Fine Print That Decides Whether a Term Loan Is Good
Two offers with the same rate can be very different loans. These are the terms we checked on every lender, and what to ask about each.
A blanket UCC lien gives the lender a claim on essentially all your business assets. It’s normal, but it has a hidden cost: the next lender sees that lien on a public filing and either takes a second position at a higher price or declines. If you’re financing a specific asset, ask for a lien on that asset only. OnDeck, for example, files a blanket lien on its term loans.
Nearly every small business term loan requires one; U.S. Bank states it outright. An unlimited guarantee means the lender can pursue your personal assets if the business can’t pay. For larger loans with several owners, ask whether a limited guarantee capped at your ownership share is available.
Bank loans often include rules you must follow for the life of the loan: a minimum debt-service coverage ratio, a maximum debt-to-worth ratio, minimum cash balances or annual financial statements. Breaking one can technically put you in default even while you’re paying on time. Read the covenant section first and model whether a bad quarter could trip it.
Three possibilities: no penalty (iBusiness Funding), a penalty that shrinks over time or applies above a size (U.S. Bank in year one; Chase over $250,000; SBA 7(a) loans of 15 years or more during the first three years), or a flat fee owed regardless of timing (most factor-rate loans unless a discount is offered, as at National Funding).
Banks and most installment lenders take one payment a month. Short-term online lenders often debit daily or weekly. The total can be identical, but daily debits leave your account lower every day and give you less room to manage around slow weeks. Ask for monthly payments; some lenders offer them to stronger borrowers.
Most bank term loans and online installment loans are fixed. SBA 7(a) loans are usually variable, tied to prime, which rose to 7.00% after the Fed’s September increase. The Fed’s next decision is October 28; Fed minutes showed most officials expected another increase before year-end. On a $250,000, 10-year variable loan, each quarter-point increase adds roughly $30 to $35 a month.
What Term Lenders Look At, and How to Look Better
Banks are tightening standards while demand rises. The Kansas City Fed’s survey has shown net tightening and declining applicant credit quality for 16 straight quarters. A well-prepared file stands out.
Debt service coverage
Lenders divide your cash available for debt by all your loan payments, including the new one. Most want at least 1.15 to 1.25. Run the math before you apply; if you’re short, ask for a longer term or a smaller amount.
Two years of tax returns that match your bank statements
Underwriters compare deposits to reported revenue. Large unexplained gaps slow approvals and invite questions.
Personal and business credit
Bank minimums cluster around 660. Pull your personal reports free at AnnualCreditReport.com and dispute errors. Check that suppliers report your on-time payments to business credit bureaus.
A one-page use-of-funds summary
What you’re buying, what it costs, how it produces revenue and how quickly. It turns a credit decision into a business case.
A complete debt schedule
List every loan, line, lease and advance with balance, payment and maturity. Surprises on a credit report are the most common reason we see files stall.
Start with your own bank
Relationships were the top reason firms chose a bank in the Fed’s survey, and some lenders discount rates for existing customers.
Which Situation Sounds Like Yours?
The best term lender depends on what you’re financing and what your file looks like.
Look at equipment financing first, where the item itself secures the loan, or a bank secured term loan like U.S. Bank’s. You’ll typically get a lower rate and avoid a blanket lien. National Funding’s equipment loans start at a 4.99% simple rate over 24 to 60 months; ask for the APR including fees. For very large purchases, an SBA 504 loan offers a fixed rate for up to 25 years.
An SBA 7(a) acquisition loan from a high-volume lender is usually the best fit, with terms of 10 years or more. The rules tightened in October: most change-of-ownership deals now need 1.25 times debt coverage, at least 10% equity with no more than half from non-cash sources like seller notes, and a CPA-prepared quality-of-earnings report for deals above $3 million. Note that Chase and Bank of America’s conventional term loans require two years of stable ownership, which won’t fit a brand-new buyer.
Move from daily debits to one monthly payment with a longer term. A bank or iBusiness Funding loan, or an SBA 7(a) where the refinance meets the program’s benefit tests, can cut monthly payments dramatically. Before you apply, get a written payoff letter from the current lender and check its prepayment terms; a flat-fee loan may cost the same whether you refinance or not.
Most banks will wait until you hit two years. In the meantime, OnDeck lends after one year, and SBA microloans and community development lenders serve younger firms. If you can wait a few months to cross the two-year line, you’ll usually unlock far cheaper bank pricing.
Banks and iBusiness Funding will likely say no. OnDeck accepts 625; Fora and Credibly accept the 550 to 570 range at factor-rate pricing. Before taking one, spend 60 to 90 days on credit repair: pay card balances below 30% of their limits and dispute errors. Moving from 610 to 660 can cut your rate in half.
Most online term lenders top out at $400,000 to $500,000. Look to SBA 7(a) loans up to $5 million, SBA 504 for real estate and big equipment, or a commercial banking relationship. Chase’s relationship pricing discounts are aimed at loans over $500,000.
SBA loans are off the table under the citizenship rule in effect since March 1. Conventional bank loans and online lenders apply their own eligibility rules, so start with your bank and iBusiness Funding.
Our Verdict
A bank term loan. U.S. Bank stands out for publishing fixed rates from 7.99% with no origination fee; Chase and Bank of America are strong options if you already bank there. Get quotes from at least two, ask for an asset-specific lien where possible, and compare covenants as carefully as rates.
An SBA 7(a) loan from a high-volume lender such as Live Oak Bank, provided every owner meets the citizenship rule.
iBusiness Funding, for its longer terms, monthly payments and no prepayment penalty. Use OnDeck only when you need money within days.
Questions people still ask
What’s the difference between a term loan and a line of credit?
A term loan gives you the full amount once and you repay it on a fixed schedule. A line of credit lets you draw and repay repeatedly up to a limit, paying interest only on what you use. Term loans suit one-time purchases; lines suit uneven cash flow.
How fast can I get a bank term loan?
Usually two to six weeks from a complete application. Online installment lenders take days to a few weeks, and short-term lenders can fund the same or next day.
Can I get a term loan for a startup?
Rarely from banks, which typically want two years of history. Startups should look at SBA microloans, community development lenders, and SBA 7(a) loans with a 10% equity injection.
What’s an origination fee, and is it negotiable?
It’s an upfront fee, usually a percentage of the loan, often deducted from the proceeds. Some banks charge little or none: U.S. Bank and Chase list $0 and Bank of America $150. With online lenders, it’s sometimes negotiable for strong files.
Do term loans affect my personal credit?
The application usually triggers a hard inquiry on the guarantor. Many business loans don’t appear on personal reports while current, but a default on a personally guaranteed loan can.
Are business loan interest payments tax deductible?
Generally, interest on money used for business purposes is deductible, subject to limits for larger businesses. Confirm with your tax professional.
Should I take a variable rate if it’s lower today?
Only if you can absorb increases. The Fed has been raising rates, not cutting them. On a long loan, a fixed rate is usually worth a modest premium.
What happens if I can’t make a payment?
Call the lender before you miss it. Many offer short-term payment changes. Missing payments can trigger default, collection against collateral and, with a personal guarantee, against your personal assets.
How this page was checked. Bank terms come from U.S. Bank, Chase and Bank of America product pages as of late October; U.S. Bank’s advertised rates were effective September 28. Online lender terms come from lender disclosures and recent independent reviews. SBA lender volume comes from industry reporting on SBA data. Lending conditions come from the Kansas City Fed’s Small Business Lending Survey and the Federal Reserve Banks’ Small Business Credit Survey. Payment examples are our own calculations. Your loan agreement is the final word.
This page is independent and is not affiliated with any lender listed. It’s general information, not legal, tax or financial advice.
Key sources: Federal Reserve · Kansas City Fed · SBA · lender disclosures