Term Loans Are a Great SBA Alternative

Loans guaranteed by the Small Business Administration (SBA) are often considered the gold standard for small business lending. However, not all entrepreneurs will have access to SBA loans.

Whether SBA loans are out of reach because you need money quickly or because you haven’t been in business long enough, don’t fret. You still have funding options! Term loans from other lenders are great alternatives to SBA loan funding.

What is a term loan?

Term loans are loans that give business owners a lump sum of cash to be repaid with interest under specific terms. The loan will come with a pre-determined repayment schedule (typically monthly or quarterly) and either a fixed or variable interest rate.

SBA loans are actually an example of term loans. However, a number of other sources offer term loans, from banks and credit unions to online lending institutions. Each lender will have their own unique set of requirements to meet in order to access funding.

Term loans can also be secured (requiring collateral) or unsecured (not requiring collateral or a personal guarantee). The interest rates and repayment terms may be more favorable for secured loans versus unsecured loans.

Term loans are often used by established business owners to purchase fixed assets, but the funds can be used for almost anything. This might include inventory and equipment, buildings and land or just padding cash flow. Generally, term loans are best used on upfront expenses, not ongoing costs. Lines of credit are better for ongoing purposes.

To apply for a term loan, you’ll need to submit an application with the standard set of documents, such as business financial statements, business and personal tax returns, bank statements and a business plan.

Why use a term loan?

As favorable as they are, SBA loans are not for every business. Because they are backed by the federal agency, these loans have very strict requirements. Some entrepreneurs may not be eligible for an SBA loan because of their time in business, because they don’t have enough money for a cash injection, or potentially due to not having the minimum credit score needed for an SBA loan. Other business owners might need money faster than the SBA can approve and fund their loan.

With general term loans, the requirements may be less stringent than the SBA. Collateral and cash injections are generally not required for term loans, making them more accessible. Additionally, depending on the lender, term loans might offer faster payment than the SBA would.

In a general sense, term loans are ideal funding options because they offer favorable terms and relatively low interest rates. They also help businesses budget more easily, because they come with a predictable repayment schedule.

Unsecured term loans through Tenet Financial Group

Tenet Financial Group can connect small business owners with favorable term loans as an alternative to SBA funding. Our unsecured term loans have the following attributes:

  • Possible funding range from $25,000–$150,000
  • Get approval and funding in 2–3 weeks
  • No cash injection or cash reserve required
  • Must have household income of at least $50,000 annually
  • Must maintain less than 40% debt-to-income ratio
  • Minimum 680 credit score required
  • Repayment term of 5–7 years on average
  • Average of 8­­–12% fixed interest rates

Are you in need of fast funding for your small business? Tenet Financial Group offers SBA and standard term loan products in addition to other funding products. Contact us today to explore your options!