Fixed amount, fixed term, fixed payments — predictable financing for major investments.
A lump sum, a fixed term, fixed monthly payments. The structurally cleanest financing product for major one-time investments where the math is predictable and the horizon is multi-year.
At a glance
Amount
$25,000 – $500,000 (partner network); larger with banks
Term
6 – 60 months (alternative); 1 – 10 years (bank)
Pricing
15 – 60% APR (alternative); 7 – 15% APR (bank)
Time to fund
2 – 7 business days (alternative); 2 – 6 weeks (bank)
Qualifications
650+ owner FICO, 24+ months in business, $25,000+ monthly deposits, profitable financials
See Your Approval Odds Across Financing Products
Heuristic approval-likelihood estimate per product based on your business profile — no
hard credit pull, no commitment, takes 10 seconds. Final approval is the lender's
decision after underwriting your full file. Estimates below are shown as
Approval Likelihood by Product.
Network-typical eligibility floor
Files at or above these thresholds typically have the broadest lender access. Below
doesn't mean declined — the lender decides on the full file.
| Product | FICO | Time in business | Revenue |
| Term Loan | 650+ | 24+ months | $25K+ monthly revenue |
- Term Loan: Profitable trailing-12mo strengthens the file materially.
What to assemble before applying
Network-typical document requirements. Faster files have these ready on Day One.
Term Loan
- ✓ Business bank statements — Most recent 3 months
- ✓ Voided business check — For ACH setup
- ✓ Owner photo ID — Driver's license or passport
- ✓ Business entity proof — Articles, EIN letter, or LLC certificate
- ✓ Business tax returns — Most recent 2 years
- ✓ Business debt schedule — All existing positions
- ✓ YTD profit & loss + balance sheet
+ may be requested
- Personal financial statement (PFS)
- Personal tax returns — 2 years for owners with 20%+ stake
- Projections — 12-24 months if loan funds growth/expansion
Lender-specific stipulations may add to this list. Have the required items ready at
intake to start the underwriting clock.
Refinancing two MCAs into a 24-month term loan
$100,000 term loan, 24-month term, 28% APR, 3% origination fee capitalized
- Loan amount
- $100,000
- Origination fee (3%, capitalized)
- $3,000
- Effective principal
- $103,000
- Quoted APR (illustrative)
- 28%
- Monthly P&I payment
- ≈ $5,653
- Total paid over 24 months
- ≈ $135,672
- Two MCAs being refinanced (daily-debit equivalent)
- ≈ $8,400 / month combined
Why this matters: Monthly outflow drops from ≈ $8,400 to ≈ $5,653 — ~$33K/year of cash flow restored, total interest paid drops, single fixed payment replaces two daily debits.
What underwriters actually weight
Trailing-12mo profitability
Bank-tier term loans require profitable trailing twelve months; alternative term loans accept thinner files at higher rates.
Debt service coverage (DSCR)
Lenders model new payment + existing debt service against trailing cash flow. 1.20+ is the typical bank-tier floor.
Time in business
24+ months is the floor for alternative term loans; banks generally want two years of complete tax returns.
Owner FICO
650+ unlocks alternative term loans; 680+ unlocks bank-tier; 700+ unlocks the cleanest pricing.
Typical files we route to Term Loan
Illustrative scenarios drawn from the lender partner network — not specific customer
data. Your actual options depend on your file.
Mid-Atlantic GC, 3 years TIB
Situation
Buy out a 25% partner — $200K one-time capital need with multi-year ROI.
Typical match
Alternative term loan, 36-month, P&I amortization on monthly schedule. Use-of-funds matched the structurally clean term-loan shape.
Speed
Approval in 48 hours; funded in 5 business days.
Illustrative — not specific applicant data
Southwest medical practice, 8 years TIB
Situation
Consolidate three legacy financings into a single 24-month payment.
Typical match
Consolidation term loan — cash flow improvement of ~30% per month, total interest reduced vs. holding the legacy stack.
Speed
Approval in 3 business days; funded in 7 business days.
Illustrative — not specific applicant data
Midwest manufacturer, 10 years TIB
Situation
$400K build-out for new production line — capital deploys once, ROI horizon 4–6 years.
Typical match
Bank term loan, 60-month, fixed-rate. File qualified on profitable trailing financials and clean debt schedule.
Speed
3–5 weeks from intake to funding.
Illustrative — not specific applicant data
How Term Loan funding moves
Three steps from application to funded. ClearValue Lending handles intake + matching;
the funding partners make the offer and funds.
1
Full file with tax returns and debt schedule
Two years of business tax returns, YTD P&L + balance sheet, debt schedule, owner personal financial statement on stronger applications.
2
Underwriting in 2–7 days (alternative) or 2–6 weeks (bank)
Lender models DSCR, validates use of funds, runs personal credit. Bank loans add covenant negotiation and (for larger loans) collateral analysis.
3
Sign closing docs, funds wire in 1–3 business days
Origination fees and any prepayment penalty appear in the closing disclosure — read every line before signing.
Bank vs. alternative term loans
Bank term loans run 7–15% APR for qualified borrowers, terms commonly 3–10 years, larger amounts (often $100k–$5M+), and require strong financials, two-plus years of profitable operating history, and a thorough underwriting process that takes 2–6 weeks.
Alternative / broker-network term loans run 15–60% APR (depending on file strength), 6–60 month terms, $25k–$500k typical, and fund in 2–7 business days after a moderate underwriting pass. They exist because plenty of profitable businesses can't pass a bank's covenant package — they have revenue, they have credit, they just don't fit the bank box.
When a term loan beats a line or an MCA
A term loan wins when the capital need is one-time, large, and tied to a specific use. You're buying out a partner. You're building out a new location. You're acquiring a competitor. The capital goes out the door once, the ROI is multi-year, and you want fixed payments you can budget against.
A term loan loses when the capital need is recurring or unpredictable (a line is more efficient because you're not paying for capital you haven't deployed) or when speed matters more than total cost (an MCA funds in 24–48 hours; even a fast term loan is days to a week).
Refinancing higher-cost debt
One of the most underused term-loan strategies for SMBs is consolidation. A business that's three years old, profitable, and stuck with two MCAs at 60% effective APR can often refinance into a 24-month term loan at 25–35% APR. Cash flow improves immediately because the daily debits become a single fixed monthly payment, total cost drops, and the operator regains breathing room.
The math has to pencil — refinancing only helps if total interest paid drops or cash-flow improvement is worth the swap. Run both scenarios before committing.
What to watch for
Three watchouts: origination fees (1–6% of the loan amount, capitalized into the loan), prepayment penalties (some term loans charge for early payoff — kills the consolidation play if not negotiated up front), and personal guarantees (standard on alternative term loans; sometimes negotiable on bank loans for stronger borrowers). Always get the all-in payment schedule before signing — that's the only number that tells you what the loan actually costs.
Program + market references
- SBA 7(a) maximum loan amount is $5 million; the 7(a) Small Loan program covers up to $350K (lowered from $500K under SOP 50 10 8, effective June 1, 2025). The SBA sunset the mandatory FICO SBSS 155+ gating threshold effective March 1, 2026 (Procedural Notice 5000-875701) — lenders now set their own credit-scoring bar. SBA Preferred Lenders (PLP) have delegated authority to close loans without separate SBA approval — compressing typical timelines from 60-120 days to 30-60. — SBA SOP 50 10 8
- Federal Reserve H.15 publishes weekly Prime rate updates that drive variable-rate term loan pricing — including SBA 7(a), whose maximum spread over Prime runs from exactly 3.0% on its largest, longest-maturity loans (over $350,000) up to 6.5% on its smallest loans (≤$50,000) — with 6.0% for $50,001–$250,000 and 4.5% for $250,001–$350,000 in between (the cap is highest for small loans, not lowest). — Federal Reserve H.15
- The Federal Reserve's 2026 Report on Employer Firms (2025 Small Business Credit Survey) found lines of credit remained the most-sought financing product for the third consecutive year, with term loans serving as the primary vehicle for capital-intensive one-time needs — equipment purchases, real estate improvements, and business acquisitions. — Fed SBC Survey 2026 (2025 data)
Frequently asked questions
What credit score do I need for a business term loan?
Alternative term loans typically start at 650+ owner FICO with 24+ months in business. Bank term loans usually require 680+ FICO, two years of profitable operating history, and full financial documentation (P&L, balance sheet, tax returns, debt schedule).
How long does a business term loan take to fund?
Alternative / broker-network term loans typically fund in 2–7 business days after document submission. Bank term loans usually take 2–6 weeks from application to funding given the more thorough underwriting process.
Can I use a term loan to refinance a merchant cash advance?
Yes. Refinancing one or more MCAs into a single term loan is one of the most common consolidation plays for businesses that have stabilized after using cash advances. The math has to pencil — confirm total interest paid drops, or at minimum that monthly cash flow improves enough to justify the transaction.
Is a term loan cheaper than an MCA?
Almost always, when you qualify. A 24-month term loan at 30% APR is meaningfully cheaper than a 9-month MCA at a 1.28 factor (≈ 60% effective APR). The trade is qualification — term loans require longer time in business, better credit, and more documentation than MCAs.
Are origination fees standard?
Yes, on most alternative term loans. Origination fees typically run 1–6% of the loan amount and are usually capitalized into the loan (added to the principal). Confirm whether the fee is on the loan disclosure as 'origination,' 'closing,' or 'processing' — same fee, different label.
Do business term loans require collateral?
Alternative term loans are typically unsecured — backed by a personal guarantee and a UCC-1 blanket filing on business assets, but not specific collateral. Bank term loans for larger amounts often require specific collateral (real estate, equipment, accounts receivable) in addition to a personal guarantee.
Best fit
- Major one-time investments (build-out, acquisition, large equipment)
- Businesses with strong credit and stable, predictable cash flow
- Operators who value payment predictability over flexibility
- Refinancing higher-cost debt (consolidating MCAs into a term loan)
Probably not the right tool if
- Recurring or unpredictable capital needs (line of credit fits better)
- Sub-12-month businesses (most term loans require 24+ months)
- Owners with sub-650 FICO (alternative MCA or revenue-based product fits)
- Short-fuse opportunities (term loans take longer to fund than MCAs)
Industries that lean on this product
Deeper dive (8 min read)
Term Loan for Small Businesses in 2026 — When It's the Right Tool
The full guide with eligibility math, the complete document checklist, the 2026
timeline reality, and the decision framework for whether this product fits.
Read the guide →
Related guides
Quick answers
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Editorial disclaimer: This page is for educational purposes
and is not financial, legal, or tax advice. Rates, fees, qualification requirements, and
product availability are illustrative ranges that vary by lender, market conditions, and
individual business profile. ClearValue Lending is a funding platform; all financing is
subject to lender partner approval and terms. Actual approval, amount, and pricing depend on
lender review. Always read your contract end to end and verify specific numbers before
signing. ClearValue Lending is compensated by the funding lender on closed transactions.
https://clearvaluelending.com/business-loans/term-loan
