A term loan is a business loan with a fixed amount, fixed APR (or floating tied to prime), fixed repayment schedule over a defined term — typically 1-10 years for working capital, up to 25 years for SBA real estate. Repayment via fully-amortizing monthly payments.
Term loans are the most familiar form of business debt — fixed amount, fixed term, predictable payments. The closest parallel to a personal installment loan or mortgage. APR is typically 8-15% for bank-tier prime credit, 12-30% for online/fintech, with SBA 7(a) offering the lowest rates (prime + 2.25-4.75%) at 10-25 year terms. Term loan vs revolving line of credit: term loans are best for one-time use-of-funds (equipment purchase, acquisition, real estate, large inventory buy). LOCs are best for ongoing/cyclical working-capital needs where you draw and repay multiple times. Term loan vs MCA: term loans have lower APR + longer terms but slower funding (2-6 weeks vs 1-3 days for MCA) + tighter credit requirements. Most small businesses with the time to qualify will save significantly with a term loan over an MCA at equivalent dollar amount. Common term-loan sources for SMB: SBA 7(a), bank business loans (Chase, Wells Fargo, BofA), online lenders (Bluevine, Funding Circle, Credibly), credit unions for member banking. The SBA's 7(a) loan program page (https://www.sba.gov/funding-programs/loans/7a-loans) documents maximum loan terms and allowable uses. The Federal Reserve's Senior Loan Officer Opinion Survey (https://www.federalreserve.gov/releases/sloos/) tracks term-loan credit standards across commercial banks quarterly, providing insight into current lending conditions for small businesses.
Bank-tier prime credit (680+ FICO, 2+ years in business, demonstrated cash flow): 8-15% APR for 3-7 year terms. Online/fintech tier: 12-30% APR for similar terms. SBA 7(a): prime + 2.25-4.75% (so currently ~9-12%), 10-25 year terms.
Term loan for one-time use of funds with a defined need (buying equipment, acquiring a business, large inventory purchase). LOC for ongoing access to capital — cyclical working capital, seasonal cash flow, opportunity-based financing. Many businesses use both.