As a small business owner, you may need a loan to expand your business, and when applying for a loan, the common question on business owners’ minds is, “How long can you get a small business loan for your business?” The answer to that question depends on a variety of factors.
Let’s find out the answer to “How long can you get a small business loan for?”
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How Long Is A Typical Small Business Loan?
Typically, the length of a small business loan could range from several months to many years, depending on the type of loan applied for. For instance:
- Term Loans: Three months to ten years
- SBA loans: up to 25 years
- Traditional bank loans: Three years to ten years
- Equipment loans: One year to five years
- Business Lines of Credit: Six months to five years
- Microloans: up to six years
- Invoice factoring: 30 days to 90 days
- Inventory financing: up to one year
- Merchant cash advance: Three months to 18 months
How Long Do You Have To Pay Back A Small Business Loan?
As far as repayment periods go, short-term loans usually have repayment windows of 6-18 months. However, long-term loans can have repayment windows stretching up to 25 years.
Keep in mind that shorter terms lead to higher monthly payments with less interest paid off on the life of the loan, whereas longer terms lead to lower monthly payments with more interest paid off on the life of the loan.
How Long Does A Business Loan Take To Get?
The time it takes to get approved for a small business loan varies depending on factors such as lender and type of loan applied for. Some lenders can provide same-day funding, whereas others may take several weeks to process your application.
You will need to hand in documentation such as financial statements, tax returns, and business plans with your application.
Are Small Business Loans Forgivable?
Some small business loans are forgivable under certain circumstances. The most well-known forgivable loan program is the Paycheck Protection Program (PPP), which the U.S. government created in response to the COVID-19 pandemic.
Small businesses could apply for loans with PPP to cover payroll and other expenses. The loans would be forgivable if the businesses met criteria, such as using the funds primarily for payroll costs and maintaining employee headcount and salary levels.
Another forgivable loan program is SBA Section 7(a) or 504 Microloan, allowing you to get up to eight months of forgiveness (initially three months, but you get another five months if you’re operating in a struggling industry, such as food service and accommodation, arts, entertainment, and education).
It’s important to note that not all small business loans are forgivable, and even forgivable loans have specific requirements that you must meet for the loan to be forgiven. Be sure to carefully read and understand the terms and conditions of any loan program you apply for.
Small business owners have many options when it comes to financing their businesses. The length of a small business loan can vary widely, from a few months to several years, depending on factors such as loan size or the purpose.
The question “How long can you get a small business loan for?” does not have a one-size-fits-all answer but rather depends on the individual circumstances of each business owner.
Do you want to know how to pay small business loans? Check out this guide.