Business loans · Terms
Business Loan Terms Explained: How Long You Can Borrow for Each Product, and How the Term Changes the Cost
The term of a business loan (how long you have to repay it) sets the payment, the total interest and, often, whether you are approved at all. Terms run from three months on a merchant cash advance to 25 years on an SBA real estate loan, and the right one is the shortest term the cash flow can carry for the asset being financed. This guide lists typical terms by product in October 2026, shows how the same $100,000 changes with the term at Prime 7.00%, and explains the other “terms” in a loan agreement that matter as much as the length.
How Long Are Business Loan Terms?
Typical business loan terms in 2026: merchant cash advances and revenue-based financing three to 18 months; online term loans six months to five years (most 12 to 24 months); online lines of credit revolving, with each draw repaid over six to 18 months; bank term loans one to seven years for working capital and equipment; equipment financing two to seven years, matched to useful life; SBA 7(a) loans up to ten years for working capital and equipment and 25 years for real estate; SBA 504 loans ten, 20 or 25 years; commercial real estate loans five to 25 years; and invoice factoring per invoice, typically 30 to 90 days. Longer terms lower the payment and raise the total interest; shorter terms do the reverse. Lenders match the term to the asset: nobody finances a truck over 25 years or a building over 12 months. The term is also one of several contract terms (rate type, payment frequency, prepayment, covenants, guarantee) that decide what the loan costs and what it restricts.
Typical Terms by Product, October 2026
| Product | Typical term | Range | Payment frequency | Rate at Prime 7.00% |
|---|---|---|---|---|
| Merchant cash advance | 6 – 9 months | 3 – 18 months | Daily or weekly | Factor 1.15 – 1.50 |
| Revenue-based financing | 6 – 12 months | 3 – 18 months | Daily or weekly | Factor 1.15 – 1.45 |
| Online line of credit | Revolving; 6 – 18 months per draw | Up to 24 months per draw | Weekly or monthly | 8% – 36% APR equiv. |
| Online term loan | 12 – 24 months | 6 months – 5 years | Weekly or monthly | 10% – 36% APR |
| Bank line of credit | Revolving; annual renewal | 1 – 3 years | Monthly interest | Prime + 1 to 4 |
| Bank term loan | 3 – 5 years | 1 – 7 years | Monthly | 7% – 11% |
| Equipment financing | 3 – 5 years | 2 – 7 years | Monthly | 9.9% – 24% (6% – 12% bank) |
| SBA 7(a) working capital or equipment | 10 years | Up to 10 years | Monthly | 10.00% – 13.50% |
| SBA 7(a) real estate | 25 years | Up to 25 years | Monthly | 10.00% – 13.50% |
| SBA 504 | 20 or 25 years (10 for equipment) | 10 – 25 years | Monthly | 6.3% – 7.0% debenture |
| Commercial real estate loan | 5 – 10 years (20 – 25 yr amortization) | 5 – 25 years | Monthly | 7% – 9% |
| Invoice factoring | Per invoice | 30 – 90 days | At customer payment | 1% – 4% per 30 days |
Through RAN Funding, term loans run up to three years; bank and SBA term loans run longer. Product detail: business term loans, long-term business loans, short-term loans.
How the Term Changes the Cost of $100,000
| Term | Rate | Monthly payment | Total interest | Interest per year of use |
|---|---|---|---|---|
| 12 months | 12% | $8,885 | $6,620 | $6,620 |
| 24 months | 12% | $4,707 | $12,980 | $6,490 |
| 36 months | 12% | $3,321 | $19,570 | $6,520 |
| 60 months | 12% | $2,224 | $33,470 | $6,690 |
| 120 months (SBA 7(a) at 11.5%) | 11.5% | $1,406 | $68,700 | $6,870 |
Total interest on $100,000 at 12%, by term
The payment falls by 75% from one year to five; total interest rises five-fold. The right term is the shortest the cash flow carries comfortably.
Run your own numbers in the business loan payment calculator.
Matching the Term to the Asset
- Working capital gap (receivables, payroll, inventory turn): 3 to 12 months; the receipts that close the gap should repay the loan. A line of credit fits better than a term loan.
- Equipment: 3 to 7 years, never longer than the useful life; a five-year loan on a three-year asset leaves you paying for something you no longer use.
- Expansion, second location, hiring: 3 to 10 years; the returns take time, so an SBA 7(a) or bank term loan fits.
- Real estate: 20 to 25 years; SBA 504 or a commercial mortgage.
- Refinancing expensive debt: the term that makes the new payment comfortably smaller than the old without stretching so far that total interest exceeds the saving; see business debt consolidation.
- Seasonal businesses: terms that end before the slow season or payments that flex with revenue.
Share of applicants fully approved, by product (Federal Reserve, 2026)
81% of applicants were approved for at least part of the request. Source: Federal Reserve Banks, 2026 Report on Employer Firms.
The Other Terms That Matter
| Contract term | What to look for | Why it matters |
|---|---|---|
| Rate type | Fixed vs variable (Prime + margin) | Variable rates moved up a quarter point in September 2026 and may again |
| Payment frequency | Daily, weekly, monthly | Daily payments on a 1.25 factor take 15% – 30% of deposits |
| Amortization vs balloon | Fully amortizing or balloon at maturity | A 5-year loan on a 20-year amortization needs a refinance at year 5 |
| Prepayment | Waived, discounted or full remaining interest | Decides whether paying early saves anything |
| Personal guarantee | Unlimited, limited, burn-off | Your personal exposure |
| Collateral and liens | Specific vs blanket UCC | What the next lender can take |
| Covenants | Minimum cash flow coverage, no new debt without consent | Breaching one can trigger default while you are current |
| Renewal and draw terms | Annual review; per-draw repayment | A line can be cut or re-priced at renewal |
| Reconciliation (MCA) | Right to adjust payments to actual revenue | The clause that lets you survive a slow quarter |
How to read an offer against these is in how to compare business loan offers; fees are in business loan fees.
Common Questions
What is the typical term for a small business loan?
Twelve to 24 months for online term loans, three to five years for bank term loans and equipment financing, up to ten years for SBA 7(a) working capital and equipment loans and 25 years for SBA real estate loans. Revenue-based products run three to 18 months.
Is a longer loan term better?
It lowers the monthly payment and raises the total interest. A longer term is better when the asset lasts that long (equipment, real estate, expansion) and cash flow is the constraint; a shorter term is better for working capital that pays back quickly. On $100,000 at 12%, five years costs five times the interest of one year.
What is the longest term for a business loan?
Twenty-five years, on SBA 7(a) and 504 loans and commercial mortgages secured by real estate. Equipment and working capital loans top out at ten years under SBA programs and seven years conventionally.
Can I change the term of a business loan after I sign?
Usually only by refinancing, which many lenders allow after six to twelve months of payments, or by requesting a modification during hardship. Lines of credit are re-termed at renewal. Factor-rate products are fixed unless a reconciliation clause applies.
How does the loan term affect approval?
Lenders approve the term the cash flow can carry: a request for $100,000 over 12 months needs about $8,900 a month of free cash flow; over 36 months, about $3,300. Asking for a term that matches the asset and the cash flow is approved more often than asking for the shortest or longest available.
Is RAN Funding a lender?
No. RAN Funding is a business financing broker. We present your application to our lender network and show you the offers you qualify for; the funding partner sets the approval, amount, rate, fees and terms.
Sources
- SBA 7(a) loan terms and maturities — U.S. Small Business Administration
- 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey — Federal Reserve Banks
- H.15 Selected Interest Rates (bank prime loan rate 7.00%) — Board of Governors of the Federal Reserve System
- Small Business Lending Survey, Second Quarter 2026 (released September 24, 2026) — Federal Reserve Bank of Kansas City
See What You Qualify For
One application, about five minutes, soft pull only. A funding specialist tells you up front which products fit your file, what they cost and how fast each one funds.
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