When you run a business, securing business loans or lines of credit should be hassle and headache free so you can spend more time focusing on growing your business. Whether it’s a term loan or a line of credit, borrowing funds can put you in a position for better financial confidence and help ensure future success. So, which is the right type of borrowing for your business?
What is a Term Loan?
Small business owners with sound financial statements can apply for a term loan, which provides borrowers with a lump sum of cash upfront and includes specific lending terms and repayment schedules. Term loans have a fixed or variable interest rate and must be paid over a pre-determined period.
These types of loans are often used when businesses need to purchase new equipment, real estate for production, or other fixed assets to maintain operations. The process begins by applying through a lender, who will examine their financial statements and credit reports. Terms loans also require some form of collateral before approval, and oftentimes they may also require a down payment prior to providing the loan.
A great benefit of term loans is predictable low payments over a longer term and slightly higher loan amounts.
What is a Business Line of Credit?
Many businesses choose to open a line of credit for the flexibility it provides. As compared to term loans, a line of credit works more like a credit card where you can borrow up to a certain limit and choose how much of your funds to access and when. With a line of credit, you only owe interest payments on the amount of money you withdraw.
Lines of credit also function like credit cards in the way that once your outstanding balance is paid, the amount of available credit replenishes. They are often used for more flexible, short-term financing, such as managing cash flow, purchasing inventory, etc. A line of credit functions in two phases: the draw period (typically 10 years) and the repayment period (typically 20 years).
Call The Experts!
At Republic Bank of Chicago, we offer both term business loans and lines of credit. We make borrowing as simple and quick as possible so you can focus on your business. We have an easy application process that ensures you receive your funds swiftly. Here are the benefits you’ll find with Republic Bank:
- Term loans with competitive interest rates, a five-year term, and loan amount up to $250,000.
- Lines of credit with competitive interest rates, a two-year term, and line amounts up to $175,000.
Additionally, there are no prepayment penalties on either of the options above. It’s extremely important to us that we provide you with the proper resources to secure your business’ financial future, so apply in just five minutes and be on your way to instant borrowing decisions. Start your applications now or reach out to us at 800-526-9127 for additional information.