Long-Term Business Loans

Stretch out your loan term and ensure your deal is manageable by comparing your options with Savvy.

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, updated on July 26th, 2023       

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Can I get an unsecured business loan with a long loan term?

Yes, you can. While many unsecured loans are paid off relatively rapidly – often within a year or two – it’s possible to get loans to invest in your business with terms of five years or more, allowing the loan amount to be steadily paid off over time.

One of the most significant advantages of this approach is in the cost of repayments. A reality of loan finance is that the longer the loan term, the lower each individual repayment needs to be. So an unsecured loan with a relatively long term will have lower repayments, and less impact on your business’ monthly budget.

Of course, the trade-off for this is that a longer loan term and larger loan size also means a greater overall cost – there's more time for interest to accrue, meaning your overall cost for the loan goes up. But sometimes this can be a worthwhile exchange for the lower repayments.

With a higher overall cost, this means getting an affordable rate is more important than ever, so if you’re considering an unsecured loan as a long-term option, it’s worth carefully comparing your options and making sure you’re going with the lowest rate available. That generally means your first port of call should be an online comparison website – like Savvy – where you can quickly compare finance options a range of Australian lenders and find the best rate on offer for a long-term loan for your small business.

What other options are available for long-term business loans?

There are other options available for finance over a long period, if you’re in a position to take advantage of them.

One of the most obvious possibilities is a secured business loan – where you’ve offered a significant asset as collateral for the loan. In addition to offering lower interest rates and larger amounts, secured business loans normally have far longer loan terms than an unsecured loan – starting around the 3-5 year mark and potentially going well over 10. The longer terms allows for lower repayments, while the lower interest rates keep the overall cost of the loan lower. Taking out a $100,000 secured loan would cost you less than a $100,000 unsecured loan in almost all cases.

The catch is that you need a significant value asset to offer as security – something like a business property. This often puts these loans out of reach for smaller businesses – who don’t always have many assets to speak of.

Another possibility is business credit facility, such as a line of credit, business overdraft, or business credit card. These can potentially be available to you for a significant period of time – a business credit card is generally permanently available until you choose to close the account. This means you have access to readily available funding on a permanent basis. However, while this is useful for short-term expenses and sudden unexpected costs, the high interest rates on most business credit makes it a poor choice for funding that you need over a prolonged period.

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Why compare business loans through Savvy?

How do I go about getting a long-term unsecured loan?

Frequently asked questions about long-term business loans

If I have a fixed interest business finance with a long term, will the interest revert to variable rate before the loan ends?

It’s not uncommon for a fixed rate loan (also called a fixed term loan) to revert back to a variable rate after a set period of time. This will generally be between one and five years, so it is quite possible this will happen during the life of a long term loan. The time period is generally discussed and set when you set up the loan however, so you should know exactly what you’re getting.

If I set up a loan to have a long term, can I still pay extra to settle the loan sooner?

The majority of business loans will allow you to make additional repayments to a loan to pay it off quicker. It’s worth checking if your lender has any fees that apply when you do this though, as that can potentially lessen the benefit a great deal.

Is it harder to get approval for a long-term unsecured loan than a short one?

No. The approval process should be entirely the same regardless of the loan term.

Can I get other loans while I have a long-term business loan outstanding?

It’s possible, but not generally a good idea. Firstly because multiple loan applications can hurt your credit score. Second because it might be harder to get finance approval if lenders can see your business has an outstanding long term loan.

Can I get a very small business loan that still has a long term?

Yes. Unsecured loans can be for as little as $5,000, so it’s entirely possible to get a small $5,000 business loan with a five-year long loan term. It’s certainly not common, but it’s possible.

Is it useful to have a redraw facility on a long term business loan?

If it’s available, it can be pretty handy. A redraw facility allows you to pay extra on the loan – shortening the loan and earning less interest – but then recover those extra funds if you find yourself needing them. It’s a handy feature to have, especially on a loan that you’ll probably have around for a while.

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