Business Loan
A loan used to fund business operations, expansion, or purchases.
A business loan provides a lump sum of capital repaid over a fixed schedule with interest. Types include term loans, equipment financing, commercial real estate loans, and microloans. Qualification depends on credit score, revenue, time in business, and collateral. SBA-backed loans offer favorable terms but have stricter application requirements.
Example
A restaurant secures a $150,000 five-year term loan at 7.5% APR to renovate the dining room and upgrade kitchen equipment, with monthly payments of $3,010.
Why It Matters for Your Business
Choosing the right loan structure and terms can save thousands in interest and ensure payments align with your cash flow cycle.
Practical Tips
- •Compare offers from multiple lenders including banks, credit unions, and online lenders.
- •Calculate total interest cost over the loan's life, not just the monthly payment.
Related Terms
More Banking Terms
ACH
Automated Clearing House - an electronic network for financial transactions.
APR
Annual Percentage Rate - the yearly cost of borrowing including fees.
APY
Annual Percentage Yield - the real rate of return on savings including compound interest.
Bank Reconciliation
Matching bank statements with internal records to identify discrepancies.
Business Checking
A bank account designed for business transactions.
Related Financial Guides & Resources
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