Typical Loan Term
Typically 3 months to 2-3 years.
Typically 3 to 10 years; up to 25 years for real estate.
Typical Loan Amounts
Generally smaller amounts (e.g., $5,000 - $250,000).
Can be much larger (e.g., $25,000 - $5 million+).
Interest Rate Profile
Often quoted with factor rates or higher APRs. Total interest cost might be lower due to short duration.
Usually lower APRs than short-term options, but total interest paid over the loan life can be substantial.
Repayment Frequency
Can be daily, weekly, bi-weekly, or monthly.
Typically monthly payments.
Common Uses
Working capital, inventory, seasonal needs, bridging cash flow gaps, small projects, emergency funding.
Major equipment purchases, real estate acquisition/development, business acquisition, significant expansion projects, long-term strategic investments.
Qualification Speed & Difficulty
Often faster approval process, can be easier to qualify for, especially with online lenders. May focus more on cash flow.
More stringent qualification criteria, longer approval times. In-depth review of credit history, financials, and business plan.
Collateral
May be unsecured or require less collateral (e.g., specific asset, UCC lien). Some rely on personal guarantees.
Often secured by significant assets (e.g., real estate, equipment, blanket lien). Personal guarantees common.
Impact on Cash Flow
Higher, more frequent payments can strain cash flow if not planned for.
Lower, predictable monthly payments spread over a longer period, potentially easing immediate cash flow burden.
