Commercial Lending: Understanding the Difference Between Short Term and Long Term Loans

There are many terms and definitions in the world of commercial lending, and if you’re new to this world, the language can be confusing. Understanding the difference between short-term and long-term loans can benefit you and determine the choice you make for the best interest of your company.

If you’re considering applying for a loan for your business, you’ll need to be prepared to inform the bank or other lender how you intend to pay back said loan – in specific terms. The two categories loans typically fall under are short term and long term and they can benefit you in different ways depending on the needs of your business.

A short-term business loan can provide you with cash fast, sometimes within a 24-hour period. The application process is rather detailed and repayment is generally required multiple times a year. This can often be for a smaller sum of money, but often have higher interest rates. However, it’s a relatively easy way for businesses to get liquidity right away without taking on more debt than they really need to. You may need to look to alternative lending options for this type of speedy loan, as traditional lending institutions may be apt to pass on a Arizona commercial lending situation like this that may appear to be high-risk.

A long-term business loan can sometimes be more difficult to obtain. The repayment structure can take place in multiyear terms over the course of 10 years or more. Because interest builds up over time in the case of a long-term loan, you may end up paying more in interest over all. More traditional lending institutions such as banks are more likely to offer this type of loan, however.

When it comes to commercial lending Arizona, which loan is right for me: short-term or long term?

Based on your needs and your eligibility, there is no right or wrong answer. If you need “cash fast,” a short-term loan may be the way to go. If you need a larger sum of money and are prepared to repay it over the course of time in a more traditional manner, long-term might be more suited for your business approach.

Seek the help of a professional lender who can offer advice as to which loan is right for you.

It never hurts to talk to a Arizona commercial lending expert of you are confused about the benefits, terms and repayment structure imposed with the various types of loans. It’s important that the lender understands your specific business needs so they can determine the best loan strategy for you.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.