Many things in life cost money—and unfortunately, you may not always have the cash on hand to fund an important purchase. For those who need capital to invest, especially in business expenses, a term loan may be the right fit to bridge the gap. To understand whether a term loan is the right product for you, be sure to talk to the experts. At Woodsboro Bank, we are proud to get to know every one of our clients so that we can offer guidance that is tailored to them.
What Is A Term Loan?
The word “term” in “term loan” refers to the period of time over which a loan must be repaid. Term loans are a type of cash influx that can range from one year to multiple years. You can use a term loan to acquire the cash that you need for larger purchases without the need to take out a personal loan. Because term loans are built for larger purchases, you may see different qualification requirements or interest rates on this type of product—and they may be more in your favor.
What You Can Use A Term Loan For
Term loans are available for a wide variety of purchases, but most commonly, businesses will use term loans to fund large expenses. These may include:
- Expansions of the business
- Opening a new branch
- Refinancing existing debt
- Purchasing real estate
These are just a few of the many potential uses for a term loan. Your local bank can help you understand what types of purchases are possible with a term loan. It is important to note that some details of your term loan may differ from a personal loan or business loan. You should always do research into the right type of product for your situation. Term loans often have a shorter term than other loans you may be familiar with, such as mortgages. Additionally, term loans may contain provisions that assess a penalty for prepaying the loan; this means that if you try to pay off the loan ahead of time, you could pay fees. This is not true of all loans, so you should always speak with a professional to learn about the terms and create a product option that is ideal for your circumstances. You should also know that even if you operate as a business, you may still be required to offer a personal guarantee or put up collateral for the loan. This helps the bank to be sure that, should you default, they can recover their investment.
Trust Your Local Bank To Provide Personalized Guidance On The Right Loan For Your Goals
Whether you are ready to get started with a term loan or you’re not sure if it’s the right product for you, trust the experts. The professionals at Woodsboro Bank would be happy to review your goals and help you choose the right loan product for your situation. Reach out to schedule an appointment.