The Tarboro office forwards the request; whether to offer a term loan, and on what terms, is each funding partner's decision.
A term loan gives one sum and a fixed monthly payment for a set number of months. It fits fixed-price items that last for years. The examples here are invented: a station store grill line, a laser engraver, a packaging machine, a dance studio's portable floor and mirrors, a digital press and two mowers.
At a glance
- Payment
Level payments, set by the partner
- Fits
Fixed-price items with a long life
- Who decides
The funding partner
Fixed monthly payments on a roller grill line for a Tarboro, NC gas station's store
A term loan turns one price into a payment that does not move. An invented Tarboro, NC gas station prices a roller grill, a bun warmer and a heated merchandiser for its store counter at $11,240. Three years of payments at 11.15% a year would run the station an invented $368.78 each month, $13,276.08 across all 36 (our arithmetic).
The grill line is store equipment that plugs in at the counter. Any new electrical circuit for it is property work outside this site, so the quote the station brings should list the units on their own.
What is a small business term loan? A laser engraver for a Tarboro, NC trophy and sign shop
A small business term loan is the same structure at a smaller size: a fixed amount, a fixed term and a payment that covers interest and principal each month. An invented Tarboro, NC trophy and sign shop buys a laser engraver for $28,350 over 48 months at an annual rate of 10.35%.
The invented payment is $723.80. Of the first one, $244.52 covers interest and $479.28 reduces the engraver balance (our arithmetic). Each month the interest share shrinks a little as the balance falls. The 48 invented payments total $34,742.40.
Long-term loans in practice: 84 payments on an Edgecombe County, NC manufacturer's packaging machine
Longer terms spread a large price thinly. An invented Edgecombe County, NC manufacturer finances a $96,400 packaging machine over 84 months at an annual rate of 9.6%. The invented payment is $1,580.50 a month.
| Year | Paid | Interest | Principal | Balance after |
|---|---|---|---|---|
| Year 1 | $18,966.00 | $8,815.49 | $10,150.51 | $86,249.49 |
| Year 2 | $18,966.00 | $7,797.00 | $11,169.00 | $75,080.49 |
| Year 3 | $18,966.00 | $6,676.31 | $12,289.69 | $62,790.80 |
| Year 4 | $18,966.00 | $5,443.19 | $13,522.81 | $49,267.99 |
| Year 5 | $18,966.00 | $4,086.31 | $14,879.69 | $34,388.30 |
| Year 6 | $18,966.00 | $2,593.31 | $16,372.69 | $18,015.61 |
| Year 7 | $18,966.10 | $950.49 | $18,015.61 | $0.00 |
Seven invented years of payments come to $132,762.10, and interest makes up $36,362.10 of it. In year one of the invented schedule, interest takes $8,815.49 of the $18,966.00 paid; by year seven it is $950.49. A seven-year payment on one machine is a large commitment, so the term is worth setting against how long the machine is expected to run.
What is a commercial term loan? A portable floor and rolling mirrors for an Edgecombe County, NC dance studio
Some banks call the same product a "commercial term loan." An invented Edgecombe County, NC dance studio buys portable sprung floor panels, two rolling mirrors and a set of freestanding barres for $15,800. Spread across 30 monthly payments priced at 11.7% a year, they cost the studio an invented $609.99 a month, or $18,299.70 by the last payment (our arithmetic).
Floor panels laid over the existing floor, rolling mirrors and freestanding barres are equipment that can move with the studio. A floor built into the room or mirrors bolted to the walls is property work outside this site. Whether the floor panels and mirrors themselves secure the loan is a collateral question, taken up in its own article.
How the term length moves total interest: 36 or 60 payments on a Tarboro, NC print shop's digital label press
| Term | Monthly payment | Total of payments | Interest |
|---|---|---|---|
| 36 months | $1,857.80 | $66,880.80 | $9,430.80 |
| 60 months | $1,224.89 | $73,493.40 | $16,043.40 |
Stretching the invented press to 60 payments frees $632.91 each month; the shop pays $6,612.60 more interest for that room (our arithmetic). A term close to the press's working life keeps the shop from paying for a machine it has already replaced. Choosing the product before the lender is the third step in a first-loan article.
Bundling two stand-on mowers into one term loan for an Edgecombe County, NC landscaping crew
One request can cover several items bought together. An invented Edgecombe County, NC landscaping crew buys two stand-on mowers and a set of trimmers and blowers for $26,350, and would pay an invented $679.11 a month for 48 months at a 10.85% annual rate (our arithmetic).
- The quote with each item and its price
- How long the business has operated
- Recent business bank statements
- Any other equipment payments already running
See the six funding types for items that fit equipment financing better.
By Riverview Business Loans · Updated