A term loan pays a lump sum that comes back in equal payments. A longer schedule shrinks each payment but grows the interest bill. The rate and the term come from whichever funding partner reviews the request.
At a glance
- Used for
Software, tools, machines, bar equipment
- Paid back
Equal monthly payments over a set term
- Decided by
A funding partner, after its own review
Agency software and a producer's laptop on one business term loan for a Mandan, ND insurance agency
An insurance agency in Mandan, ND that adds a producer may need a new agency management software license and a laptop, second monitor and phone headset for the new producer at the same time. Both are known prices with years of use ahead, so one term loan can cover the pair with a single payment. A smoothie and coffee bar that sizes its request from equipment quotes is followed step by step in the request steps post.
A laptop and phone headset for one new producer: 89.3% of the 28 insurance agencies and brokerages with paid staff in Morton County, ND had fewer than five people on the payroll in 2023 (County Business Patterns, NAICS 524210). An agency with a staff that small may find one fixed payment simpler to budget than two separate ones.
How does a business term loan work? A worked case: rolling tool chests at a Mandan, ND repair shop
The lender pays the full amount at the start. Each monthly payment then covers that month's interest on the balance and part of the principal; as the balance falls, more of each payment goes to principal.
Illustration only, invented figures: rolling tool chests for the technicians at a Mandan, ND repair shop cost $12,935, financed over 36 months at a 10.43% annual rate. The invented payment is $419.99. Of the first invented installment, $112.43 pays interest and the remaining $307.56 reduces what the shop owes. The 36 invented payments total $15,119.64, so the interest over the whole term is $2,184.64.
What is a small business term loan? A telehandler for a Morton County, ND home builder
A small business term loan is the same structure sized for a small company: one purchase, one payment, a set end date. Residential building construction had 35 employer establishments in Morton County, ND in 2023 (County Business Patterns, NAICS 2361), and a builder of that size may run one telehandler across several houses at once.
Illustration only, invented figures: a $46,190 telehandler over 60 months at a 9.64% annual rate comes to an invented $973.24 a month; the 60 payments total $58,394.40, which is $12,204.40 of interest in this invented case.
How do long-term loans work? A hydraulic shear spread over 84 months in Morton County, ND
A long-term loan works the same way, with more payments. Stretching the term lowers each payment and raises the total interest, so the trade only makes sense for equipment that will still be working when the last payment is made. An electrical contractor weighing a bank loan against a dealer rate sheet for a cable plow is in the dealer and bank quotes post.
Illustration only, invented figures: a Morton County, ND metal shop finances a $38,615 hydraulic shear at an 8.91% annual rate. Paid across 84 invented months, the shear costs $619.52 a month and carries $13,424.68 of interest. Over 48 months the same invented loan costs $959.29 a month with $7,430.92 of interest. For the metal shop, the 84-month version of this invented loan means $339.77 less leaving the account each month and $5,993.76 more paid to the funding source by the end. The shear's electrical hookup is property work outside this site.
What is a commercial term loan? A glass washer and back-bar coolers in Morton County, ND
"Commercial term loan" is another name for a business term loan, used by banks and other funding sources for the same lump sum and fixed schedule. For a tavern, an undercounter glass washer and two back-bar beer coolers are a one-time purchase that stays in use for years, which is the case a term loan is built for. A janitorial company's floor burnisher, on a loan or on a lease with an hour allowance, is compared in the burnisher hours post.
The washer and the coolers are equipment. Plumbing the washer's water and drain lines, built-in bar counters and any remodeling are property work outside this site.
A tavern pricing a glass washer and back-bar coolers sits among the 23 drinking places with paid staff in Morton County, ND (County Business Patterns 2023, NAICS 7224). Buying the washer and both coolers from one restaurant equipment dealer gives the term loan a single quote and a single total.
Term length on a Mandan, ND tavern's glass washer and cooler quote: 36 months against 60
| Term | Monthly payment | Total of payments | Interest |
|---|---|---|---|
| 36 months | $544.96 | $19,618.56 | $3,142.56 |
| 60 months | $364.09 | $21,845.40 | $5,369.40 |
Illustration only, invented figures: choosing 60 months over 36 on the $16,476 equipment quote trims $180.87 from each monthly payment, while the tavern pays $2,226.84 more in interest over the life of the loan. A tavern whose card sales swing from week to week may value the lower payment; one with steady sales may prefer to pay less in total.
By Thistlepine Capital ยท Updated