The worked cases below cover a home builder's loader, an insurance agency's move and a therapy office's equipment. Funding partners review each request and decide; call (517) 500-5442 to start one.
A term loan suits one large business cost with a life of several years. The payment stays the same each month; a longer term lowers it and raises the interest. Land and buildings are outside this site.
At a glance
- Fits
One large cost used for years
- Payment
Equal monthly installments
- Not covered
Land, buildings, construction loans
What a term loan covers when an Adrian, MI insurance agency moves to a larger office
An existing agency moving to a bigger rented office faces a cluster of one-time costs at once. A term loan can pay for the business side of the move in one sum: workstations, a phone system, a copier, moving labor and the new lease's security deposit; desks and chairs are furniture and stay outside this site. The building stays the landlord's, and any wall or wiring changes inside it are property work outside this site.
Illustration only, invented figures. An insurance agency in Adrian, MI totals $41,200 for the move. Spread across 60 months at 10.95% a year, the monthly bill for the move is $894.76. Sixty payments total $53,685.60, so the move carries $12,485.60 of interest spread over five years.
One-time cost, repeating cost: how an Adrian, MI home builder splits a term loan from a credit line
A term loan and a line of credit can both pay a builder's bills, but they behave differently. The term loan is borrowed once and paid down to zero on a schedule. The line stays open, and the builder draws on it, pays it down and draws again.
Illustration only, invented figures. A residential builder in Adrian, MI needs $24,000 for estimating software, a plotter and a job-site trailer, a cost paid once. Financed for 36 months at 11.4% a year, the purchase runs $790.28 monthly and carries $4,450.08 of interest across the term. The same builder also fronts about $8,500 for materials on each house until the draw comes in. Drawn on a line at 13.9% and repaid 45 days later, that costs about $145.66 in interest each time.
Putting the one-time cost on the line would leave the limit tied up for years; putting the repeating cost on a term loan would mean borrowing a fresh lump sum for every house. Each cost goes to the product built for it.
Which term length fits? An Adrian, MI physician office financing exam-room computers
A term that runs longer than the equipment lasts leaves the business paying for something it has already replaced. A physician office in Adrian, MI that expects its new exam-room computers to stay in service about four years can compare two terms.
| Term | Monthly payment | Total paid | Interest |
|---|---|---|---|
| 24 months | $929.28 | $22,302.72 | $2,502.72 |
| 48 months | $518.50 | $24,888.00 | $5,088.00 |
The 48-month term lowers the payment by $410.78 a month but adds $2,585.28 of interest, and it ends right when the office plans to replace the machines. The 24-month term costs more each month and finishes with two years of use left.
How a down payment changes the loan on a Lenawee County, MI auto repair shop's tire equipment
A down payment is cash the business puts in up front so less is financed. Some funding partners may ask for one, and some may finance the whole price; the offer says which. For an auto repair shop in Lenawee County, MI buying a tire changer and wheel balancer package, the effect is easy to see.
Illustration only, invented figures. The package costs $28,750. Financed in full at 11.2% a year over 48 months, it runs $745.85 a month, with $7,050.80 of interest. With 15% down, $4,312.50, the shop finances $24,437.50; the payment drops to $633.98 and the interest to $5,993.54. The trade-off is $4,312.50 less cash in the account on day one.
Where each loader payment goes in the first three months, for a Lenawee County, MI home builder
Each payment on a term loan is the same dollar amount; the split between interest and principal shifts as the balance falls. Early payments carry more interest because the balance is highest; later ones go mostly to principal. Illustration only, invented figures: a home builder in Lenawee County, MI finances a $71,350 compact track loader at 10.35% a year over 60 months, for a payment of $1,528.29. Month one's interest is $615.39, one twelfth of the annual rate on the full balance.
| Payment | Amount | Interest | Principal | Balance after |
|---|---|---|---|---|
| Month 1 | $1,528.29 | $615.39 | $912.90 | $70,437.10 |
| Month 2 | $1,528.29 | $607.52 | $920.77 | $69,516.33 |
| Month 3 | $1,528.29 | $599.58 | $928.71 | $68,587.62 |
The sixtieth payment clears what is left. Paying extra toward principal shortens the schedule if the offer allows prepayment; some offers charge for it, so that line is worth reading before signing.
What is a small business term loan? An Adrian, MI therapy office adding rehab equipment
Nothing about the structure changes for a small business term loan: one sum up front, a set number of months, the same payment each month. It can fit a therapy office in Adrian, MI that wants a treadmill with a harness system, parallel bars and a cable column for a new rehab area inside its existing space.
Illustration only, invented figures: the equipment costs $22,600. Over 42 months at 11.85% a year, each payment is $659.99, and the full schedule comes to $27,719.58, including $5,119.58 of interest. If any of the equipment needs anchoring or new outlets, that installation work on the space is property work outside this site.
Articles on this site work similar questions through with invented figures: how a term loan compares with other business loans, a child care center’s strollers and laundry machine, fees and collateral on a therapy clinic loan, first-year costs after a change of owner and UCC liens from filing to release.
By Valeshire Financial · Updated
