What a term loan is good for
A term loan delivers a set amount up front, repaid on a schedule you know in advance. That suits spending that happens once and pays back over time: a second location, a renovation, a bulk purchase of inventory, a vehicle, a major hire. It suits worse a need that comes and goes, where a revolving product fits better.
We do not publish rates or terms, since they depend on the business. What we can state is the range, $25,000 to $5,000,000, and that funding can arrive in as little as 24 hours.
The Modesto projects that fit
- Adding capacity at a food or beverage producer. Wikipedia lists Crystal Creamery, Fiscalini Cheese and Sciabica Olive Oil among privately owned companies based in Modesto. Smaller producers in the same space buy packaging lines, cold storage and delivery vans in steps.
- Expanding a service shop. A repair or steelwork business with a waiting list may need a bigger bay and another technician before it needs anything else.
- Remodeling a downtown storefront. A one-time build-out has a start and end, which is how a term loan is structured.
- Buying a competitor's customer list or a retiring owner's business. The price is known and the revenue is already there.
Fixed payment versus flexible product
| Term loan | Line of credit | |
|---|---|---|
| Best for | One defined purchase | Recurring gaps in cash |
| You receive | A lump sum | Access you draw on as needed |
| Planning | Known schedule | Depends on how much you use |
If your need is ongoing, read the line of credit page. If it is a machine, equipment financing is its own page.
Test the payment against a slow month
Modesto's seasonal swings are part of the planning. Wikipedia describes hot, dry summers and a farm economy built around the valley, so many local businesses see income move through the year. Before taking a fixed payment, look at the lowest month in the last twelve and ask whether the payment still fits.
For illustration only: on a $100,000 purchase with a payment of a few thousand dollars a month, an owner whose slow month deposits only $30,000 should be honest about whether that payment sits comfortably. If not, a smaller amount or a different product may be wiser.
What we need
We consider FICO scores of 500 and above, ask for about three months of business bank statements, require no tax returns, and use a soft credit pull on a five-minute application. Sole proprietors can apply. See also working capital, the county overview, or go to the application.