We source high-quality long term business loans for our clients.
- Market-leading rates
- Longer repayment terms tailored to your business
- Borrow up to 60% of your turnover
- Loans from £20,000 to £25 million
- Secured and unsecured business loans
- Cash-flow funding, equipment finance, merchant cash advances, asset finance, VAT loans, business acquisition finance and SaaS finance.
- Loans for retail outlets, restaurants, cafes, florists, hairdressers, pharmacies, hotel loans, guest houses and B&Bs, offices, warehouses, industrial units, manufacturing, HMOs, nursing and care homes, gyms, investment properties, development land and buy-to-let property (portfolios and limited companies welcome)
- R&D Tax Credit refund service
Call us on 0203 880 8890 to discuss your requirements
We offer a range of long term business loan solutions, from securing finance for an existing business to acquiring a business. Every business is unique, so our business finance experts provide bespoke financing solutions.
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What is a Long-Term Business Loan?
Long-Term Business Loan vs. Short-Term Business Loan
The Advantages of a Long-Term Business Loan
Debt Service Coverage Ratio - A Key Factor
6 Long-Term Business Loan Factors to Consider
Getting a Long-Term Business Loan - 4 Considerations
What is a Long-Term Business Loan?
A long-term business loan is one where the repayment structure is five years or more.
Here are a few example that fit the bill of being long term business loans (business finance comes in many shapes and sizes, so this is a general overview):
- Longer term business loans will generally have commercial property involved, and these might be 10/15/25 year loans with long-term security
- Working Capital loans are usually short-term (under 2 years), but lenders might go as far as 5-6 years for the long term, and will still require personal guarantee/property security (PGI can insure against this)
- Assets can also be re-financed to release equity, and asset finance lenders go up to 84 months
- Large (over £1m) loans can be on a structure known as ABL (asset-based lending) where they will look at various assets on the balance sheet to form a debt structure - these are completely open to negotiation
If you need a hand deciding what type of financing is right for your business, our advisers can look at your situation and present you with a range of options to choose from that fit your needs.
You can book a free, no-obligation consultation below.
But why would your business look to a long-term loan rather than a shorter-term one? What are the advantages and what can long-term business loans be used for? At Clifton Private Finance we have some answers.
Long-Term Business Loan vs. Short-Term Business Loan
There is only one real reason to consider a long-term loan over a shorter-term one: the size of monthly repayments.
Structuring a loan to be repaid over a longer time means that each repayment is smaller - an elementary idea. This can help in all sorts of ways, from putting less stress on cashflow, to giving access to larger sums. It is part of the flexible nature of business loans that should be considered when looking for finance.
While there are more factors to take into account than simply the size of the loan, such as interest rate, loan set-up and administration fees, and the potential need for collateral, a long-term business loan should be seen as a way of borrowing more money with smaller regular repayments.
Use our long term business loan calculator to get a quick quote. Or get a bespoke business loan quotation.
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The Advantages of a Long-Term Business Loan
Businesses never stand still. A good way to look at a business is that you are either growing or you are shrinking, and shrinking is very rarely the direction you want.
But expanding needs capital - it can’t just be done through force of will alone and no matter how much effort you put in, eventually you will need cash. Loans are a well-established way for companies to access capital to invest, and the idea is that as the company expands and income grows, repaying a loan becomes easier and easier.
A long-term loan, with its low-but-long repayment structure, can take the maximum advantage of this growth plan while putting the minimal amount of strain on current and short-term finances to allow the business to build until repaying the loan is almost insignificant.
Yes, there is a commitment to keep up with payments for multiple years, but when that responsibility is easily met, the value of the long-term nature of the loan is easily identified.
Perhaps the most recognisable long-term loan is that of a commercial mortgage; a long-term loan tied to property as collateral that allows a business to expand and grow its assets without putting too much pressure on monthly cashflow.
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Debt Service Coverage Ratio - A Key Factor for Long-Term Loans
As discussed, the fundamental difference between a long-term and short-term loan is that of the size of your monthly repayments. In technical terms, it affects your business debt service coverage ratio (DSCR).
The ratio is calculated as NOI/DS - thus, if you have debt service of £6,000 per month, and a NOI of £10,000 per month, your DSCR would be 10000/6000 = 1.67. The higher your DSCR the better. Companies with a DSCR >2 would find it quite easy to take on a long-term business loan, while those with a DSCR <1.25 might struggle to get approved.
As long-term loans spread the cost of repayments over many years, the monthly debt service for them is low - often lower than existing short-term loan responsibilities. So, even though the total owed on a long-term business loan is greater, the impact to the business is far smaller.
Read our full guide to DSCR for a deeper understanding of the subject.
6 Long-Term Business Loan Factors to Consider
1. Collateral
While many short-term business loans are unsecured, meaning there are no asset-based guarantees leveraged against them, long-term business loans are typically secured loans.
In many cases, the asset that is used as collateral is one that is purchased with the loan (as in the case of a property leveraged against the mortgage), but this does not always need to be the case with alternative assets often suitable to use for a guarantee.
2. Loan-to-Value
When obtaining a long-term business loan, the size of the loan is limited by the value of the assets used as collateral. Loans are typically from 75% to 90% loan-to-value (LTV), thus, a loan of £300,000 would require between £334,000 and £400,000 in tangible assets to secure.
A long-term business loan used to purchase a high-ticket asset, such as specialised machinery or commercial property, will be limited by its LTV and additional capital will be needed to purchase the asset in full. This additional capital is typically called the deposit or down payment.
3. Interest Rates
One of the advantages of a long-term business loan is the lower rate of annual interest, often advertised with AER as much as 10 times lower than an unsecured business loan, long-term loans can seem to have extremely affordable interest rates.
However, as the loan is repaid over many more years, the total amount of interest accumulated over the lifetime of the loan will be either comparable or greater than that of the short-term loan.
4. Inflation
Another factor to consider is that of inflation - something that is typically to the benefit of the borrower. The value of money drops slowly over time, with £100 today worth less (in terms of real buying power) than it was ten years ago. Effectively, this means that the cost of your loan repayments will be somewhat smaller as time goes on.
Using data from 1994 to 2024 as an example, the value of £1,000 thirty years ago would have the same buying power as almost £2,500 today. Looked at in reverse, a loan repayment of £1,000 per month for a loan obtained in 1994, would have as much impact on the business as a repayment of a little over £400 today.
The impact of inflation can often offset the cost of interest rates to a significant level and is worth considering when looking into long-term business loans.
5. Early Repayment
Your business may want to release itself from its debt obligation earlier than planned. It is important to look at the terms of your loan contract to understand whether this can be done and if so, what fees are applicable.
It is valuable to understand these longer-term impacts before finalising any long-term business loan.
6. Fees
Early repayment fees are not the only additional costs of many long-term business loans. Many loans have set-up and administrative fees to cover the lender's costs when assessing your business suitability for the loan. This is especially true for asset-based loans where asset valuation and due diligence are essential.
7. Government Help
Some long-term business loans can be secured thanks to government-backed business initiatives. It is worth discussing your options with your loan advisor to see if you would be eligible for a more significant loan thanks to these schemes.
Getting a Long-Term Business Loan - 4 Considerations
Securing the right loan for your company is important. With multiple different long-term options available for business in the UK, it’s essential to not rush into the first deal that seems worthwhile.
Using a Finance Broker
At Clifton Private Finance we offer a comprehensive broker service to help your business get the perfect long-term business loan. Using a broker gives you a wealth of experience and ensures that you get a loan that best suits your needs.
Writing a Business Plan
Long-term business loans are assessed by lenders with some strict criteria and an eye to your business longevity. Your business plan is the surest way to present your company in the best possible light, showing your long-term path as well as clearly showing your financial forecast.
It is essential that you have a professional business plan.
Building a Good Credit Report
Your business credit history is going to be under scrutiny, so make sure it’s healthy. If you have had a few troubles, it’s worth smoothing these out and waiting a few months before making any significant loan applications to show that you’re on the right path.
Clearing Other Debts
Debt service is a factor in the size of loan you will be able to take on, so improve your DSCR by clearing what can be easily paid off. This will put your business in the position of being able to access larger and more attractive long-term business loans.
Long-Term Business Loans with Clifton Private Finance
Contact our expert team at Clifton Private Finance to discuss your business needs and we will help find the best long-term business loan for you. With decades of experience in obtaining structured loans that have been designed for the complex needs of business operations, we will compare multiple loan offers to find the most suitable. Discuss your needs with us today.
Why Clifton Private Finance?
Here at Clifton Private Finance, our business loan specialists offer a complimentary advice service and can help you choose the right finance solution for your business requirements.
Our broker team will help you source the most competitive business loans, commercial property finance, business acquisition finance and cash flow funding solutions.
Our business loan service provides:
- Market-leading rates
- Fast service - finance within 5 to 7 days
- Access to specialist lenders
- Expert advice - professional service
As a specialist finance broker, Clifton Private Finance can provide a clear picture of your options. We will assess your circumstances and arrange a finance solution tailored to your needs.
If you need business funding, call us on 0203 880 8890, complete our contact form above or book an appointment.
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