A term loan is the oldest idea in business lending: you borrow a set amount, you repay it on a set schedule, and when the schedule ends the debt is gone. There is no revolving balance to manage and no moving target. That simplicity is the whole point. When you know what you are buying, what it will cost and roughly what it will earn, a term loan lets you plan around one fixed number instead of guessing. fundivi offers business term loans from $25K to $5M, with decisions typically back the same day, and this guide explains how they work, how to size one, and how to tell when a different product is the better answer.
If your business has been open for 6 months or more, brings in $30K or more in monthly revenue, and the owner has a personal credit score of 550 or higher, you can see what you qualify for in about 2 minutes.
The Basic Mechanics
Every term loan has four moving parts. The principal is the amount you borrow. The term is how long you have to repay it. The payment is what you owe on each due date, and the total cost is everything you will have paid by the end, principal plus the cost of borrowing.
Because the payment is fixed, you can set it against your calendar before you sign. If you borrow for a build out and your revenue is stable, you can see exactly how much of each month's income it will take. That predictability is what separates a term loan from products where the cost or the balance moves around.
A longer term lowers each payment but usually increases the total you repay. A shorter term raises each payment and lowers the total. There is no universally right answer. The right term is the one your cash flow can carry comfortably without leaving you thin in your slowest month.
What Term Loans Are Best At
A term loan fits when the purpose is specific and the payoff takes time. Consider these common cases.
Expansion. Opening a second location, adding a service line or moving into a larger space all require a lump sum up front and pay back over years, not weeks.
Acquisitions and buyouts. Buying a competitor, a partner's share or a customer list is a single defined purchase with a known price.
Renovations and build outs. Improvements to a property you operate from add capacity or draw customers, but the return arrives gradually.
Refinancing more expensive debt. If you are carrying several shorter, costlier obligations, consolidating them into one term loan with a single payment can reduce the strain on your monthly cash flow. Run the numbers on total cost first, since stretching the repayment can raise the total even as it lowers the payment.
Large inventory or supply commitments. A major order that will be sold over many months can be financed with a term that roughly matches the sell through period.
When a Different Product Fits Better
Being honest about the limits saves owners money. If your need is a gap in timing, like paying staff before a large invoice clears, working capital is built for that. If you are not sure how much you will need or when, a business line of credit lets you draw as you go. If the purchase is a vehicle or a machine, equipment financing uses the asset to support the loan and matches the term to its useful life.
And if you are borrowing to cover recurring losses, a term loan will not fix it. It will add a fixed payment to a business that is already short, which is the hardest situation to recover from.
How to Choose the Right Amount
This is where many owners go wrong, in both directions. Borrow too little and you run out before the project is finished, forcing a second, often costlier round. Borrow too much and you pay for money you never needed.
A practical method works in four steps.
First, list every cost the project requires, not only the headline purchase. Include installation, permits, training, extra inventory, marketing for a launch and any period before the new thing earns anything.
Second, add a cushion. Projects almost always cost more than the first estimate, and a modest buffer of ten to fifteen percent is often wise.
Third, subtract anything you will contribute yourself. Putting in some of your own money lowers the amount you borrow and signals commitment.
Fourth, test the payment. Take the resulting figure and ask what the monthly payment would be at a few different terms, then check it against your slowest month of revenue, not your best.
The cost calculator is useful at that last step. Enter a few amounts and terms and compare the total repayment, so you can see how much a longer term really adds.
Term Loan or SBA Loan
For larger, long horizon investments, owners often ask whether an SBA loan would be better. The honest answer is that it depends on time. SBA loans, available through fundivi from $50K to $5M, can carry attractive terms, but the process typically takes 60 to 90 days. A fundivi term loan is typically decided the same day.
If you can wait and your business has the history and documentation an SBA lender wants, it may be worth exploring both and comparing the total cost. If the opportunity has a deadline, such as a lease that closes Friday or a seller who has other buyers, speed can be worth more than the difference in cost. Many owners ask for both and then decide.
What fundivi Looks At
fundivi's underwriting engine reviews your business bank activity directly. It looks at how steadily revenue arrives, how your balances behave through the month, whether there are repeated overdrafts, and how the business has trended over recent months. Your credit is part of the review and the minimum personal FICO score is 550, but a business with steady deposits and a middling score can look stronger than one with a high score and erratic cash flow.
The baseline requirements are 6 months in business, an active business checking account, $30K or more in monthly revenue and a 550 FICO. For larger amounts, expect closer scrutiny, since a $2M request will be weighed against a revenue base that can support the payment.
Common Reasons an Application Stalls or Is Declined
Knowing the usual causes helps you avoid them.
Revenue that does not support the payment. If the requested amount implies a payment that would consume too much of your monthly revenue, the lender may offer less or decline. Right sizing the request is the fix.
Unstable or declining deposits. Deposits that swing wildly, or a trend that has been falling for several months, make repayment harder to predict. If there is a reason, such as a seasonal pattern, say so in your application.
Frequent overdrafts or negative balances. These suggest the business is already tight, and a fixed payment would add to the pressure.
Commingled accounts. When personal and business spending run through the same account, the cash flow is hard to read. Keep them separate.
Missing or inconsistent information. Mismatched names, missing statements and unanswered questions slow decisions more than almost anything else.
If you are declined, ask what drove it. Often the answer points to an adjustment, such as a smaller amount, a different product or a few more months of cleaner statements.
A Worked Example
A veterinary clinic with $85K in monthly revenue wants to add a second exam room and a diagnostic imaging machine. The room build out is about $60,000 and the imaging equipment is $90,000. The owner considers one large term loan.
A more careful look splits the project. The room build out is a good fit for a term loan, since it adds capacity that pays back over years. The imaging machine is an asset that can be financed on its own through equipment financing, with a term matched to its life. Splitting the project means each piece uses the structure that suits it, and the owner is not paying term loan costs on an asset that supports its own financing.
The owner then tests the payment on the build out against the clinic's slowest month, adds a ten percent cushion for overruns, and chooses a term that leaves comfortable room. That is the whole process, and it is worth doing every time.
Fixed Payments Versus Flexible Repayment
The fixed payment is a strength and a risk. It is a strength because you can plan around it. It is a risk because it does not care how your month went. If your revenue swings widely between seasons, a payment sized for your best month can feel heavy in your worst.
That does not rule out a term loan, but it should shape the term and the amount. Owners with seasonal income often choose a smaller loan or a longer term so the payment stays manageable year round. Others look at revenue based financing, where repayment moves with actual sales, as a better match for uneven revenue. The question to ask yourself is simple: if my slowest month came right after signing, could I still make this payment without borrowing again?
Using a Term Loan to Refinance
Refinancing deserves its own note, because it is both common and easy to get wrong. Consolidating several shorter, costlier obligations into one term loan can lower your monthly outflow and simplify your books. But a lower payment is not the same as a lower cost.
Before refinancing, add up what you still owe across the existing debts, including any remaining fees or costs, and compare it with the total you would repay on the new loan across its full term. If the new total is lower, or if freeing up monthly cash flow lets the business earn more than the extra cost, refinancing can make sense. If you are simply stretching the same debt over a longer time, you may be paying more in exchange for short term relief, and it is worth being clear with yourself that this is the trade.
Getting Ready to Apply
A little preparation shortens the path to a decision. Gather your most recent three or more months of business bank statements, have basic business and ownership details on hand, and write down the amount, the purpose and how you expect to repay. If you are weighing products, the funding product matcher asks a few questions and points to a likely fit, and the how it works page explains each stage.
For a larger or more complex request, it can help to talk it through. You can book a consultation to review your numbers, learn more about the company on the about page, or browse more guides in our resources section. Because fundivi is a hybrid lender that matches you first against its own capital and can bring in vetted partners when another structure fits, a change of plan does not mean starting over.
Frequently Asked Questions
How long does it take to get a business term loan?
fundivi term loans are typically decided and funded the same business day, depending on how early you apply and how complete your file is. It is not guaranteed for every applicant.
Do I need excellent credit?
No. fundivi looks for a personal FICO score of 550 or higher, along with 6 months in business, an active business checking account and $30K or more in monthly revenue. Cash flow carries heavy weight.
How much can I borrow?
Term loans at fundivi run from $25K to $5M. The amount you qualify for depends on your revenue and cash flow.
Is collateral required?
Requirements vary by offer and amount. Review the terms of any agreement carefully, including any personal guarantee or collateral requirement.
Can I pay a term loan off early?
Terms differ by offer, so ask before you sign whether early repayment carries a fee or earns a discount.
Should I choose a term loan or a line of credit?
Choose a term loan when you know the amount and the purpose, and a line of credit when the need is uncertain or recurring.
Next Steps
If you know what you are building, a term loan gives you a clear number to plan around. Take the 2 minute application to see what your business qualifies for, with many decisions arriving the same day.
