Conventional or traditional business loans are basic term loans in that a borrower will gain a set amount of money to be repaid with a set number of payments over a specified repayment time and more often than not, with a fixed interest rate, although some traditional loans do have variable interest rate options. These loans are available through traditional banks as well as through alternative lending institutions. Being a traditional loan also implies that there is a traditional, and much more stringent, approval criteria which make these loans a bit more difficult to obtain. You may be required to have collateral, especially with less than good credit. During the application process or before you even begin the process, be sure to ask questions about prepayment penalties and fees associated with the loan.

Once you have chosen a loan and a lender, the application process usually only take a couple of days, which is a nice alternative to the lengthy SBA loan process.

The costs of a conventional business loan vary from lender to lender and are dependent on your credit scores as well as the collateral that you are willing to put up for the loan. The longer the term of the loan, the more open lenders are to less than perfect credit scores. Interest rates on conventional business loans can vary anywhere from seven to thirty percent, again depending on your credit score and collateral. With fixed rates and terms, these loans are very predictable, and you will know exactly how much your payments will be and how many total payments will be required. This also gives you some control over the costs by allowing you to set a payment and borrow the amount available with that payment.