What is a loan maturity date?

A loan’s maturity date is the date on which you’ll have repaid the loan if you follow the minimum payment schedule.

What is a prepayment penalty?
A prepayment penalty is a fee that you have to pay if you repay the balance of a loan before its maturity date. It compensates the lender for the interest you would have paid but didn’t.
Is there a difference between typical small business loan terms?
There are many different types of small business loans and they can vary drastically based on their expected uses. For example, some loans let you borrow just hundreds or thousands while others allow you to borrow millions and repay it over decades.
How Do Small Business Loans Work?
Small business loans work like most other types of loans. Your business can borrow money and use it for various purposes. The company must then pay that money back over time. Common uses include investment, buying equipment, or paying unexpected bills.
Am I Eligible?

Both your personal and business credit, as well as business financials determine your company’s eligibility for a loan. When you apply, be ready to provide documentation of:

  • Your time in business

  • Personal and business credit score

  • Annual revenue (or monthly sales)

  • Bank statements

  • Personal and business tax returns

  • Purpose of the loan

  • Personal background and character

  • Business plan with projections

  • Collateral

  • Legal documents relevant to your business (business licenses, franchise agreements, leases for commercial real estate, etc.)


Small business loans are useful tools that can get you extra cash to expand your company to cover unexpected costs. Before you apply, have a plan for how you’ll use the money to help grow your business and for how you’ll repay the debt. Defaulting on a business loan might have serious consequences for your business.

About the Authors

TJ Porter

Written by: TJ Porter

Personal Finance Writer

I have in-depth experience in reviewing financial products such as savings accounts, credit cards, and brokerages, writing how-tos, and answering financial questions both simple and complicated.

More about me

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