Long-term business loans: borrowing over five years or more

A long-term business loan is a loan repaid over many years instead of months. There is no official cut-off, so this guide treats five years or more as long term. That is our working definition, chosen because the British Business Bank describes 3–5 years as the typical range for unsecured loans.

It is a form of term debt: a loan, secured or unsecured, with a predetermined repayment schedule. The British Business Bank says term loans can fund purposes such as buying new equipment or expanding the business, and most banks and online lenders offer them.

The products that run longest are generally those backed by an asset, because the asset reduces the lender’s risk. Secured term loans, commercial mortgages and some asset finance agreements are the usual routes.

Our guides to commercial mortgages and asset finance cover those two routes in detail.

It depends on the product and the lender, but under the Growth Guarantee Scheme term loans and asset finance currently run up to six years. That is the live scheme limit as of October 2026, and it applies to facilities from lenders accredited to the scheme.

In July 2026 the Chancellor announced that the scheme would support terms of up to ten years for term loans and asset finance. The British Business Bank page says it is working with accredited lenders to make that capacity available, and still lists six years in its terms. Do not assume a lender can offer ten years until it says so.

You borrow for longer to make each repayment smaller and to match the loan to the life of what you are paying for. The British Business Bank says longer terms on secured loans often mean lower monthly repayments, which helps businesses with uncertain cash flow.

The trade-off is that interest is charged on the balance for more months, so a longer term usually costs more in total even when the instalment is lower. The illustration below uses round numbers and no interest to show the repayment effect only.

Halving the instalment means paying for twice as long, and every extra month adds interest and exposure to fees. Ask any lender for the total repayable over the whole term, and read how APR works to see why the rate alone does not show it.

Long-term loans usually involve security, a personal guarantee or both, because the lender is exposed for longer. The British Business Bank says a secured loan is backed by assets you own and that failing to repay could mean losing the asset.

• Secured loans may bring arrangement costs such as valuation and legal fees, which the British Business Bank says must be paid even if the application is rejected or the amount is lower than requested.
• Unsecured loans typically require a personal guarantee, which makes you personally liable if the business cannot repay.
• Under the Growth Guarantee Scheme, lenders may take personal guarantees but cannot take your principal private residence as security.

Read our guide to personal guarantees and take independent legal advice before you sign one.

Lenders assess whether the business can afford repayments for the whole term. The British Business Bank says that on unsecured loans they may look at your trading position, credit history, cash flow, balance sheet and cash reserves.

For secured loans it adds due diligence on the asset, which the British Business Bank says can make the process longer than expected. Gathering your documents first helps. A clear picture of your finances also supports the application, so keep your accounts, forecasts and a business plan ready.

Most are not. The FCA says business lending of £25,000 or less to sole traders and small partnerships falls within its consumer credit perimeter, while lending above £25,000 and lending to limited companies generally falls outside it.

Long-term business loans are usually above £25,000, so they are usually outside the perimeter. Capzy does not give legal advice, so ask a solicitor if the status of a particular agreement matters to you.

A long-term loan is the wrong choice when the need is short-lived or the repayments would not fit your cash flow for the whole term. Paying for years for something that is used up in months leaves you repaying costs that have already gone.

• The asset or project will not last as long as the loan.
• An asset is at risk and the business could not manage a bad year.
• A personal guarantee would put your home or savings at stake.
• The business may want to repay early, and the agreement has charges for doing so.

If the need is shorter, read our guide to short-term business loans. If you are choosing between security types, see secured and unsecured loans.

The alternatives are products that fit the need more closely than one long loan does. Which one is right depends on whether you are buying an asset, buying premises or funding day-to-day trading.

• Asset finance spreads the cost of equipment or vehicles over its working life.
• Commercial mortgages are built for buying premises.
• Working capital loans or a revolving facility suit running costs better than a long term.

Capzy is a credit broker, not a lender, and is paid by the lender. We introduce businesses to lenders that offer longer-term finance and set out what comes back so you can compare it, including in the secured loans section of our lender directory.

You can check your funding options with a soft search that does not affect your credit score. A full application to a lender may involve a hard search, and any offer is subject to status and lender criteria. Before accepting one, read how to compare lender offers.