Financing types
A term loan is for a cost you can name today and pay off on a schedule.
A term loan gives you one lump sum, repaid with interest on a set schedule. It fits a defined project better than a cash gap that comes and goes. The Business Funding Club refers you to ROK Financial. ROK and the lenders it matches you with review every request and make every funding decision.
A referral club, free to apply. ROK Financial and its lenders review every request and make all funding decisions. How we’re compensated.
Prefer to go straight to the funder? You can apply on ROK's own site. It carries our referral ID.
By Marcus L. Barber, Publisher · Reviewed by Marcus before publishing · Updated · How we write and check facts
What it is
A term loan is closed-end credit: a fixed principal amount, repaid over a fixed period[1]. You get the money up front and repay principal plus interest over time[2]. Paying it down does not free up money to borrow again, the way a line of credit does. Some lenders require collateral, and most ask for a list of company assets[2]. Many also ask the owners to sign a personal guarantee.
Where it fits
- A one-time cost with a clear price: a build-out, an expansion, a second location, or a large stock order for a signed contract.
- Buying out a partner or buying a business, where the amount is known.
- Replacing several short, costly obligations with one schedule, when the numbers show the total cost goes down.
- Work you have already won that pays back over months, not weeks.
When it’s the wrong tool
- A gap that repeats every month. You pay interest on the full amount from the first day, even in weeks you don't need it. A line of credit usually fits that pattern better.
- Covering ongoing losses. A fixed payment on top of a shortfall makes the shortfall bigger.
- A short bridge you plan to repay in weeks, if the loan carries a prepayment penalty or a fee you owe no matter when you pay it off.
Ask before you sign
- What is the total dollar cost of this loan, including every fee, if I make every payment on schedule?
- How much do I actually receive after fees are taken out at closing?
- How are payments collected, and how often: monthly, weekly or daily?
- Is there a prepayment penalty, or a charge I still owe if I pay off early?
- What secures the loan? Is there a lien on all business assets, and is a personal guarantee required?
How a term loan works
- You apply with the documents the lender asks for.
- The lender sets the amount, the cost and the payment schedule.
- At closing the money goes into your account, less any fees withheld.
- You make scheduled payments until the loan is paid off.
Payments are usually fixed, which makes them easy to budget. That is the main strength of a term loan and its main risk. The payment is due whether or not your customer has paid you.
What ROK lists for this product
ROK's small business loan page describes a term loan as principal plus interest repaid over time, and lists uses such as equipment, inventory, leasehold improvements, expansion, payroll and operating costs[2].
The page names what lenders commonly review: bank records with steady balances and regular deposits, measures such as gross margin and cash flow, and in some cases collateral. Documents include your tax ID, business licenses and filings, tax returns, a profit and loss statement, a balance sheet and bank statements[2].
ROK's general application lists at least 4 months in business and $10,000 or more in monthly gross sales ($120,000 a year)[3]. ROK's loan page also notes that many lenders prefer at least six months in business[2]. ROK and its lenders review every request and make every funding decision. The Club does not.
Reading a term loan offer
In California, many non-bank providers must give you a disclosure with the offer that shows the total funds provided, the total dollar cost, the term, how and how often you pay, the prepayment policy, and the cost on a yearly basis[4]. New York requires standard disclosures for closed-end commercial financing too[5].
| On the offer | What to check |
|---|---|
| Funding provided | The full loan amount, or less after fees are withheld? |
| Finance charge | The total dollar cost. Compare this across offers, not just the payment. |
| Total payment amount | Everything you will pay back over the life of the loan. |
| Payment frequency | Monthly, weekly or daily. Daily payments come out before many customers pay you. |
| Prepayment | Whether paying early saves money or still owes part of the charge. |
Industries where it comes up
ROK Financial lists this product on its own site. Read ROK’s page
Common questions
Is a lower payment always the better offer?
No. A lower payment spread over a longer schedule can cost more in total. Compare the finance charge, which is the dollar cost of the loan, and the total payment amount. Then check how often payments come out. A smaller daily payment can strain cash flow more than a larger monthly one.
Can I pay a term loan off early?
Usually, but read the prepayment terms. Some loans charge a penalty. Others set the cost as a fixed amount, so paying early saves little or nothing. California's disclosure rules require a description of the prepayment policy with the offer[4]. Ask for it in writing wherever you are.
What will ROK want to see?
Lenders commonly review bank statements, tax returns, a profit and loss statement, a balance sheet, business licenses and your tax ID[2]. For a project loan, a quote, contract or written plan for the money helps the lender understand the request. ROK and its lenders decide what they need.
Does it cost anything to apply through The Business Funding Club?
No. The Business Funding Club is a free referral club, not a lender or a broker. We refer your request to ROK Financial. ROK and the lenders it matches you with review it and make the decision. ROK pays Digital Solomon when a referred business is funded. You never pay the Club anything, and you don't have to accept any offer.
Sources
- New York Financial Services Law Section 801: Definitions (Commercial Financing) New York State Senate, checked October 16, 2026
- Small Business Loans ROK Financial, checked October 16, 2026
- Business Financing application (ROK Financial partner page) ROK Financial, checked October 16, 2026
- California Financial Code, Division 9.5: Commercial Financing Disclosures California Legislative Information, checked October 16, 2026
- 23 NYCRR 600: Disclosure Requirements for Certain Providers of Commercial Financing Transactions New York State Department of Financial Services, checked October 16, 2026
Before you start
What ROK looks for.
Stated plainly so you don’t spend time on a form that isn’t built for your business yet. These are the minimums ROK lists on its partner application. Meeting them is the starting line, not a decision.
- 4 monthsminimum time in business
- $10,000minimum monthly gross sales
- U.S.based and operating
Credit history is one input among several. ROK reviews the whole picture: revenue, deposits, time in business, and what the money is for. What to have ready.
A referral club, free to apply. ROK Financial and its lenders review every request and make all funding decisions. How we’re compensated.
Prefer to go straight to the funder? You can apply on ROK's own site. It carries our referral ID.