Interest doesn’t accumulate over time, and early repayment won’t reduce the total cost of capital. Term Loans: These loans, which can be either secured or unsecured, provide a lump sum of money. They typically have fixed interest rates and require repayment over one to five years through equal monthly installments. While they can be utilized for a variety of business expenses, these loans often have strict eligibility criteria and tend to impose higher interest rates on newly established businesses.