A business term loan is a single lump sum repaid in scheduled installments of principal and interest over a fixed term, used for projects with a known cost. Silvershore Funding Group, a small-business funding broker in Flagstaff, Arizona, explains amortization, balloon payments and covenants, and connects Coconino County owners with lending partners, who decide and set rates and terms.
| What it is | One lump sum for a defined purpose |
|---|---|
| How it is repaid | Scheduled installments of principal and interest over a set term |
| Common uses | Build-outs, expansion, buying a business, refinancing |
| Terms to read | Amortization, any balloon payment, covenants, prepayment |
| Who decides | The lending partner, not Silvershore Funding Group |
| Office | 10 N Leroux St, Flagstaff, AZ 86001 · (928) 239-1321 |
How a term loan works
The partner agrees an amount, a term and a payment schedule, then pays the money out once, either to you or directly to whoever is selling or building. From then on you make regular payments, usually monthly, each one covering interest on the remaining balance plus part of the principal. When the last scheduled payment is made, the loan is paid off.
Because the whole sum arrives at once, a term loan suits a need with a known price and a clear finish: a dining room remodel, a second clinic location, the purchase of a competitor, or replacing several older debts with one. For needs that come and go, a line of credit is usually the better tool.
Amortization in plain terms
Amortization is the schedule that spreads repayment over the term. On a typical fully amortizing loan, each payment is the same size, but the mix changes: early payments are mostly interest because the balance is large, and later payments are mostly principal as the balance shrinks.
Two practical consequences follow. First, paying a loan off early saves the interest that would have accrued later, unless the agreement charges for early payoff, so ask about prepayment terms before signing. Second, the balance falls slowly in the first years, which matters if you expect to sell the business or the financed asset before the term ends.
Balloon payments and covenants
Balloon payments
Some commercial loans are not fully amortizing. Payments are calculated as if the loan ran for a long period, but the remaining balance falls due in one large balloon payment at an earlier date. The regular payments look smaller, yet the business must have a plan to pay or refinance the balloon when it comes due. If an offer has one, find the date and the amount in the agreement and decide now how you would meet it.
Covenants
A covenant is a promise in the loan agreement that lasts as long as the loan does. Financial covenants might require the business to keep a minimum cash balance or a minimum ratio of income to debt payments; others limit new borrowing, selling assets or changing ownership without consent. Breaking a covenant can be treated as a default even when every payment is on time, so read them as carefully as the payment schedule.
What term loans tend to pay for in Coconino County
Project financing follows the size and type of local businesses. Coconino County's 3,955 employer establishments in 2023 included 451 in health care and social assistance, 421 in construction and 629 in accommodation and food services (U.S. Census Bureau, County Business Patterns 2023). Those are businesses that remodel dining rooms, fit out treatment rooms and add vehicles and crews, the kind of one-time, multi-year investment a term loan is built around.
For a single asset, such as one machine or vehicle, equipment financing is often the closer fit, because the asset itself secures it. The industry pages show how the options line up for contractors, restaurants and medical and dental practices.
Term loan, line of credit or equipment financing?
| Term loan | Line of credit | Equipment financing | |
|---|---|---|---|
| Suited to | One project with a known cost | Recurring or uneven needs | A specific machine, vehicle or system |
| Money arrives | Once, in full | In draws, when you choose | Paid to the seller for the asset |
| Collateral | Varies: business assets, real estate or a guarantee | Varies; often a general lien or guarantee | Usually the equipment itself |
| Repayment | Fixed installments over the term | On the drawn balance | Installments or lease payments |
Where SBA loans fit
Some owners searching for commercial loans in Arizona are looking for SBA-backed loans. Those are made by participating lenders under U.S. Small Business Administration programs. Silvershore Funding Group does not arrange SBA loans. The SBA Arizona District Office lists Coconino County among the counties it serves (SBA website, checked October 2026), and our Northern Arizona resources directory lists free advisers who can talk through SBA options.
What partners usually review
- the project budget, quotes or purchase agreement;
- business tax returns and recent financial statements, where the business has them;
- business bank statements;
- current debts, liens and how much income is left after existing payments;
- business and owner credit, and any collateral offered.
Silvershore Funding Group is a broker, not a lender.How a request moves explains the steps from your first call to a partner's decision.
By Silvershore Funding Group · Updated