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When your little idea, your dream takes a real shape, you know it's time to pool your finances to make it grow. Sometimes your efforts aren't enough, and that's when you need to apply for a loan. Commercial loans can help business interests with an uninterrupted supply of capital.
Commercial loans can be used to purchase commercial space or commercial buildings for new or existing businesses. They can be used to purchase business assets or to finance the expansion of an existing business.
Different commercial loan lenders process commercial loans in different ways. You can start by pre-qualifying for commercial loans. This will determine how much you can afford as a commercial loan borrower and which commercial loan program is best for you.
Commercial loans
Commercial loans are the primary form of financing for business projects. When making a business loan, the lender will review general information such as your income and existing debts. Your application will be reviewed by a loan officer.
Loan application - amount of loan requested, how funds will be used, type of loan, and amount of existing working capital. Business loan lenders will feel more confident knowing that you have invested your own money in the business plan.
Business Plan
Business Plan - If commercial loans are being used to start a new business, the business plan is critical. It should include cash flow projections for the first 24 months. The information should be concise and clear. The feasibility of the plan is essential for business loan approval.
Personal Financial Statements - If a commercial loan is being used to expand a business, you must provide a business profile. Personal financial statements are required for anyone who owns 20% or more of the business. Complete details of current debt, payment schedules, maturities and collateral used to secure other loans. You may be asked to provide additional documents during the loan process.
If you are purchasing property, you may be required to provide preliminary environmental reports, site plans, property reports, property appraisals, and lease summaries.
The commercial loan decision process usually takes 1-5 days. During this time, you may need to submit additional information. A commercial loan broker can help you submit your loan application to multiple lenders for approval.
Their job is to select the most attractive offer and return the final letter of intent. If all conditions are met, the commercial loans are approved and the lender provides a final loan commitment. At closing, the commercial loan is transferred by cashier's check, draft or electronic funds transfer.
Commercial loans are either secured or unsecured - with or without collateral. Secured commercial loans are usually available as commercial mortgages. Commercial mortgages are offered at better terms, interest rates and
- Business Loans
Small Business Administration (SBA) loans are loans made to small businesses that cannot qualify for a loan from a financial institution for a variety of reasons, including lack of business history, lack of collateral to "secure" the loan, or insufficient credit history.
The SBA is not a direct lender, but acts as an underwriter on behalf of the bank funding the loan for the business. If the borrower defaults, the SBA pays the bank a percentage of the balance for the financial risk it takes in extending the loan to the business. There are several types of SBA loans that are not discussed in this article, but will be discussed in more detail in a later article.
Conventional business loans are either unsecured, meaning no assets are used to approve the loan, or secured, meaning they are so-called "asset-based loans" where assets such as inventory, equipment, accounts receivable, or real estate are used to approve the loan.
Conventional business loans are made to companies that have good banking relationships, an established credit history with trade lines with other companies they do business with, and a good credit rating with various credit reporting agencies such as Dun & Bradstreet.
There are short-term loans where only the interest is paid and the balance is due at the end of the term, usually referred to as a "balloon loan." There are also longer-term loans that are fully amortized (principal and interest in each payment) and paid over a period of one to five years or more.
Repayment Options. Commercial loans are available with fixed and variable interest rates. Fixed-rate commercial loans mean that your interest rate and monthly payments are set at the beginning of the loan and remain the same throughout the term.
Business owners apply for fixed-rate loans because they can use them to better plan their finances by knowing how much they have to spend each month. With variable interest rates, interest rates change depending on market trends.
The advantage of variable interest rates is that they are lower than fixed interest rates at the beginning. However, the interest rate may increase during the term of the loan, causing you to pay more. In contrast, fixed-rate business loans leave no room for change if interest rates go down.
Educate yourself before you apply for a commercial loan. Be prepared to answer some questions. Commercial loans are a cost-effective way to finance your business needs when you need it.
Commercial loans can strengthen your competitive position, increase your working capital and maximize your profitability. Investigate your options with commercial loans and see how your business can become a commercial success.
There are other offerings that qualify as retail finance. Loyalty cards, such as those offered by large department stores, and even some co-branded credit cards offered by many large national retailers and online merchants. However, true retail financing, in my opinion, are fixed-term credit agreements that are specific to the purchase of goods and/or services from a particular retailer. Commercial loans