Are you considering applying for a commercial loan but not sure that’s what’s best for your business?
Then here’s some information to help you understand the options.
Commercial loans, if used strategically, can help you catalyze faster growth for your business. Conversely, if you secure commercial loan funding without proper planning – this can result in the opposite. So, before you proceed with applying for a commercial loan or line of credit, below are a few questions that you should ask yourself first.
Why Do I Need a Commercial Loan?
If the answer to this comes quickly to mind, you’re off to a good start! In most cases, businesses require commercial loans for one of the following reasons:
- Start a new business
- Expand the business
- Buy machinery and other equipment
- Purchase essential goods or services for business operations
If you need a commercial loan for any one of these reasons, your decision is likely a smart one. But you still need to be well-informed about the options for commercial lending. Let’s get into it.
Types of Commercial Loans
If you apply for a loan from a trusted bank, you can access a wide range of commercial loan formats and products designed to best suit your needs. When a loan is designed specifically for a certain application, it serves the purpose well, and you get maximum benefits for your business. Keep an eye out for these five types of commercial loans offered by many banks and lending institutions:
1) Construction Loans
Construction loans are designed to support business expansion. If you are constructing a new facility to expand your business, a construction loan can help you keep your expenses in control. You can get funds to cover labor charges, material costs, land development, and other construction-related expenses.
2) Commercial Real Estate
Commercial real estate financing is designed to enable property owners, real estate developers, and investors to purchase and/or improve commercial land or buildings. The wide variety of loans and creditlines available can open up exciting opportunities to help you invest and expand.
3) Equipment Loan
If you need funds to buy expensive equipment for your business, do not assume that you have to use up funds from your savings. Apply for an equipment loan and you can get financing for up to 100% of the value of the equipment. With an equipment loan, you can get the required equipment without having to hurt business cash flow in the short term. The loan payments would of course be amortized over time, and your existing funds and present day cash flow can be used for other purposes. Now isn’t that a win-win situation?
4) Letters of Credit
With letters of credit, you can procure goods and services from vendors on a credit basis if you cannot pay at the time of purchase. Based on your history and relationship with your bank, your bank can issue letters of credit, which guarantee that your payment will be received on time. This allows you to purchase goods on credit helping you run business operations seamlessly.
5) Small Business Loans
Small business loans are loans designed specifically to help smaller, typically locally-based businesses progress and flourish. Usually, small business loans have attractive interest rates and flexible terms to provide stress-free and easy repayment systems to local business owners. Small business loans alsotypically get approved more quickly than larger loans for bigger commercial entities.
How to Get a Commercial Loan?
As you can see, there are several different types of commercial loans available for different business needs. All you need to do now is contact a trusted bank in your area and schedule an appointment with a loan officer. We suggest that you choose a bank that offers quick approval, friendly service, and attractive rates. The bank should also have sufficient local expertise and knowledgeable customer service representatives within the branch so that they can provide the best suggestions about terms and interest rates.
The first step would be to visit the websites of banks in your area. That way, you can go through all the information comfortably and refine your list of potential banks that best suit your needs, before scheduling a consultation.
Getting a commercial loan doesn’t have to be a migraine-inducing experience. With a little bit of know-how and armed with the right questions to ask, you can be confident that there are banks in your area that offer the right commercial loans and lines for large and small businesses alike.
So don’t be hesitant. Contact a trusted local bank and see how they can help you scale your business with the right commercial loan option today.