COMMERCIAL FINANCING

Purpose:

• Working Capital: To finance day-to-day operations, such as inventory, payroll, and other operational expenses.
• Capital Expenditures: To fund the purchase of equipment, machinery, or real estate.
• Expansion: To support business growth, open new locations, or enter new markets.

Types of Commercial Loans:

• Term Loans: A lump sum of capital is provided with a fixed repayment schedule.
• Lines of Credit: Businesses can draw funds up to a predetermined limit as needed, similar to a credit card.
• Commercial Real Estate Loans: Specifically for purchasing, refinancing, or developing commercial properties.
• Equipment Loans: Financing for the purchase of machinery, vehicles, or other equipment.

Interest Rates:

• Fixed Rate: The interest rate remains constant throughout the loan term.
• Variable Rate: The interest rate can fluctuate based on market conditions.

Collateral:

• Secured Loans: Backed by collateral, such as business assets, real estate, or inventory.
• Unsecured Loans: Do not require specific collateral but may have higher interest rates.

Repayment Terms:

• Short-Term Loans: Repaid within a few months to a few years.
• Long-Term Loans: Repaid over an extended period, often with a fixed monthly payment.

Qualification Criteria:

• Lenders evaluate the business's financial health, credit history, cash flow, and the purpose of the loan.

Lender Types:

• Traditional Banks: Offer a wide range of commercial loan products.
• Online Lenders: Provide a faster application process, often with different criteria.
• Credit Unions: Non-profit financial institutions that may offer competitive rates.

Government-backed Loans:

• Some commercial loans are guaranteed or partially guaranteed by government agencies to encourage lending to small businesses.