Types of Commercial Business Loans

2007-11-16 12:28:43

( Business )



What are Commercial Business Loans?

Commercial business loans are highly similar to individual consumer loans in terms of payment periods and qualifications. The loan terms and conditions, especially the interest rate, depend on the credit history of your business, the reputation of your company, and which of your assets will secure the loan.

Like individual consumer loans, commercial business loans also have different variations and structures. Some commercial business loans give incentives to the companies that are borrowing from them.

Types of Commercial Business Loans

Businesses come in all sizes, shapes and needs. Thus, there is also a wide variety of commercial business loans especially made for specific companies.

There are small fast business loans that cater to start-up companies or to finance their development plans or projects. Loan amounts are usually small, less than fifty thousand dollars. The loans can also be used to fund franchises or trade activities.

Working capital types of loans are used to help companies get temporary funding while they are waiting to collect on their receivables, or to fill their inventory requirements in anticipation of sales. Your business may also need short-term credit lines to protect your bank account from being overdrawn, as well as business credit cards that you can use to purchase supplies. Such loans are usually secured by receivable invoices or inventory stocks.

Equipment financing serve to give you enough funding to acquire your machineries and office equipment for your business operations. Thus, your machines or equipment serve as the collateral for this type of loan.

Commercial mortgages are for the construction or acquisition of real property as a business asset, such as buildings and lots. Some creditors also offer you venture capital financing, where they serve as your business partner as well as funder for your development projects. And just like a mortgage, the same financed properties are also the collaterals for the loan.

There are many other sub-varieties of the above types. The best thing you can do is to talk to your creditor about your options.


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