Business owners always have a need for money either to begin on some new project or for the expansion of an established one. The money should be easily and readily available to them. Fortunately there are commercial loans that business people can readily avail of. Business owners can avail of these loans to invest in infrastructure, purchase products as well as services, start a new venture, or grow one that is already established.
Before a commercial loan deal can take place, company owners are required to disclose some relevant information about the company. This would include their audited financial statement for the last 3 years, particularly for starting some new project. The usual requirements, in the case of expanding the business, are the financial statements including the balance and profit (loss) statements of the company. Lenders also will require information on the owners, business partners, and stockholders of the company.
Commercial loans are available in both secured and unsecured forms. With secured loans (or commercial mortgages), borrowers will have to assign some commercial property as collateral. The higher the collateral equity the larger the loan amount.
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Interest rates can be variable or fixed. For the fixed rate, both interest rate and monthly payment amounts are preset, so that borrowers are aware of how much they need to pay and can thus work out the loan. Under the variable option, the rate of interest is subject to change at any time depending on the market and the borrower might have to pay a higher rate, in case it gets higher.
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There is a comfortable and longer repayment period for secured commercial loans, which can be between 12 and 25 years. The amount of the loan and repayment period, on the other hand, should be carefully chosen keeping in mind one’s financial capacity.
When it comes to the unsecured type of commercial loans, some concrete evidence of the borrower’s repayment capacity together with his/her business profile maybe required. The credit score of such borrowers matter a lot in negotiating the loan transaction.
Getting commercial loans is usually easy even for those who are identified as bad credit provided that they have a concrete loan repayment plan that will gain the lender’s approval.
The borrower should make efforts to bring his/her credit score up to standard level of 720 as determined in the FICCO scale. Credit scores of 580 or less is considered bad credit. Make sure to have your credit report examined and it should be accurate as well; also, try paying off your easy obligations to illustrate progress in your credit score.
Commercial loans provide sound financial assistance to business owners as long as it is availed of properly. Be mindful in remitting monthly payments promptly.