Businessmen always need funding to start an original venture as well as to expanding an existing one. The money should be easily and readily available to them. Considering such an urgent requirement, commercial loan products had been designed for this purpose. Commercial loans can be used by business owners to finance infrastructure projects, buy goods and services, launch new projects or expand an existing one.
As a requirement, business owners must give out some important details about their business in advance. They are usually required to provide an audited financial statement for the past 3 years if their the purpose is to introduce some new business. In the case of business expansion, lenders usually require company financial statements along with balance and profit/loss statements. At the same time, information about the owners along with their partners or stockholders (if any) will be required.
There are secured business commercial loans and unsecured ones as well. Secured commercial loans are otherwise known as commercial mortgages and borrowers are required to entrust commercial property as collateral. The equity in this collateral will determine the amount of the loan.
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The interest rate options are fixed and variable. The interest rate as well as the month amortizations are predetermined under the fixed rate, which allow borrowers to find out the amount they need to pay and make provisions for 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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Repayment period for the secured commercial loans can be for a period of 12 to 25 years. However, one should carefully consider his/her financial capacity when choosing the amount as well as repayment duration for the loan.
The unsecured commercial loans, on the other hand, usually require borrowers to present tangible proof of their capacity to pay along with their business profile. The credit score of such borrowers matter a lot in negotiating the loan transaction.
Those with bad credit can still avail of a quick commercial loan for as long as they are able to win the confidence of the lender with a plan for loan repayment.
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 conscientious about paying the monthly installments when they become due.