All about commercial loans
Business loans are available to help creditworthy companies improve their cash flow, make value-added purchases and acquisitions, and remain competitive in a difficult economy. Even if your business' reputation has suffered because of tough times, bad credit business loans can help turn things around.
If you don't qualify for a government business loan or grant, private lenders offer many options. Whether your business would be best served by a one-time loan or a revolving line of credit, the capital you need is available.
Types of Business Loans
There is a wide range of commercial loans available to finance just about any business need you may encounter. If you're just starting a new business, startup capital is available from both federal and state governments as well as private lenders.
Working capital commercial loans are intended to address shortfalls in cash flow, which can be caused by slower-than-expected sales, unpaid receivables and unplanned-for expenses. Funding for franchise start-ups, construction, real estate or business acquisitions, equipment leasing and much more is also available.
Minority business loans are available to both women and ethnic minorities attempting to launch their own companies or finance companies they've already created. If you're planning on starting an online venture, you should look for a lender that specializes in offering Internet business loans.
These distinctions are important because the type of loan you're applying for informs your actual application process. While you should be prepared to make a full financial disclosure to your business loan officer, some loans can be approved after a limited review of your business finances. For example, if you need a working capital loan, you might need only to demonstrate how future revenues will address the shortfall and leave you in a good position to pay back the loan, rather than bombarding your loan officer with complete balance sheets.
The Application Process for Commercial Loans
If you're applying for a startup loan, you'll need to have a detailed business plan written before your loan meeting. This plan should detail, at minimum, your business model, your anticipated revenue sources and your anticipated expenses.
You should also be aware that liability can differ when applying for business loans. In some cases, the business itself is considered the borrower, and the bank can seize business assets it's holding as collateral if repayment is not made. However, some business loans require a personal guarantee; in this case, even though the business is the borrower, the guarantor is considered personally responsible for the loan, and his or her credit rating is on the line. Before you apply for any business loan, know whether you or the business is considered the borrower, and ask the lending institution about what specific documentation they need to assess your application.