Exploring Commercial Loans

Written By Alla Levin
February 20, 2020
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Exploring Commercial Loans

Commercial loans can help you turn your business idea into reality, or help you grow your business from a one-person operation to a fantastic enterprise, but they can be complex.

Getting a loan for commercial purposes is often more complicated than finding one for personal use, and there are different loans for different needs.

Here are some of the commercial loans you may need to use at some point.

Commercial mortgages

If business rents are high in your area, and you feel like you need more security, then you may want to buy business premises such as offices or a store.

There are a number of commercial mortgages available that can help you buy a property other than your main residence, and once you pay them off, your business has a valuable asset.

Some companies choose an interest-only mortgage for lower payments, but you may also want to consider making bigger repayments and paying it back faster, as this could put your business in a much stronger position.

Once you’ve bought a property, should you need to in the future, you can look at refinancing as a low-interest way to fund business expansions or improvements.

Term loanschoose an interest-only mortgage

Term loans basically work in the same way as most of the personal loans you have come across.

You visit biz2credit.com to work out how much you want to borrow and over what period, and you get a figure for how much monthly repayments will be.

then make the repayments as agreed, whether it’s over a couple of years or in the long-term.

It’s worth considering the impact the repayments will have on your business, and to ensure you can afford them before you sign up.

Interest-only loans

Some lenders also offer interest-only options to businesses.

If you are waiting for a big invoice to be paid, or know you can pay the loan back in one go in future, then an interest-only loan could be cheaper than a term loan, as you pay it back early and aren’t stuck with the repayments for years.

However, it can be dangerous to your finances if you take one of these loans out and then can’t pay it back, as you may be stuck paying back the interest for years and getting nowhere.

SBA Express loansSBA express loans are an option for some small businesses;

Funded by the government, SBA express loans are an option for some small businesses; however, it’s worth noting that you’ll still pay interest, and the application process can be longer than some commercial loans.

You generally need a good credit score for this kind of loan, so any adverse credit on your file might rule you out.

Construction loans

If your loan is specifically for a construction project, you may be able to get a construction loan.

The reason these loans may work better than standard loans is that they are sometimes available with repayments based on your profits once the construction is complete.

For example, if you are building an extension and hiring more staff, then the amount you could borrow might be based on projections once the work is done, rather than your current situation.

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