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Commercial Loans

There are many ways to finance your business. Whether you are just starting up and need to raise capital, or you are growing an existing enterprise, a business loan may be what you need. There are many variations on the financing options of such loans. Business loans can be a great way of reducing the personal risk of running the business. For example, if you currently have to offer personal guarantees for trade credit, you risk losing your own home or property if the business fails.

business loans

If you are interested in applying for a commercial loan, the first thing to know is that there are a lot of choices. While most will still require collateral, and all will depend on a solid credit history of the individuals involved, personal risk can be reduced by using business property as collateral instead of personal property.

Of course this is only available if your business has assets, and business that have been trading for some years will have more assets available than new businesses. Often however, the items that will be purchased with the loan, such as premises, machinery or vehicles, will be acceptable collateral for the loan.

Most lenders will require information about the business. Particularly if it is a start-up, they will require proof of assets or savings, credit histories of directors and the business and evidence of financial responsibility. As with all loans, the better your credit rating, the more you will be able to borrow, the lower the interest rate and the more favourable will be the terms.

A business plan, which shows how you intend to generate the revenues required to pay back the loan will also be required. The longer it is expected to take the business to start turning a profit, the harder the loan terms will be.

If the business has been running successfully for a period of time already, evidence of this will be required. Accounts showing previous profits etc. will vastly improve your position when seeking a loan.

You must know what kind of loan you are looking for before you begin applying. There is a wide range of financing products available for various purposes, and unless you are certain of what exactly you require, it will be very difficult to decide exactly which one to go for. A rule of thumb which is often used by borrowers is to use short term loans to fund short term expenses such as stock purchasing, and long term loans to fund long term needs such as vehicle, machinery or premises financing.

More Information:

  • Business Loans
    Business loans are commonly used by business owners to access cash needed for business start up, growth or improvement. There are a wide variety of programs and lenders available, so it’s important to understand your specific needs and pursue a loan that fits your situation.

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