Business people require financial help most of the time either for launching a new project or for intensifying an older one. Most often, this need for funding is an urgent one. 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. Lenders also will require information on the owners, business partners, and stockholders of the company.
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 amount of the loan usually depends on the equity of collateral.
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The rate of interest may be fixed or variable. 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. In the case of the variable option, interest rates are likely to be affected by the market and can go up at any time, in which case the borrower maybe paying an escalating rate.
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The repayment period for the secured commercial loans is usually between 12 to 25 years. It is important, however, to consider one’s financial capacity when choosing the loan amount as well repayment duration.
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.
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.
Try as much to raise your credit score to the 720 acceptable level in FICCO scale that has a range of between 300 and 850. Credit scores of 580 or less is considered bad credit. It is important that your credit report is checked and that it is error-free, and to repay easy debts to display improvements in your 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.