Best Commercial loan Options

Here is a quick look at how some commercial loans work.

Traditional Term Loans

A traditional term loan is a lump sum of cash that you pay back, plus interest, over a fixed period of time. Banks and online lenders issue term loans. These commercial loans are best for large, one-time business expenses.  You borrow a fixed amount of money for a specifically stated business purpose and pay back the loan over a fixed term usually at a fixed interest rate.

Commercial real estate loans are loans that business owners can use to buy or upgrade commercial properties. The property serves as collateral for the loan. Banks and private lenders offer commercial real estate loans.  Like a residential mortgage, the commercial loan will be secured by the property being purchased.

A business line of credit gives you access to a specific amount of capital that you can draw from whenever you need. You only pay interest on the money you draw, and when you pay it back, the credit line goes back up.  A business line of credit provides flexibility that a regular business loan doesn’t. You can borrow up to a certain limit and pay interest only on the portion of money that you borrow.  Commercial lines of credit work similarly to credit cards, and they’re especially helpful for seasonal businesses or those with cash flow irregularities.

An SBA (Small Business Administration) loan is a long-term, low-interest small business loan that the government partially guarantees.  SBA loans are similar to traditional term loans, but the government guarantee makes it easier to qualify for SBA loans. Lenders offer a large amount of money—up to $5 million—suitable for large, one-time and recurring business expenses.  SBA loans alleviate the risk associated with lending money to business owners and entrepreneurs who may not qualify for traditional loans – thus opening up lending opportunities to thousands of entrepreneurs, start-ups, growing businesses, minorities and veterans.

Short-Term Loans

A short-term loan is a loan of $10,000 to $500,000. You pay back the loan, plus interest, with daily or weekly payments over 3-18 months. These commercial business loans are best for small, one-time business expenses.  Short-term loans are widely available, but are specifically targeted for consumers who are likely to pay the loan back.