Commercial Lending

Find the best commercial lending rates

Taking on a loan can be a frightening experience as an individual consumer or as the owner of a small business. However, engaging in commercial lending, which is the process by which established organizations (most often companies comprised of a business partnership or limited liability corporation) borrow money, can be an opportunity to free up new capital and pursue new customers and markets. In many cases, commercial lending takes the form of a line of credit, which a business can use for operating the company and pursuing new projects. Commercial lending opportunities that don't involve a revolving line of credit may instead involve bank loans with a fixed or variable interest rate and critical provisions, such as the duration of the loan.

Getting a Commercial Loan

Commercial lending is different from loans that require collateral. In instances where an institution lends money to a company, the focus is primarily on cash flow, and the company's collateral is of secondary importance. Why? Because in order to receive a loan, a business must demonstrate that it is capable of managing its resources and has the ability to grow, even if only slowly. Commercial lenders will take a close look at a firm's cash inflows and outflows before making an investment. This is a crucial step in determining how long it will be before the company can be expected to make a return on the loan and help the lender profit from the investment. So long as this repayment can be reasonably guaranteed, the loan is likely to be granted.

An insolvent company at risk of bankruptcy, on the other hand, is much less likely to be tossed a lifesaver by a commercial lender and should pursue alternate strategies in order to return to solvency.

Finding Lower Commercial Lending Rates

Commercial lending, be it commercial mortgage lending, commercial real estate lending or other business lending, can also be a beneficial move for businesses looking for new capital, because commercial lending rates tend to be lower than arrangements involving business credit lines. In the long run, this means a company receiving a loan will pay far, far less for that transaction and will sooner have the opportunity to begin making a profit on the new capital. Wholesale commercial lenders may be able to offer even lower lending rates.

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