Business Loan
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Business Loan
A business loan, also referred to as a commercial loan, is a type of financing used to cover costs that are associated with running, operating, and growing your business.
This can include working capital (day-to-day business needs), equipment purchases, real estate, and inventory. Business loans can also be used for startups as well.
In general, the most common types of business loans are:
Term loans
Lines of credit
Real estate loans
Letters of Credit
SBA Loans
The following types of lenders provide business loans:
Banks
Credit unions
Small Business Administration (SBA)
Online lenders
Alternative lenders (such as Small Business Development Centers and economic development agencies)
How Much Can My Business Borrow?
The bank or lending institution that you choose to work with will determine the maximum amount of financing you’re able to receive.
Lenders have a maximum amount they can lend. This is called a legal lending limit. The amount that can be lent per type of loan is just based around this number; the specific type of loan product doesn’t matter.
Factors that determine how much your business is eligible for include:
Collateral
Cash flow of the business
Guarantor strength
Credit score
Duration for the process
Loans for Working Capital, Equipment and/or Inventory
These loans can be completed from start to finish in 3-5 business days (assuming all information is collected in a timely manner).
Real Estate Loans
The length of time for a real estate secured loan to close is usually between 30-60 days. The timeline becomes longer because title work and an appraisal need to be ordered and completed.
Title work tells us if there are any outstanding mortgages against the property that might prevent the clear transfer of ownership from the seller to the buyer.
Appraisals determine the value of a property and are conducted by a third party.
For more complex real estate loans, you might need additional time for due diligence. For example, if the property is in a flood zone, we will need flood insurance and may need a survey. Environmental reports come into play when there is a chance that the land may have some environmental cleanup concerns.
Collateral Type
The type of collateral usually determines how quickly you can receive a loan. For example, using real estate for collateral could take longer than something like equipment, because the value of the equipment is already determined.
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