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The Benefits of Commercial Loans to Business People

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. With such pressing requirements, banks have come up with quick commercial loans in response. Commercial loans can be used by business owners to finance infrastructure projects, buy goods and services, launch new projects or expand an existing one.

Before a commercial loan deal can take place, company owners are required to disclose some relevant information about the company. 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. The usual requirements, in the case of expanding the business, are the financial statements including the balance and profit (loss) statements of the company. 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. With secured loans (or commercial mortgages), borrowers will have to assign some commercial property as collateral. The amount of the loan usually depends on the equity of collateral.
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The interest rate options are fixed and variable. The interest rate as well as the month amortizations are predetermined under the fixed rate, which allow borrowers to find out the amount they need to pay and make provisions for 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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Repayment period for the secured commercial loans can be for a period of 12 to 25 years. The amount of the loan and repayment period, on the other hand, should be carefully chosen keeping in mind one’s financial capacity.

In the case of unsecured commercial loans, the borrower is required to provide a concrete proof of his/her repayment capacity together with their business profile. The credit score of such borrowers matter a lot in negotiating the loan transaction.

Those with bad credit can still avail of a quick commercial loan for as long as they are able to win the confidence of the lender with a plan for loan repayment.

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. If you have a score of 580 and less, then you are marked as 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 offer business people some sound financial resource, but much thought must be given before taking advantage of it it. Be conscientious about paying the monthly installments when they become due.