Finance Your Enterprise Ventures
According to a Reuters report, the start of 2022 saw an increase in commercial and industrial loans. If you’re one of the businesses in need of this type of financing, you have options. Whether you require capital to purchase commercial real estate, fund a construction project or finance a costly business expense, a commercial loan can help.
What Is a Commercial Loan?
A commercial loan is any debt financing issued to a business. Commercial loans come in many forms with unique repayment structures. However, they all serve a unified purpose: to provide funding for all things small business.
In fact, options once considered “alternative” are now more widely adopted and, many times, the first choice for business owners looking to secure commercial financing.
How Does a Commercial Loan Work?
Since there are multiple types of commercial loans, how they work depends on the option you choose. For instance, some loans are specifically for commercial real estate, construction or vehicles. Others serve as a temporary bridge of commercial funds until more long-term capital can be secured.
Here are some common commercial financing options and how they compare:
Short-Term Commercial Loans
Short-term commercial loans provide your small business with a lump sum of working capital that must be repaid within 3-18 months. They’re known for their accessibility and speed.
Through these commercial business loans, you can receive same-day funding to finance renovations, inventory or any other immediate need.
Qualifying for this financing through an online commercial loan broker is often easier than qualifying for funding at your local bank. It’s a great option if you’re on the hunt for a fast commercial loan.
Is a Short-Term Commercial Loan Right for You?
If an unexpected expense puts you in need of capital, short-term loans may be suitable for you. Commercial loan lenders are less critical of applicants thanks to the abbreviated terms and lower amounts, resulting in higher acceptance rates and faster approvals.
Consider one today if:
- You need short-term funding for your next project
- Your bad credit history disqualifies you from long-term commercial loans
- You need a quick turnaround
Business Term Loan
Commercial business term loans are repaid over 1 year-5 years. They’re best used to finance large projects like equipment purchases and commercial real estate.
Unlike banks that can take months, Fast Capital 360 can give you options from some of the best commercial loan lenders in as little as a business day. Qualified candidates will find that interest rates aren’t too far off the best commercial bank loans, starting at 7%.
Because long-term commercial financing involves more money and longer terms, lenders have stricter qualification requirements. As a result, if you have bad credit or lower revenues, you may need to pursue another commercial loan option.
Is a Term Loan Right for You?
If you’re planning a costly new project for your business, term loans may be right for you. Although they’re harder to qualify for, the longer, predictable repayment structure and lower interest rates make them ideal for qualified borrowers.
Consider one today if:
- You’re planning to buy expensive equipment or real estate
- You prefer a long commercial loan term repayment period
SBA loans are partially guaranteed by the Small Business Administration (SBA). As a result, lenders face less risk of default and thus, open up access to financing opportunities for more businesses. That said, SBA lenders extend capital to small businesses they deem “financially fit,” making it more difficult to qualify.
SBA loans offer some of the most favorable commercial loan rates and terms on the market. But working with the government does take time. You may have to wait 3-4 weeks to receive funding.
Is an SBA Loan Right for You?
Low interest rates and long commercial loan terms are the hallmarks of SBA financing, making it an attractive option to small business owners. But they’re not for everyone.
Consider an SBA loan if:
- You’re not in a hurry
- You have good credit but don’t qualify for a conventional commercial bank loan
- You care about costs
Equipment financing gets you capital to lease or purchase equipment for your small business.
Since the equipment is used as collateral to secure the loan, you can finance up to 100% of the purchase price and pay for it over the life of the term. Keep in mind, though, that equipment financing has tougher qualification requirements compared to short-term loans and alternative forms of funding.
Is Equipment Financing Right for You?
When you need to purchase or upgrade equipment, this is the right type of commercial financing for you.
Consider equipment financing if:
- You need quick access to funding to purchase or replace outdated or damaged equipment
- You can’t afford to pay for the equipment outright
Business Line of Credit
With a revolving business line of credit, you’ll have a pool of funds to draw from on an as-needed basis. Much like your business credit card, you only pay interest on what you withdraw.
The flexibility of a business line of credit means they’re a bit harder to qualify for, so you’ll need strong sales and have a fair credit score to be considered.
Is a Business Line of Credit Right for You?
If you want to get a commercial loan that you can use for any ongoing working capital needs, a business line of credit is right for you.
Consider obtaining a business line of credit if:
- Your need for funding is open-ended
- Project costs could exceed your original estimates
Merchant Cash Advance
A merchant cash advance (MCA) is an alternative to a commercial loan. It’s a sum of capital that is borrowed against a business’s future sales. This means that, unlike types of commercial loans that are paid through installments, payments are drawn from the lender either by credit card holdbacks or daily ACH payments.
Also, MCAs use factor rates to determine the payback amount. This means you’ll have to pay the total amount agreed at signing, even if you pay off the amount early.
Merchant cash advances have lower qualification requirements than most commercial funding options. This allows small business owners who may not have a long or positive credit history the chance to grow their business.
Is a Merchant Cash Advance Right for You?
If you need to fill an urgent need, merchant cash advances are for you. With an MCA, you can get cash fast to address any emergency.
Consider an MCA if:
- You need funding today
- There is an emergency that requires working capital
- You have trouble qualifying for other bad credit commercial loan options
When Does a Commercial Loan Make Sense?
Now that you understand the different types of commercial loans, here are a few reasons you might consider one:
Fund Business Growth
If you own a newer business and are looking to ramp things up or you are a seasoned business owner seeking expansion opportunities, a commercial business loan can help. Seek funding to bring on additional staff, finance marketing ventures or fund investments in technology to help streamline operations.
Purchase Major Assets
Commercial finance is also used to invest in costly business assets. These can include purchasing an office, a storefront or other commercial space. Other common business use cases include vehicles and equipment.
Cover Operational Costs
The everyday costs of running a business can add up quickly. If you find your company is unable to keep up and you’re experiencing a temporary lull in revenue, consider a commercial business loan.
What Does a Commercial Loan Cost?
Commercial loan costs vary. For the funding options that use interest calculations — short-term, business term, SBA, equipment financing and business lines of credit — you’ll pay a mix of interest and principal in weekly or monthly installments.
Some commercial lending product fees are calculated using factor rates. In these agreements, you’ll always pay the set payback amount, even if you pay your loan off ahead of schedule.
Estimate your total cost of borrowing using our commercial loan calculator.
Commercial Loan Example
Let’s say you need a $250,000 commercial loan to fund a real estate purchase. If you were to secure a 7% interest rate for a term of 5 years, this would mean your payments would be $4,950 per month. This would equate to principal and interest of $297,000 over the course of the 5 years. However, depending on the terms of your financing agreement, you could repay your loan sooner and potentially save on some of the interest as a result.
How to Get a Commercial Loan
To get a commercial loan application approved, you’ll need to follow your lender’s application guidelines and meet their qualifying criteria.
What Our Lenders Evaluate
Securing a commercial loan at Fast Capital 360 is as simple as completing an online application and meeting minimum credit score, time in business and revenue requirements. Applicants also submit 4 of their most recent business bank statements. Our lenders look at a business’s bank statements to evaluate cash flow, including revenue compared to expenses.
Fast Capital 360 Minimum Qualifications
|Loan Type||Time in Business||Annual Revenue||Credit Score|
|Short-Term Loan||1+ year||$75,000+||540+|
|Business Term Loan||1+ year||$200,000+||600+|
|SBA Loan||2+ years||$50,000+||650+|
|Business Line of Credit||1+ year||$200,000+||560+|
|Merchant Cash Advance||4+ months||$100,000+||500+|
Commercial Business Loans Through Fast Capital 360
Here are a few reasons to entrust us with your commercial financing needs.
What Sets Us Apart
We’re committed to finding you the right financing for your business fast, just like we’ve done for more than 35,000 companies.
Over the years, our customers have been happy to give us great feedback:
How to Apply for a Commercial Loan (Online)
At Fast Capital 360, our online lending marketplace makes it easy to compare multiple offers from reputable financing providers.
Applying for a commercial business loan online is fast, easy — and most importantly — you can get preapproved without impacting your credit.
Complete our online application today. (It only takes a few minutes, we promise.)
It’s as easy as:
- Tell us about yourself and your business
- Attach recent bank statements
- Get multiple offers
Choose the offer that works best for your needs. Once approved, you could be funded within a day.
Commercial lending rates are determined based on your business’s financial health. Lender considerations vary but can include:
- Personal and/or business credit score
- Loan amount
- Loan repayment period
- Use of funds
- Down payment amount
Additionally, some lenders calculate your rate off a base rate, such as the prime rate. Specifically, your commercial loan interest rate could be a certain percentage above the prime rate.
Conventional lenders and some loan types, such as SBA loans, may require applicants to submit certain items when applying for a commercial loan, including:
- Personal background statement
- Personal financial statement
- Business plan
- Profit-and-loss statements
- Business and personal income tax returns
- Articles of incorporation
Lenders will evaluate your commercial loan application, credit history and company finances to consider the level of risk involved in loaning you funds.