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Guide to Commercial Loans

How do Commercial Loans work?

Commercial bank loans are similar to a personal bank loan with the exception that commercial loans are calculated and lent according to the credit history of the business and not necessarily a personal rating, although this may also be used on some occasions.

To receive any form of finance for a business, an application must be submitted to the lender stating how much is required and for what purpose. Other paper work may be required by the lender and once satisfied the funds are made available.

Usually there is an administration fee for setting up the loan. Each month the loan will accumulate interest which is payable, this may be calculated at a variable or fixed rate but is usually agreed at the onset of the loan.

There may be other charges attached to the loan such as late payment fees, early termination fees etc.

The main considerations which lenders take account is; what funds are required, past financial history, up to date business accounts showing the business is running well and what if any collateral is being used.

The loan is taken out for a specific period of time which is agreed with the lender, any early repayment of the loan may incur a charge but this is up to the discretion of the lender.

 

Guide Contents

Commercial Loans
How do Commercial Loans work?
Secured Commercial Loans and Unsecured Commercial Loans
Find the best Commercial Loan
Applying for the best Commercial Loan
Frequently asked questions about Commercial Loans
Where to get more help and advice about Commercial Loans

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