Commercial Loans for your Business – Options and Factors to Consider as a Businessman

When you are in business whether, as a sole trader or a company, there will be times when the business cannot generate enough cash flow to meet its ongoing operating expenses. Your need for cash will also arise when you will expand business operations and purchase much-needed business assets. If you are a business owner and experiencing cash flow fluctuations, your next step should be to consider getting a commercial loan.

A commercial loan is also called a business loan and it can be set up for you, whereby you can use the proceeds of the loan to fund large capital expenditures or operating expenses that your business may otherwise be unable to afford. You will need to consider a number of options when deciding on a commercial business loan. Here is a list of options you should consider:

1. You will have to decide on the type of acceptable security you want to provide (e.g. residential, commercial or industrial)

2. You will have to decide if the securities taken by the lender/credit provider consist of Registered 1st or 2nd Mortgages, and

3. You will have to decide on the loan type (e.g. Interest Only or Interest plus Principal), the maximum loan size and the maximum loan-to-value ratio (LVR) percentage.

If you elect to fund your large capital expenditures or operating expenses with a commercial loan, you should consider all of the following factors:

1. If your business requires working capital or is at an important stage of development that requires a capital input, a short-term commercial loan may provide an effective solution. This loan is taken out for short-term and has a pre-determined exit date.

2. If you are considering purchasing a commercial property to either operate your business or to create a commercial property, you may require a longer-term commercial loan.

So, these are the main options and factors to think about when you are deciding to expand your business operations or generating enough cash flow to meet the ongoing operating expenses of your business. If you are confused about anything regarding commercial loans or want to seek expert help, you can consult a finance broker. He/she will understand your business requirements and suggest the best financial solution.

But, remember to be vigilant in the selection of the finance broker. Make sure that you choose a qualified expert who is a specialist and who knows what the credit policies and standard requirements are for commercial loans.