Applying for a Commercial Loan, what to expect.

Store owner smiling for picture with customers in the backgroundIf you own a business, it can be an exciting and nerve-wracking decision to grow or expand. The most important place to begin is to decide how and why you intend to expand. Do you want to rent out a larger space, get more equipment, or possible hire extra hands? Are you trying to grow because you have higher demand than supply or do you plan to expand into a new territory to gain access to a new demand stream? For smaller growth you might be able to fund the changes needed with your cash flow over time, however, for larger and faster growth you might need additional funding.

A great way for companies to get the financing they need to grow their business is to get a commercial loan. These loans, unlike small business loans, are typically not guaranteed by the government to the lender. This means that the loan is a riskier investment for lenders. However, with commercial loans there are more options so the loan terms might be more flexible than a standard small business loan. When you apply for a commercial loan, it will probably require more verification and stricter qualifications for approval.

Applying for a commercial loan will typically require*:

  • High credit score
  • Verification of Business History
  • Personal and Business Financials and Assets
  • Business Plan
  • Collateral
  • Personal Guarantee

When applying for the loan there may be other fees that will be charged during the application process. Due to the higher interest costs and the origination fees it is best to know what the money will be used for before applying for the loan to ensure the expected growth will outweigh the cost. Commercial loans that are unguaranteed by the government can have higher interest rates than other small business loans. It is best to research which loan has the best requirements and interest rates that fit your business goals.

The benefits of getting a commercial loan include getting the money right away so you can begin your expansion plans quickly, instead of gradually or in the distant future. The payments are also typically divided over a longer period and are made into manageable amounts that can be paid off with cash flow, if planned correctly. Typically, commercial loans allow you to borrow more than you would be able to with a personal or small business loan. You also do not need to give up any ownership of your company in exchange for the financing, which is commonplace with investors.

Common uses for a Commercial loan would be:

A commercial loan might be the best option for you to expand and grow in the way you planned. Reach out to a financial advisor today to learn more about what options work best for you.

Talk with our commercial lender, Loren Sarno, today to learn more about the options that are available at Alltrust Credit Union!


*Exact qualifications and paperwork needed to qualify for a commercial loan may differ. Contact a finance professional to get more specific information on the programs you might qualify for and paperwork needed to apply.

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