Five advantages of why commercial loans are suitable for your business

The term “SME” is used for companies with fewer than 250 employees. These businesses are generally considered the backbone of the economy, as they account for a significant percentage of all companies in the UK – over five million. The share of commercial loans for SMEs equalled 34.8 per cent of all business loans in the UK.

Commercial loans are usually more expensive than other loans because they typically involve larger loan amounts and higher risks. Lenders charge higher interest rates and fees to offset the higher risk associated with commercial loans. The interest rate can still remain reasonable because lenders can structure the loan to meet the borrower’s financial needs and risk profile. For example, lenders may offer a longer loan term, lower interest rates, or more flexible repayment terms to reduce the overall cost of the loan.

Lenders typically assess a business’s creditworthiness and evaluate the collateral that the business has to secure the loan. This helps to mitigate the risk associated with the loan, allowing lenders to offer more competitive rates. Commercial loans can have different repayment schedules – sometimes monthly, quarterly, or twice yearly.

If you have the opportunity to grow your business by opening a new location or expanding your product line but don’t have the cash in hand to do it, a commercial loan can give you the financial boost you need. That’s not all, commercial loans have several other advantages for companies. Here are a few of them.

Use it for a variety of purposes

Commercial loans are typically for larger amounts of money. They have different terms than personal loans because businesses often require capital for activities or investments that require more significant financial resources. They also provide access to capital that would normally be unavailable through personal loans, such as help in business expansion, acquiring new assets, and investments in research and development. 

The speed and efficiency of the application process

A commercial loan can be approved in just a few days, which is faster than getting a traditional loan from a bank. Online application only takes minutes to complete, and you can be approved for a loan in as little as 24 hours. The loan terms are also more flexible than other loan types, such as mortgages.  

The flexibility of terms and repayment options 

You can tailor the loan to fit your business’s needs, whether you need a short-term or long-term solution. You can also choose from various repayment options, including interest-only payments, which can help keep your monthly payments affordable.

Wide range of financing options available

There is a wide range of financing options available for commercial loans. Some of the most common include SBA loans, conventional bank loans, and private loans. Each option has pros and cons, so comparing your options are vital before deciding on a loan.

• SBA loans are government-backed loans typically available at lower interest rates than conventional ones. However, they also usually have stricter eligibility requirements.
• Conventional bank loans are typically available at higher interest rates than SBA loans, but they may have more flexible eligibility requirements.
• Private loans are usually available from online lenders and other alternative lenders. They often have higher interest rates than SBA and conventional loans but may also have more flexible eligibility requirements.

Easy to qualify

You don’t need a perfect credit score or tons of collateral. Most commercial loans are based on the strength of your business rather than your credit score. This makes it easy for small businesses to get the funding they need to grow.

If you’re looking for help securing a commercial loan, BFS is the company to call. They have over 75 years of experience helping businesses get the funding they need to grow, and they’ll work with a wide range of lenders to find the best loan product for your business. So whether you’re looking for a short-term or long-term solution, BFS can help.