Various types of Commercial Loan
With the financial turmoil we are experiencing at this time and age, various types of commercial loans still exist in the market today to help finance businesses with their star-up and/or working capital.
Commercial loan is a kind of loan which is specifically designed to help businesses in whatever form.
Just like any other loan, commercial loan is borrowed money from a lending institution such as bank, which needs to be settled in a specific number of month/s or year/s with corresponding interest rates.
What are the existing commercial loans in the market today?
Working Capital Loan
Working capital loan is a type of loan that is being applied for by businesses to help them finance their company’s operating expenses. Most businesses need financial assistance from lending institutions to help them finance their businesses until such time they were able to cover up all their operating expenses out of their revenues.
Construction loans aims to help borrowers in the construction buildings and/or make minor or major improvements in their property. These establishments are supposed to be incoming generating establishments.
Acquisition or Acquisition and Development Loan (A&D Loan)
This type of loan is all about financing borrower’s financial needs in acquiring a property or to acquire and develop a certain property. The total amount of loan will be divided in acquiring a certain land and portion of the loan is intended to develop or the improvement of the actual property acquired.
Consolidation of Debt Loan
This type of loan was designed to help borrowers live a tension free life by helping them pay off their debts. There are several financial institutions that specialize in this kind of loan. These are firms that work out an affordable payment scheme with your past creditors.
This type of loan is designed to help businessmen in financing their purchase of new equipments for their businesses. With this type of loan the equipments bought through these financial institution will use as the collateral to obtain the said loan. This is much better than using your property or your business itself as the collateral once default in payment was made. The equipments bought will be the only ones at stake rather than your property or your business itself.
Short-Term and Long-Term Loan
Short-term loan was designed for a specific need such as paying of debts or purchasing of new equipments and should be paid in a set term. Term runs from 90 days up to 120 days but can be extended if the case may require so.
Long-term loan was designed for a much longer term of payment. Term runs for more than 36 months. Prepayment penalties and changes in interest rates are applied in this type of loan.
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