Types of Commercial Small Business Loans
Many kinds of small businesses qualify for a variety of commercial business loans. There are mortgage loans to help people buy properties, construction loans that enable them to build properties, and numerous kinds of other loans that fall somewhere in between. Just as no one business is right for everyone, no one kind of commercial business loan is right for every business.
The kind of loan you apply for is going to depend on a lot of factors, including the percentage of the purchase price that you’re needing to borrow, whether you own the property a building is going to be built on, how good your profit outlook is, and many other criteria. This article will briefly describe ten different types of loans you might qualify for:
1. Acquisition loans – for the purpose of helping you acquire property.
2. Acquisition and Development loans – that cover both buying the property and developing it.
3. Asset-based Loan – collateral is put up for this loan which can be used to buy anything.
4. Bridge Loan – is set up to cover a short period of time, like while permanent financing in being arranged for.
5. Construction Loan – Borrowing up to 80% of the estimated cost to build a commercial structure.
6. Debt Consolidation Loans – by consolidating many loans into one businesses can pay lower monthly payments.
7. Development Loans – to be used to build a new structure or improve an existing one.
8. Construction Improvement and Rehab Loan – money to buy and restore a fixer-upper business property.
9. Mezzanine Loan – Similar to a second mortgage, these loans are secured by company stock instead of property.
10. Refinancing Loan – Refinancing an existing loan in order to lower interest payments, pay off a balloon loan, or lengthen the term of the loan.
Another option that is available to small businesses is an SBA (Small Business Administration) loan. The SBA has geared its program so that people starting small businesses can get the financial assistance and counseling they need to succeed.