WHAT IS A COMMERCIAL LOAN?
This is the simplest form of business lending. Borrow funds you need over a fixed period with regular payments to repay the capital borrowed and the interest charged by the lender. There are a variety of sources where you can obtain a commercial loan and not just from high street banks. These include
You can get a secured or unsecured commercial loan depending on the trading history and credit rating of your business.
Secured vs Unsecured
Secured Commercial Loan
This is when a lender would require some security against their debt. The security they take could be on the assets already owned by your business, similar to an Asset Re-Finance explained on our Asset Finance Page. Lenders may also ask for Directors Personal Guarantees so in the event the business was unable to meets its obligations under the commercial loan agreement, the directors would become liable to the lender.
A secured commercial loan is usually cheaper than an unsecured one as the lender has a lower risk and can therefore lend at a lower interst rate.
This is a commercial loan where the lender does not hold any security on the businesses assets whether it is because the business doesnt not own sutaible assets or wishes not to give a security. This is usually a more expensive option and your businesses trading and credit history plays a bigger role in the lenders decision. Lenders may still require Directors Personal Guarantees with an unsecured commercial loan.