A commercial loan, which is also referred to as a business loan, allows businesses to conveniently and effectively get the cash they need to improve their business' situation.
Whether or not you can successfully get a business loan or not depends on the lender you go with and the type of loan you opt for. The financial state of your business is also of course a deciding factor in whether or not you get a yes or no.
Before applying for a commercial loan, it's important that you comprehensively review the funding requirements to ensure you're best placed to get the answer (and cash) you want.
No ifs, buts or maybes ever come into the equation: your business has to meet these requirements, or the loan simply cannot be granted.
While there are various kinds of commercial loans, they all tend to fall into two categories: secured and unsecured loans.
What's the Difference Between Secured and Unsecured Loans?
Secured loans are those in which the borrower (you) offers security in the form of an asset for the loan.
This asset can can be anything from a vehicle or piece of equipment to property and even investment accounts and insurance policies.
Whatever you choose to secure the loan against, it can be used in case repayments for the loan are not made.
The value of the asset you're willing to borrow against will usually play a deciding part in how much capital you can gain access to; the larger the asset's value - and therefore the more security you give to the lender - the more you'll usually be able to borrow.
This is because the lender has confidence that the value can be recovered either via repayment or (worst case) by seizing the asset. Secured loans also offered much lower interest rates because there's so much less risk involved for the lender.
Unsecured loans - as I'm sure you can guess - are those in which no assets are required as collateral.
These loans are granted based on affordability, creditworthiness and eligibility considerations.
These are commonly used when businesses are attempting to get quick capital. The application process for these loans is usually simpler and quicker than that of secured loans.
Businesses who don’t want to offer their assets as security or businesses that do not have assets find unsecured loans particularly useful.
Security is provided in the form of a personal guarantee. The guarantor, which is usually the director or owner of the business, assumes liability for repayments in the case that the business cannot make them.
So how about the different types of lender?
With the birth of The Internet and everything that came with it gave us two different types of lender: banks and online.
Bank Vs. Online Lender
Bank loans are usually provided by banks who have a high-street presence and online presence, instead of businesses (like ourselves) who are solely online-only lenders with no shop front.
There are huge variances in unsecured loan amounts from banks, however small businesses are usually offered anywhere between £1,000 to £100,000. These loans can usually be repaid over a term of one to 10 years.
Banks sometimes offer slightly lower interest rates and many of them offer a choice between a variable or a fixed rate.
The processing time for banks loans however can be very, very lengthy.
In fact, just applying for these loans can be a longer process than the entire process of application and approval with an online lender. If you’re looking for a quick source of finance, banks probably aren't for you.
Online lenders generally offer the kinds of loan services that banks do. However, as stated before, the application process is usually much quicker.
In fact, many online lenders approve loans and can transfer the funds to you within days of said approval.
(Not to toot our own horn or anything, but we actually take this one step further and offer instant cash transaction upon approval).
Businesses that don’t have time for the long application process that banks commonly use online lending sources. A business looking for a quick injection of cash should look to an online lender.
Conclusion: are Commercial Loans Easy to Get?
Sorry to be all how long is a piece of string about it, but there are too many variables involved to say yes or no.
For some businesses, getting a commercial loan will be easy peasy. For others, a little more tricky.
One thing is for certain though: it's much easier (and quicker) to get a loan through an online-only lender than a bank.
If you've still got any questions about commercial loans, please feel free to call our team.
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