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Questions to ask when thinking about Commercial Loans

Published on 28th December 2018

Turning an SME into a well-established business venture isn’t easy. As well as the dedication and many hours of hard work each day, you also need access to sufficient amounts of capital to achieve your goals. However, deciding to use your own finances is a risky strategy and could deprive other areas of your business. That’s why choosing to explore how applying for a Commercial Loan could see your business receiving the funds it needs to complete all manner of essential projects. But, as always, it pays to be fully aware of the solutions that are available to you and what they mean for your business. So before making your decision, here are some of the questions you need to ask about Commercial Loans:

  • What aspect of your business requires funding?
  • What types of Commercial Loans are available?
  • How much money do you need to borrow?
  • How is the agreement repaid?
  • Are there any additional costs to consider?

Why does my business require a Commercial Loan?

This is an important question which you need to answer before making enquires for a Commercial Loan. Because Commercial Loans cover a diverse spectrum of business finance products, you need to decide whether you require the funds for purchasing real estate, acquiring valuable equipment and machinery or even supporting your business’ finances. Of course, these aren’t the only uses for a Commercial Loan, but by identifying what aspect of your business needs funding you’ll be in a much stronger position to choose an appropriate business finance product. In addition, it will also help you convince lenders that their investment will add value to your business and generate a healthy return.

Got a business project that needs funding? Or could your business do with a capital injection? Apply for a Commercial Loan today or find out more about how your business could benefit.

What types of Commercial Loan products are available to my business?

Whenever you discuss Commercial Loans you are, in fact, talking about a number of different business finance products. Therefore, approaching a bank, broker, Alternative Finance lender or any other financial institution and asking for a Commercial Loan simply isn’t practical. By being clear about what aspect of your business you’re hoping to finance, you can begin rounding your search down to a group of products before identifying an appropriate business finance solution. By choosing to pursue a Commercial Loan just some of the products and packages you could benefit from may include Secured Loans, Unsecured Loans, Term Loans, Asset Finance, Bridging Loans and Working Capital Finance.

How much money could my business borrow with a Commercial Loan?

This aspect of Commercial Loans varies widely from product to product and largely depends on how the lump sum is generated. Whilst some products such as secured term loans offer between £5,000 to £1,000,000, other finance solutions may rely upon the equity or purchase cost of a concerted piece of equipment or real estate, for example. Therefore, before making your decision, you need to make sure that you’re fully aware of how each product generates a lump sum for your business so that you receive a sufficient amounting of funding.

How are Commercial Loans repaid?

When considering a loan for your business, what may come to mind in terms of repayment schemes are fixed monthly repayments. Although many business finance products such as Term Loans and Asset Refinance use this method, it’s not the only repayment scheme available. Commercial Loans cover many different business finance products, which all operate in their own way. For example, Bridging Loans require you to make a single final repayment at an agreed date or period, depending on whether you’ve chosen a Closed or Open Bridge product. However, in the run-up to that point, you also need to settle the interest through either monthly interest payments, rolled-up interest or retained interest. Therefore, before entering any Commercial Loan agreements, make sure that you fully understand how the product works so that you can be certain your business can afford the repayments.

Are there any other costs that I need to be aware of when considering a Commercial Loan?

As well as interest, some Commercial Loan products may require you to pay additional costs and fees, affecting the total cost of finance. These can include arrangement fees, administration fees, legal costs, missed/partial payment fees, redemption penalties and exit fees. Because any additional fees will largely depend on your choice of lender and Commercial Loan product, make sure that they fully explain each of these cost to you, preferably in a face-to-face meeting.

Thinking about applying for a Commercial Loan?

Making sure that your business is constantly growing can be a frustrating endeavour, there are so many aspects you need to consider. Just one of the many issues that you may face could involve a lack of sufficient capital. Without the necessary funds to back up your business, it can be tempting to simply delay or abandon your intended goals. However, by applying for a Commercial Loan, you could gain access to a wide range of finance solutions to allow you tocompletey any number of business projects. So if you’re look to buy equipment, redevelop your premises or support your cashflow, apply for a Commercial Loan today or find out more with Rangewell.

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David Harrison

David Harrison

Content writer
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