Numerous businesses rely on commercial mortgages to help in purchasing commercial properties. It's a common thing for businesses to require financing and backing for inventory, operations, upgrades, expansion, and for a multitude of other reasons. Commercial financing is available for these kinds of reasons. Apart from the often used short-term business loans, there are various medium and long-term commercial financing options on hand.
Medium-term commercial financing loans usually have terms between 1 and 5 years. Bankers and commercial lenders have greater concern for medium-term commercial loans and will require increased collateral for the added risk. Expansion, upgrades, and equipment are usually the reasons for these loans. Some of the medium-term commercial loans include:
1. Equipment Leasing. A business can lease equipment for 2-5 years. Renting allows lower monthly payments, as opposed to a term loan to buy the equipment.
2. Business Term Loan. These business loans can be utilized at the business' discretion. Term loans often have 5-year terms and require repayment with quarterly payments of both principal and interest.
3. Monthly Payment Business Loan. Similar to business term loans, but these require monthly payments.
Because terms are more than 5 years, long-term commercial financing are the hardest loans to get. Some bankers prefer well-established companies with strong collateral. Samples of long-term commercial financing loans are:
1. Commercial Mortgages. Commercial mortgages have great variety in their amounts, rates, and repayment terms. Some can have terms up to 25 years.
2. Real Estate Loans. Companies with good financial situations and equity can borrow against any real estate properties they have.
3. Personal Loans. As a form of commercial financing, small business owners can avail of personal loans.
4. Asset-based Loans. These are loans taken against the company's assets.
5. Leveraged Buyout. Leveraged buyouts occur when a corporation or investor purchases a big share of a company's equity.
6. Small Business Association Loans. Lenders guaranteed by the SBA can issue SBA loans. These loans are designed for small businesses and have certain requirements that must be met, but are quite simple to qualify for. Also known as start-up loans, all small businesses ought to consider this form of commercial financing.
