Commercial Loans for Small Business

A commercial loan is a type of debt financing provided to businesses in various forms, each with its own repayment terms. Despite these differences, all commercial loans aim to provide funding for a wide range of small business needs.

Interestingly, financing options once considered “alternative” are now becoming mainstream and often the preferred choice for business owners seeking commercial funding.

Given the various types of commercial loans available, their functionality differs based on the specific option selected. Some loans are designed for commercial real estate, construction, or vehicle financing, while others act as interim solutions to bridge the gap until long-term capital is secured.

Here are several common commercial financing options and their comparative features:

Short-Term Commercial Loans

Short-term commercial loans provide your small business with a lump sum of working capital, typically requiring repayment within 3 to 18 months. Known for their accessibility and fast processing, these loans offer same-day funding to address immediate needs such as renovations or inventory replenishment.

Obtaining this type of financing through an online commercial loan broker is often easier than securing funds from a local bank, making it an excellent choice for those seeking quick commercial loans.

Is a Short-Term Commercial Loan Right for You?

If you face an unexpected expense that requires immediate capital, short-term loans could be an ideal solution. Due to their shorter terms and smaller amounts, lenders tend to be less stringent with applicants, resulting in higher acceptance rates and faster approval processes.

Consider a short-term commercial loan if:

• You need short-term funding for your next project
• Your bad credit history disqualifies you from long-term commercial loans
• You need a quick turnaround for immediate financial needs

Business Term Loan

Commercial business term loans typically have repayment periods ranging from 1 to 5 years, making them ideal for financing significant projects such as equipment purchases and commercial real estate ventures.

While traditional banks may take months to approve a loan, iBusinessLender can provide options from top-tier commercial lenders within as little as one business day. Qualified applicants will find competitive interest rates starting at 7%.

Due to the larger sums and extended terms associated with long-term commercial financing, lenders have stricter eligibility criteria. Therefore, individuals with poor credit or lower revenues may need to consider alternative commercial loan options.

Is a Term Loan Right for You?

If you’re planning a major new project for your business, a term loan may be the right choice. Although they are harder to qualify for, the longer, predictable repayment structure and lower interest rates make them ideal for eligible borrowers.

Consider a term loan if:

• You’re planning to buy expensive equipment or real estate
• You prefer a long-term repayment period

SBA Loans

SBA loans are partially guaranteed by the Small Business Administration (SBA), which reduces lenders’ risk and makes financing more accessible to many businesses. However, SBA lenders typically extend these loans to small businesses they deem “financially fit,” making qualification more stringent.

These loans offer some of the most favorable rates and terms available in commercial financing. However, the involvement of government processes means that there is a longer wait time, typically 3-4 weeks, before funds are disbursed.

Is an SBA Loan Right for You?

SBA loans are known for their low interest rates and long repayment terms, making them an attractive option for small business owners. However, they are not suitable for everyone.

Consider an SBA loan if:

• You are not in a hurry to receive funds
• You have good credit but do not qualify for a conventional commercial bank loan
• You are focused on minimizing costs and securing favorable terms

Equipment Financing

Equipment financing provides the capital needed to lease or purchase essential equipment for your small business operations.

Since the equipment itself serves as collateral for the loan, you can finance up to 100% of the purchase price and spread the payments over the loan term. However, it’s important to note that equipment financing typically has more stringent qualification criteria compared to short-term loans and alternative funding options.

Is Equipment Financing Right for You?

If you need to purchase or upgrade equipment, this type of commercial financing is ideal.

Consider equipment financing if:

• You need quick access to funding to purchase or replace outdated or damaged equipment
• You cannot afford to pay for the equipment outright

Business Line of Credit

A revolving business line of credit provides you with a pool of funds that you can access as needed. Similar to a business credit card, you only accrue interest on the amount you use.

Due to their flexible nature, business lines of credit usually require stricter qualification criteria. A strong sales record and a good credit score are typically necessary for consideration.

Is a Business Line of Credit Right for You?

If you need a commercial loan for ongoing working capital needs, a business line of credit is a suitable option.

Consider obtaining a business line of credit if:

• Your need for funding is open-ended
• Project costs could exceed your original estimates

Merchant Cash Advance

A merchant cash advance (MCA) offers a flexible alternative to traditional commercial loans by providing a lump sum based on your business’s future sales. Unlike installment-based commercial loans, MCA repayments are made through credit card holdbacks or daily ACH payments.

MCAs use factor rates to determine the total repayment amount, which means you must pay the agreed-upon sum even if you settle the advance early.

One of the key advantages of MCAs is their lenient qualification criteria, making them accessible to small business owners with limited or less favorable credit histories. This allows businesses to seize expansion opportunities despite credit challenges.

Is a Merchant Cash Advance Right for You?

If you need immediate funding, a merchant cash advance can be an ideal solution. MCAs provide fast cash to address urgent needs.

Consider an MCA if:

• You need funding immediately
• There is an emergency that requires working capital
• You have difficulty qualifying for other commercial loan options due to bad credit

Now that you understand the different types of commercial loans, here are a few reasons you might consider one:

Fund Business Growth

Whether you’re a new business owner looking to accelerate growth or an established business owner exploring expansion opportunities, a commercial business loan can be essential. Use the funding to hire additional staff, support marketing campaigns, or invest in technology upgrades to improve operational efficiency.

Purchase Major Assets

Commercial financing is also used to invest in significant business assets. This can include purchasing an office, a storefront, or other commercial spaces. Other common uses include acquiring vehicles and equipment.

Cover Operational Costs

Running a business comes with numerous day-to-day expenses that can add up quickly. If your company is struggling to keep up due to a temporary revenue lull, consider a commercial business loan to help cover operational costs.

The costs associated with commercial loans can vary. For funding options with interest calculations—such as short-term loans, business term loans, SBA loans, equipment financing, and business lines of credit—you’ll make periodic payments that include both interest and principal, typically on a weekly or monthly basis.

Alternatively, some commercial lending products use factor rates to calculate fees. In these cases, you must pay the predetermined repayment amount, even if you pay off the loan early.

To estimate your total borrowing costs, use our commercial loan calculator.

Commercial Loan Example

Consider this scenario: you need a $250,000 commercial loan to finance a real estate acquisition. With a 7% interest rate over a 5-year term, your monthly payments would be $4,950. Over the 5-year period, you would pay a total of $297,000 in principal and interest. However, by following the terms of your financing agreement, you may have the option to repay the loan early, potentially reducing the total interest costs.

To get your commercial loan application approved, you’ll need to follow your lender’s application guidelines and meet their qualification criteria.

What Our Lenders Evaluate

Applying for a commercial loan through iBusinessLender is simple. Complete an online application and meet the minimum requirements for credit score, time in business, and revenue. Additionally, applicants must submit their four most recent business bank statements. Our lenders review these statements to evaluate cash flow, specifically comparing revenue to expenses.

iBusinessLender Minimum Qualifications

Here are a few reasons to entrust us with your commercial financing needs.

What Sets Us Apart

We’re committed to finding you the right financing for your business fast, just like we’ve done for many other small businesses.

Our customers have been happy to give us great feedback.

How to Apply for a Commercial Loan (Online)

At iBusinessLender, our online lending platform simplifies the process of evaluating numerous offers from trusted financing providers.

Applying for a commercial business loan online is swift, hassle-free — and crucially — you can secure preapproval without affecting your credit score.

Complete our brief online application today. (It’s a quick process, we assure you.)

Here’s how it works:

1. Share information about yourself and your business.
2. Attach your recent bank statements.
3. Receive multiple offers.

Select the offer that aligns best with your requirements. Upon approval, funding could be disbursed within a day.