You have dreams for your business, and achieving those dreams means investing in your business’ future. Whether you’re a small business entrepreneur, or you’re building a formidable real estate portfolio, reaching your full potential often requires a commercial loan.

Commercial loans put the support of investors behind your business, empowering you to expand and attain professional heights previously unavailable to you. Continue reading to learn more about commercial loans and the role they can play in your business.

What is a commercial loan?

Commercial and industrial loans are funds borrowed from lending institutions such as banks or other financial services providers that are used expressly for short-term business purposes. Typically, these loans are used for large expansion efforts, investments, or to bridge gaps in cash flow.

Why you may need a commercial loan

Commercial loans are common in the business world, and do not indicate poor financial management or business performance. In fact, many thriving business owners regularly combine investments of their own equity with commercial loans to grow their business and achieve greater financial security. Here are some common business circumstances for which a commercial loan may be appropriate:

  • Investing in new real estate, expanding your business property, or upscaling to larger premises.
  • Bridging gaps in operation cash flow, such as downtime while new rental properties fill up, or to cover workflow expenses while regular capital is diverted for other projects.
  • Investing in upgraded equipment or improved inventory.

What to consider when considering commercial loans

Commercial loans are significant responsibilities for businesses to assume, and the decision to borrow should be taken seriously. Here’s what you need to consider:

  • At what stage is your business? Are you just starting out? Are you established and stable? Are you experiencing growth? The stage of your business will inform your borrowing potential and the purpose of your commercial loan.
  • Why does your business need the money? Knowing exactly what your loan will be used for is important to prevent the funds from being diluted amongst numerous peripheral tasks. Clearly identify the purpose of your commercial loan and meticulously budget for it.
  • How long will your borrowed money be necessary? This question is particularly urgent if you are borrowing to cover gaps in cash flow. For example, if you’re borrowing to cover operational expenses while a new rental property fills with tenants, it’s important that you have a reasonable expectation for when you will have signed enough tenants to cover those expenses independently.

What will commercial lenders look for?

Commercial lenders will want to know that your business is creditworthy and will be able to cover the cost of the loan. To do this, they will likely examine your business’ history, financial stability, and the extent to which you are relying on borrowed assets to achieve security. Lenders may also look to your business’ future, forecasting whether you will achieve the necessary growth to make your loan payments. Therefore, it often helps to have clearly defined the purpose of your commercial loan and outlined how the loan will benefit your business financially.

Commercial lending for brighter future

Offering some of the most competitive rates and terms on commercial business loans NZ wide, CFS Bridge Finance specialise in commercial lending tailored to your specific business needs. Contact CFS Bridge Finance today to learn more.

Businesswoman looks over London skyline
Is a Commercial Loan Right for Your Business?

Leave a Reply