Commercial Loan

Commercial Loan

We all know about loans but not much about commercial loans. Just like loans given to individuals are known as personal loans, loans given to a company or organization is called commercial loans. There are various kinds of commercial loans that are offered by various banks and financial organizations. Here are a few famous types of commercial loans
Acquisition commercial Loan: As the name suggests, this loan is granted to acquire an asset. Mostly, this loan is granted to buy a property or commercial space. The amount of loan disbursed depends on the value of the property to be acquired. Moreover, the borrower does not need to use all the money at one go. He will be given an account where the funds would be transferred. He can withdraw the amount required by him as and when required. The interest is charged only on the amount used by him and not on the amount disbursed to him. This loan is often sleeked by those in the real estate and development business. Along with Acquisition, many banks also give development loans. These loans are mainly used to develop the site or property purchased. It can be used to construct a mall, hotel or any other business unit.

Asset based Commercial Loans: Unlike the other types of commercial loans, which are given for a particular purpose, the asset based commercial loans are a loan given against the guarantee of an asset pledged. The money from this loan can be used for almost any purpose. The general trend in the market is to grant 75 % to 80% value of the assets pledged as loans. The interest rates in this case is slightly less as the bank has a collateral securities with them. They can sell these securities, if the borrower fails to repay.

Bridge Loan: this type of commercial loan is basically a short term loan taken by commercial entities as a stop gap arrangement. The funds of the loan are used to finance the working capital deficit or boost a company’s expansion plans.

Consolidating Debt Loans: As the name of the commercial loan implies, this loan is basically taken as a step to consolidate the various debts and loans taken by the commercial entity. The rate in case of this loan is extremely low and the repayment clause is flexible.

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