What motivates business owners to seek commercial loans?
Those who own existing businesses generally seek financing in order to take advantage of a new opportunity, such as entry to a new market; to fulfill large, new contracts; or to purchase real estate in order to expand or relocate a business. Businesspeople also turn to commercial loans to start new businesses. What kind of commercial finance options do banks offer? Banks offer lines of credit, commercial loans, term loans and loans that are backed by the Small Business Administration (SBA). How do those options differ? SBA loans are term loans backed by that federal government agency for between 50 and 85 percent. This means the backed percentage of the money lent by the bank is guaranteed by the SBA, and administered by the bank. Durations of SBA loans vary depending upon the purpose of the loan. Interest rates on SBA loans are based on the Wall Street Journal prime rate, plus a margin based on the size and type of loan as well as the borrower’s credit standing. Commercial loans are s
