Commercial lending has the potential to be extremely beneficial when it comes to your business and its future. Of course, if you do not play your card right or are unable to meet the terms of your commercial loan, there can be clear disadvantages; but that is why it is important to know how to use commercial lending to your benefit.)
The main advantage that comes with commercial lending is the potential for growth of your business. At first, this may seem like a no-brainer, but in order to achieve this particular effect, you need to make sure that you are truly in a position for potential growth. This means you and your current business need to overcome a few hurdles along the way.
For instance, your business credit needs to be more than average. In other words, you should be able to offer extensive proof that your business has outstanding, if not above average credit. Clearly, if you are a well-established business, it will be much easier to show proof of above average or excellent credit. However, if you are a newer business or rather a first-time owner, a lack of credit will most likely bring the lending process to a halt. Of course, this may put a pin in your plans for now, but the good news is that this setback is only temporary.
In addition to need above average business credit, you will also need your personal credit history to be up to par. This means your annual income, credit score, and previous loan history matter. Remember, just as you will need to provide detailed reports of your business financial situation, you will also have to do the same for yourself personally. Thus, you need to have stellar personal credit and the documentation to back it up. This, especially, holds true if you are looking for a larger sum of commercial financing. Ultimately, having both your personal and business credit squared away means that you can move forward with the application process, which of course is the first step to financing and potential business growth.
Now that you understand, how much your credit matters with commercial financing, let us go over what you can do if your business and/or personal credit is a problem. In essence, you can still secure a commercial loan with collateral such as your home or vehicle. However, it almost goes without saying that there is an increased risk when you choose to use collateral (secured loans). Therefore, if business growth is highly unlikely in the future, you may want to wait until it is more feasible credit wise.
The Benefits for your Business
With that being said, commercial loans generally come with incentives such as extremely low-interest rates, longer repayment terms that are more flexible, retained ownership of your business and no need for collateral( unsecured loans)when you have decent credit—just to name a few. Thus, as you can see, with these incentives only, the ability to grow (and keep) your business is very likely as this form of lending/financing wants to see your business succeed.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.