What are the Most Common Commercial Loans?

There are many types of financial products that are considered to be commercial finance, in this blog post we have listed and briefly explained a few common types of commercial finance:

Term Loans

These loans represent the fundamental type of commercial loan.

A term loan is when you get a loan amount in full and pay back the loan with interest on regular monthly instalments. Term loans are often used to purchase equipment, buy property or expand a property.

Line of Credit

This type of loan is very similar to how a credit card works; it enables businesses to access the funds they need whenever they need, providing a greater financial flexibility. Just like a credit card, there are interest charges places on the funds used.

Equipment Finance

As the name states, this kind of loans is designed to finance equipment purchases, this type of loan can be structured as either a term loan or a lease. The equipment itself serves as collateral for the loan. Equipment financing is a very popular choice among businesses as it allows them to acquire the necessary equipment they need without any upfront payments.

Real Estate Loans

A real estate loan caters to businesses looking for financing for real estate acquisitions or improvements. These loans can be structured as either term loans or mortgages, with the real estate serving as collateral. Real estate loans are incredibly popular among businesses looking to purchase or enhance commercial properties.

Invoice Finance

This type of loan is typically used to manage cash flow; it allows businesses to gain access to funds according to any outstanding invoice payments due. The borrowing amount you can access will depend on the amount of invoices that are due to be paid to you. Invoice financing provides businesses with flexibility, allowing access to funds when needed.