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Commercial Loans
When a business borrows money from bank for working capital, to finance equipment, or as an asset-based loan to finance inventory and receivables, it's a commerial loan. Businesses also use banks to finance real estate, but that's a real estate loan, collateralized by the real estate.
There are several types of commercial bank loans, but the term loan is most common. This loan is for a specific number of days, typically 30 to 180, for working capital. Depending on the financial strength of the borrower, including the company and the individual, the term loan may or may not have to be secured by specific collateral.
Expect the bank to charge an origination fee in addition to the interest. Most commercial loans require collateral and, for small businesses especially, a personal guarantee by the buisness owner. |
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