Thinking about using commercial loans to fund your business? Here is everything you need to know about the different types of commercial loans and how to qualify.

1. Commercial Loans
The Ultimate Guide For Small
Businesses

2. Should you consider going
after a Commercial Loan
for your business?

3. Should you consider going
after a Commercial Loan
for your business?
Commercial loans are one of
the cheapest forms of
capital for small businesses.

4. However
only a small percentage of businesses
will be able to get a commercial loan.

5. However
only a small percentage of businesses
will be able to get a commercial loan.
As a general rule of thumb, you
will need to be in business for
at least
2 years

6. If You Have a New business

7. If You Have a New business
Click Here For
Our Guide To
Funding New
Businesses

8. For an existing
business to qualify for
a commercial loan,
you will also need free
cash flow and a solid
debt service ratio.

9. Free Cash Flow
Is the cash that is left over after
you have paid all your monthly
expenses.

10. Your Debt Service Ratio
Is your free cash flow divided by
your monthly loan payment.

11. Your Debt Service Ratio
Is your free cash flow divided by
your monthly loan payment.
!
Lenders are generally going to
want this number to be 1.25 or
higher.

12. In other words,
If your business generates $5000 in free
cash flow, banks will generally not be
willing to give you a loan where the
monthly payment is more than $4000.

13. In other words,
If your business generates $5000 in free
cash flow, banks will generally not be
willing to give you a loan where the
monthly payment is more than $4000.
This means that both the size and length
of the loan are important.

14. Collateral
Lenders are going to want
collateral that is worth the
full amount of the loan.
They also want that
collateral to be easy to
reliably price and sell.

15. For those Without Collateral
SBA Loans Are An Option.

16. For those Without Collateral
SBA Loans Are An Option.
Click the link below to learn more about SBA loans.
http://fitsmallbusiness.com/sba-loans-ultimate-guide/

17. Loan
Concepts

18. Term Loans
Are what most people think of when they
think about loans. They typically pay a
lump sum upfront, have fixed interest
rates, and monthly payments that begin
right away.

19. Term Loans
Are what most people think of when they
think about loans. They typically pay a
lump sum upfront, have fixed interest
rates, and monthly payments that begin
right away.
Term loans are typically used for large capital
investments, commercial real estate, and large
acquisitions.

20. Lines Of Credit
A business line of credit is a pre-approved
amount of credit that your business has
the option of borrowing within a certain
timeframe.

21. Lines Of Credit
A business line of credit is a pre-approved
amount of credit that your business has
the option of borrowing within a certain
timeframe.
This gives you capital when you need it, without having
to worry about submitting a new loan application that
might be rejected.

22. Short-term
vs. Long-term
Short term loans are generally less than 3
years. Long term loans generally range from
3 to 20 years. Most small businesses will not
be able to get a long term loan
unless the loan is
backed by real
estate.

23. Secured vs. Unsecured and
The Personal Guarantee
Secured loans are backed by collateral, while
unsecured loans are not. Most small
businesses will not be able to get an
unsecured loan.

24. Secured vs. Unsecured and
The Personal Guarantee
Secured loans are backed by collateral, while
unsecured loans are not. Most small
businesses will not be able to get an
unsecured loan.
In addition to collateral banks generally
require small business owners to
personally guarantee the loan.

25. Fixed Rate
vs. Floating Rate
Fixed-rate loans have interest rates that do
not change over the life of the loan. Before
you commit to the loan, you
will know the monthly
payment and the total you
will pay throughout the
life of a loan.

26. Fixed Rate
vs. Floating Rate
Variable-rate loans have interest rates that are
based on the prime rate or another “index”
rate. As the index rate changes
your interest rate will fluctuate,
which means that your interest
rate and monthly payment may
go up.

27. Types of
Commercial Loans
And What They Are Used For

28. Term Loans
Term loans have a monthly principal and
interest payment. As you pay it back, the
outstanding principal amount decreases. Term
loans are best for financing large
long-term assets such as real estate
or equipment.

29. Short-Term loans:
Short-term loans are used as cash for
accounts payable, inventory needs, and
working capital. They usually require
less collateral and have lower
interest rates.

30. Line of credit loans
Line-of-credit loans are loans designed to meet
the day-to-day cash flow needs of your
business. Your credit limit is primarily based on
the size of your accounts receivable.

31. Line of credit loans
Line-of-credit loans are loans designed to meet
the day-to-day cash flow needs of your
business. Your credit limit is primarily based on
the size of your accounts receivable.
These loans can be used to buy inventory and pay operating
costs, but not designed for the purchase of real estate or
equipment.

32. Revolving lines
of credit
Revolving lines in which the lender
allows the business to borrow the same
amount again once repayment is made.

33. Mortgages
Mortgages are a type of a term loan
secured by a building on a piece of
land. Typical amortization periods range
from 10 to 30 years.

34. Mortgages
Mortgages are a type of a term loan
secured by a building on a piece of
land. Typical amortization periods range
from 10 to 30 years.
In general, business mortgages are more
complicated and expensive your personal
mortgages, as Banks may require a full property
appraisal, environmental audit, and legal fees.

35. business acquisition loans
These term loans are designed specifically
for the purchase of an existing business.
Franchise Start-Up Loans
These term loans provide the capital
necessary to purchase a franchise.

36. Debt financing
These term loans are designed to
help you pay off and consolidate
previously held debts. They are
normally done through a bank or
traditional lender and are normally limited
by the personal guarantee of the business
owner.

37. Micro-loans
Micro-loans are smaller loans of up to
$35,000, although the average is
around $13,000. These loans are
usually used to purchase equipment,
inventory, machinery, supplies and as
working capital.

38. Micro-loans
Micro-loans are smaller loans of up to
$35,000, although the average is
around $13,000. These loans are
usually used to purchase equipment,
inventory, machinery, supplies and as
working capital.
You generally cannot use these loans to pay
off existing debt. They normally carry a term
of 6 years or less.

39. Professional loans
Professional loans are a type of term loan
for certain specific professional
businesses, such as CPA’s, dentists,
doctors, and lawyers.

40. Secured Working Capital Loans:
These are term loans designed to be used
as working capital.
UNSecured Working Capital Loans:
Unsecured working capital loans do not require
collateral, and are designed to be used as
working capital.

41. Start-Up Loans
These are term loans
designed to provide capital
to new entrepreneurs.

42. Crowd-funded
Loans
Crowd funding websites such as Kiva Zip offer
unsecured microloans that are funded by other
people, not a bank. These loans generally range
from $2,500-10,000 and carry 0% interest rates.

43. Crowd-funded
Loans
Crowd funding websites such as Kiva Zip offer
unsecured microloans that are funded by other
people, not a bank. These loans generally range
from $2,500-10,000 and carry 0% interest rates.
The advantage is that they do not require collateral or a long
business history. The disadvantage is that there is some uncertainty
in whether your loan will be fully funded.

44. SBA LOANS
The Small Business Administration
offers a wide range of loan products for
businesses that do not qualify for
traditional business loans.

45. SBA LOANS
The Small Business Administration
offers a wide range of loan products for
businesses that do not qualify for
traditional business loans.
Click here for our Ultimate Guide to SBA Loans

46. FACTORING
Factoring is a form of cash advance
backed by your accounts receivable. A
factor is an independent company or
bank that buys a business’s invoices
based on the customer’s credit.

47. FACTORING
Factoring is a form of cash advance
backed by your accounts receivable. A
factor is an independent company or
bank that buys a business’s invoices
based on the customer’s credit.
Factors generally advance your business 75 to 80
percent of the receivable. Once your customer pays
the factor, you receive the remainder of the amount
owed.

48. And Finally...

49. To learn how to
simplify the process of
running your business

50. Join Us At
www.FitSmallBusiness.com
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