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- No hard credit check to use
- Funding Advisor provides products tailored to your business
- Funding as fast as 1 business day
- Required time in business: 6+ months
- Required annual revenue: $60,000+
- Min credit score: 550+
- No hard credit checks
- Highly rated by past customers on Trustpilot
- Funds available in as soon as 24 hours
- Required time in business: 1+ years
- Required annual revenue: $120k+
- Min credit score: 580+
- Personalized, fast funding within 24 hours
- Zero impact to your credit
- Simple application process
- Required time in business: 6+ months
- Required annual revenue: $180k+
- Min credit score: 525+
What are commercial loans?
Commercial loans help businesses cover big expenses like expanding, buying property, upgrading equipment or managing cash flow. They work best for short-term needs and established businesses, not startups.
These loans usually come from banks, credit unions or online lenders and often require collateral, paperwork and meeting certain financial terms. Before applying, make sure you understand how the loan works, what it costs and what’s required to qualify.
Common uses for commercial loans
Commercial loans can help a business grow, stay stable or invest in big projects. Lenders want to see that the loans will help the business earn more money, run more efficiently or increase the value over time. Here are common ways businesses use these loans:
- Real estate acquisition or refinancing. Buying office space, warehouses or retail locations is a common driver. Refinancing can reduce rates or access equity for expansion.
- Equipment purchase. Businesses often finance high-cost machinery, vehicles or technology infrastructure to spread the cost over time and preserve working capital.
- Construction and development. Commercial construction loans support ground-up development, tenant improvements or major renovations. They are usually short term and interest-only until project completion.
- Business expansion. Funds may support new locations, product lines or workforce growth, particularly for businesses with predictable revenue and a scalable model.
- Acquisition financing. Used to acquire another company or buy out a partner. This typically involves a mix of debt, equity and sometimes seller financing.
- Working capital and cash flow management. Some term loans or lines of credit are used to bridge seasonal revenue gaps, cover payroll or manage receivables.
Types of common commercial loans
Each loan type is designed for a specific business use case, with distinct underwriting standards and repayment expectations.
| Commercial Real Estate Loan | Purchase or refinance property, including offices, warehouses, and retail space | 5 to 20 years, often with balloon payments | Real estate, usually capped at 70%-80% loan-to-value (LTV) | $100,000 to $10M+ | 5% to 10% (fixed or variable) |
| Term Loan | Business expansion, equipment purchase, or working capital | 1 to 10 years, fully amortizing with fixed or variable rates | Equipment, receivables, or business assets | $25,000 to $5M+ | 7% to 60% (fixed or variable) |
| SBA 7(a) Loan | Business acquisition, real estate, or equipment financing | 7 to 25 years, depending on loan purpose | Real estate, equipment, or other business assets | $50,000 to $5M | 10.5% to 15.5% (fixed or variable) |
| Commercial Construction Loan | Building new facilities or renovating existing structures | Short term, interest-only during construction, followed by conversion to permanent financing | Real estate or property being developed | $500,000 to $10M+ | 4% to 12% (variable) |
| Business Line of Credit | Short-term working capital needs, seasonal cash flow | Revolving, typically renewed annually | Receivables, inventory, or business assets | $10,000 to $500,000 | 8% to 99% (variable) |
How to apply for a commercial loan
Getting a commercial loan takes more time and paperwork than smaller business loans. Lenders want to know your business is financially strong, that you can repay the loan and that you have something to offer as collateral. Here’s a simple step-by-step guide to help you prepare:
- Know what you need. Decide how much funding you need and what you’ll use it for — like buying property, expanding your business or managing cash flow. Lenders will ask, so be ready to explain.
- Check your finances. Review your credit score, business revenue and existing debt. Strong financials improve your chances of approval and help you qualify for better rates.
- Gather your documents. Prepare business tax returns, financial statements, a business plan, cash flow projections and details about any assets you’ll use as collateral.
- Compare lenders. Shop around with banks, credit unions and online lenders. Look at interest rates, repayment terms, fees and eligibility requirements to find the best fit.
- Submit your application. Apply with your chosen lender. Be ready to answer questions and provide more information during the review process, especially for loans over $250,000.
Pros and Cons of Commercial Loans
Commercial loans offer powerful funding options for growing businesses, but they come with trade-offs that are important to understand before borrowing.
Pros
- Scalable funding. Commercial loans provide large sums of capital, making them ideal for expansion, acquisitions, and significant business investments.
- Lower interest rates. Compared to personal loans or credit cards, commercial loans typically offer more favorable interest rates, especially for established businesses with strong financials.
- Tax benefits. Interest payments on commercial loans may be tax-deductible, providing potential savings for your business.
- Long-term financing. Many commercial loans offer extended repayment terms (up to 25 years), spreading out payments and easing cash flow pressures over time.
- Collateral options. Loans can be secured by a variety of business assets, such as property, equipment, or receivables, giving businesses more flexibility in obtaining financing.
Cons
- Lengthy approval process. Commercial loans require extensive documentation and can take several weeks to approve, especially with traditional lenders.
- Collateral risk. Securing a loan with business or personal assets means you risk losing those assets if your business struggles to meet repayment obligations.
- Complex requirements. Meeting the financial criteria for larger loans can be difficult, with lenders often expecting high credit scores, solid business plans, and robust cash flow projections.
- Prepayment penalties. Some commercial loans may charge fees if the loan is repaid early, which can reduce flexibility for businesses with fluctuating cash flow.
- Strain on cash flow. Regular repayments can put pressure on a business’s cash flow, particularly if revenue is inconsistent or if the loan is large relative to the business’s size.
