Commercial Loans

Commercial Loans

Commercial Loans
Commercial loans are available at​ competitive interest rates and repayment terms from our lending market leaders .​
These can be used to​ start or​ expand and develop your business or​ for the​ purchasing of​ equipment .​
Commercial loans could be the​ most flexible solution to​ meet your financial needs but it’s also important to​ consider the​ effect of​ loan repayments on​ your cash flow and business assets .​
When looking at​ commercial loans you​ will need to​ assess your requirements for repayment terms and compare interest rates,​ known as​ the​ Annual Percentage Rate or​ APR,​ of​ different lenders in​ order to​ decide which loan is​ best for you​ .​
The repayment term can be anything between one and fifteen years on​ average and you​ have two choices with regard to​ interest rates: fixed interest rates and variable interest rates.
Fixed Rate: the​ interest rate is​ set at​ the​ beginning of​ the​ term of​ the​ loan,​ the​ percentage given to​ you​ being determined by your circumstances,​ the​ amount of​ the​ loan,​ the​ term and your assessed ability to​ repay the​ loan by the​ due date .​
Your monthly repayment amount remains constant,​ regardless of​ changes in​ the​ bank base rate which is​ an​ advantage if​ the​ rate increases but a​ disadvantage if​ it​ drops .​
Variable Rate: the​ interest rate you​ pay is​ linked to​ fluctuations in​ the​ bank base rate and can therefore increase or​ decrease depending on​ what is​ happening in​ the​ open market .​
You will consistently pay the​ current market rate plus an​ agreed premium but because the​ base rate can change,​ your monthly repayments could go up or​ down .​
This is​ an​ advantage if​ interest rates fall but you​ may end up paying a​ lot more if​ rates rise.
There are a​ number of​ reasons why commercial loans can be a​ beneficial way of​ raising the​ money you​ need .​
The first is​ cash flow .​
Because your loan repayments are agreed and set for the​ term of​ the​ loan your cash management can be more predictable from month to​ month .​
Secondly,​ you​ have a​ large degree of​ flexibility on​ how you​ use the​ loan,​ including paying off other higher interest loans .​
Commercial loans also enable you​ retain ownership in​ your company by making it​ unnecessary for you​ to​ raise funds by selling an​ interest in​ your company to​ an​ outside investor .​
Interest payments on​ commercial loans are also tax deductible and are made with pre-tax money .​
a​ further advantage is​ that if​ you​ back your loan using capital equipment then you​ remain the​ legal owner of​ the​ equipment .​
You must be aware however that if​ you​ do not pay back the​ loan and default on​ repayments then the​ lender is​ able to​ foreclose on​ any assets backing the​ loan and to​ sell them to​ pay back the​ money owing .​
Comparing the​ APRs of​ commercial loans is​ a​ good indication of​ how competitive loans are but it​ is​ also important to​ pay attention to​ the​ small print on​ the​ loan agreement .​
If you​ think you​ may be in​ a​ position to​ pay back the​ loan before the​ due date then you’ll be wise to​ check the​ early redemption policy of​ the​ lender .​
Some lending companies charge up to​ two months interest if​ you​ settle the​ loan within 3 to​ 5 years and before the​ due date,​ which can increase the​ total cost of​ the​ loan .​
It may be cheaper to​ take a​ loan with a​ slightly higher APR but with no redemption penalty.

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