




| Improve Your Company With A Commercial Building Loan |
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Many companies often need to expand. They may be doing it because the company’s business is expanding at an incredible rate, or they may be doing it to help give the business a shot in the arm. Regardless of the reason that they are doing it, there are very few businesses on the planet that will be able to pay cash outright for the expansion or construction of a new building. As a result, you are going to need to get a commercial building loan to help expand your current building to accommodate a larger inventory and to show your shareholders that the business is doing well and progressing into the future. Of course, getting a commercial building loan is not as easy as simply signing a piece of paper and getting the loan. The first thing you have to do is get a loan that is going to be the right amount for your construction project. This is when you talk with the construction firm and contractors to find out what the construction cost is going to be. Then, when you have done that, you go to your commercial loan consultant and tell them that the loan you need is about one-quarter higher than what the construction manager and contractor quoted you. The reason for this is that you want a safety net in case costs start to rise, and they will. Next, you should work with your commercial loan consultant to either get an unsecured loan if you have excellent credit, or a loan with low interest rates. Most construction projects can cost a lot of money, and a single percentage point can be the difference between thousands of dollars with a commercial building loan. For example, if you have a commercial building loan for $1,500,000, and you have an interest rate of eleven percent, then the total cost with interest is going to be $1,665,000. However, if the interest rate is going to be twelve percent, then the total cost including interest on the commercial loan will be $1,680,000. With the changing on a single interest percentage, you end up paying $15,000 more in the long run. This is why you need to negotiate the best interest rate you can with your commercial loan consultant. Getting a commercial building loan is very important if you want to expand your business and move out of your current building and into one better suited to your company. Of course, it costs money and that is why you need a commercial building loan. By doing your researching and working with your commercial loan office, you can get a great loan, with low interest. |
| An Unsecured Commercial Loan Versus A Secured Commercial Loan |
| There are two types of commercial loans that you can get as a business. The first is a secured commercial loan, and the second is an unsecured commercial loan. A secured commercial loan is a loan that you get with collateral, and therefore is a much easier loan to get as a result. If you have less than excellent credit, you can put your business equipment, mortgage and other items up for collateral and the bank or lender will be more apt to provide you with funding. The reason for this is that they know they can get back their money with the collateral by selling it, so the risk is much lower. An unsecured commercial loan is one that is not backed by collateral. It is much harder to get and it is based only on the credit rating of yourself and your company. As a result, you are in danger of higher interest rates if you go for an unsecured commercial loan with credit that is not perfect. In contrast to the higher risk that is put on by the lender, the borrower has lower risk associated with a unsecured commercial loan because if they do not pay back the loan, the only damage is to their credit rating, and even that can be repaired with time. An excellent way to illustrate the difference between a commercial secured loan and an unsecured commercial loan is with an example. If you have a friend, and you borrow money from them and they ask for collateral of your television, then you know that if you don’t pay them back, you lose your television. Your friend has the assurance that even if you don’t pay back the loan, they still get a new television. However, if you borrow from a friend and they don’t ask for collateral, then when you don’t pay back the loan you are out no money (but may have lost a friend). Typically, an unsecured commercial loan will leave the business responsible for repaying the loan, but there will be a personal guarantee from the owner of the business that there will be a repayment of the loan per the commercial loan terms. An unsecured commercial business loan is better for a business if they have good credit, but bad for the lender if the business does not pay back the loan. Unless you have perfect credit, you should not try and get an unsecured commercial loan because the interest rates may cause you to default on it down the road. |