Commercial Financing

Written by Patricia Skinner
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Any type of commercial financing can also be referred to as business-to-business lending. There are a host of different types of loans that come under the heading of commercial financing, such as venture capital, asset based lending, bridge loans and more. Borrowing is an accepted method for any business to acquire equity for any legitimate business purpose.

In fact, most businesses today would consider that equity in the form of loans is a necessary factor if they are to operate at optimum efficiency. The different kinds of lending organizations include banks, finance companies, which would include lenders and their agents, and investment corporations. This last will invest in a business rather than make a straight loan.

Types of Commercial Loan

A commercial loan will enable a business to perform just about any function, from expansion to saving itself from bankruptcy. Lenders will normally require some kind of projection of what the loan is intended to be used for. Especially in the case of business acquisition loans, the lender will be inclined to take an active role in the project.

This should be viewed as an asset rather than an intrusion. Most lending companies have a lot of business experience and are in a unique position to assess business prospects and opportunities. It should be remembered that it is just as much in their interests that your business project succeeds as it is yours.

For a business that needs working capital, a lending partner may arrange for a revolving line of credit. Existing inventory and assets may be used as security for such an arrangement. Alternatively, a level of credit may be arranged without security based on a particular company's credit worthiness.


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