How do I Choose the Best Commercial Loan?

Choosing the right commercial loan is extremely important if you want to lock in the best rates and terms for the duration of that obligation. This particular type of small business loan can be obtained from a number of different lenders. For this reason, one of the most prudent ways to identify the best sources for the lending is to obtain the services of a commercial loan broker.

Brokers of commercial loans typically have a wide and varied network of potential lenders to work with, a benefit that prevents you from having to put in the time and effort to locate lenders who specialize in small business loans. By going through a commercial loan broker, it is possible to narrow the field somewhat, focusing attention on lenders who the broker believes are most likely to be interested in doing business with you. In many instances, the broker can identify specific lenders that you may or may not have been able to find on your own.

As part of the process, the broker will work with you to prepare what is known as a commercial loan profile. The profile simply contains basic information regarding your business, the loan amount that you are seeking, and some idea of the rates and terms that you would prefer to receive as part of the loan contract. From there, the broker will seek to match your preferences with the qualifications that his or her associated lenders are willing to extend to their clients. In most cases, the broker can identify several different lenders who are ideal candidates. At that point, you have the opportunity to review the specific interest rates, terms of repayment, schedule of fees and charges, and all other aspects of the provisions related to each of the potential lenders.

When assessing each of the commercial loan offerings from these lenders, make it a point to identify not only the rate of interest that applies to the outstanding balance, but how that interest is applied. Keep in mind that while some lenders use a 360-day standard, others may use a 365-day standard for calculating the annual rate of interest. Depending on the amount of the commercial loan, this factor may significantly impact the amount of money you eventually pay to settle the debt.

Another key aspect of selecting the right commercial loan is to look into the background of the lender. Ideally, you want to work with a lender who is financially stable, has a reputation for honesty and integrity, and in general is considered a good risk. Many borrowers overlook this aspect when choosing to work with a given lender, and find themselves dealing with unfortunate circumstances that could have been avoided if they had taken the time to investigate the lender in greater detail. Since a commercial loan normally involves a substantial amount of money, always take the time to qualify a potential lender, even as the lender is taking the time to qualify you and your company for the loan.