post-title Commercial loan agreements – the technical guide

Commercial loan agreements – the technical guide


In case you want to get a commercial loan for your business and you don’t know anything about it, you are in the right place. Bank and creditors will ask a lot of questions, and you have to be prepared to answer them promptly. This article should cover the technical questions that you will stumble upon as an entrepreneur who wants to obtain financing for a startup or as a long-term business owner that wants to upgrade a company. Regardless of the reasons that push you to get a loan, here’s what you should know:

Lending money to startups

Startups are the ones that need commercial loans most often, so you should know more about what requirements you should meet for obtaining one if you find yourself in this situation. Neither banks or other financial companies won’t lend money to startups that don’t seem profitable or that doesn’t possess hard assets for pledging for the business loan. In order to reduce the risks of not getting their money back, banks and other lending companies avoid offering loans to startups that can’t prove their worth. Small business owners will have to invest some time and effort into gathering all the paperwork necessary to get a commercial loan.

Long-term businesses financial details

For businesses that are present in the industry for quite some time, obtaining a loan is easier. A business owner will have to present relevant financial details to the lending company to prove that he can pay back the entire amount of money in the time frame set accordingly. Banks and lending companies will ask about past loans or any debt incurred. You need to bring documents as proof of what you are stating. Gather together paperwork that is related to the company’s bank accounts, previous investments, financing sources, profit details for the past three months and anything else that may prove the financial status of your company in the present. By doing this, you have all chances to obtain a commercial loan.

Audited financial statements

Both startups and long-term businesses should come up with audited financial statements. Any paperwork related to the financial status of a company that has been audited or reviewed by a professional might matter more when trying to obtain a loan. Profit and loss statements are the most useful for getting a loan, but make sure you have a positive balance to show. If you don’t have enough financial history, skip this step and rely on presenting your business plan and expected results.

In case you still didn’t manage to get a loan…

There are cases when all this paperwork won’t be enough to prove that you can pay your loan back. This is the situation when you should apply for a personal loan instead of a commercial one. They are just as effective, but you’ll have to involve collateral assets that are related to your personal financing. If you’re okay with that, then opt for this variant and finance your business requirements right away.