Submitted by: Thomas Morva
Z Commercial Loans

Businesses need funding for expansion and to sustain their positions in a competitive growing global marketplace with ever-changing innovations in technology. Commercial loans are one of the instruments available to businesses that need to purchase inventory or invest in capital equipment. Loans sought for the development of large establishments like hotels, malls, industrial warehouses and factories are called commercial loans. Commercial or business loans help companies pay for new equipment or expand operations.

Financial institutions and commercial banks are the prime lenders of commercial loans. Commercial banks are owned by private investors, called stockholders, or by companies, called bank holding companies. The vast majority of commercial banks are owned by bank holding companies. Private lending institutions and other financial groups also form a small percentage of commercial lenders. These loans are generally provided at a cost, referred to as interest on the debt.

Commercial lenders focus mainly on the business market and have varying standards on which they base their loan criteria and evaluation of customers. Brokers play an important part in the commercial loan industry. They help evaluate the borrower and also help them find the right kind of lender.

Bridge loans are commonly used for the financing of projects. This is a type of short-term loan, typically taken for a period of 2-3 years. They are used for the purchase of commercial real estate, speedy acquisition of a property or the purchase of other companies.

In the US commercial lenders will generally require that their loans are backed by collateral. Collateral is a form of security or guarantee pledged for repayment of a loan. It is usually in the form of an asset like real estate or bonds. The flexibility and speed at which the commercial lending industry operates, makes it an viable option for borrowers.