types of commercial loans

Types of Commercial Loans

September 30, 2023

Types of commercial loans: There are several alternative commercial loan options available to businesses beyond traditional bank loans. These alternatives can provide flexibility in terms of terms, rates, and qualification requirements. Here are some alternative commercial loan options to consider:

1. SBA Loans

Government-backed loans from the Small Business Administration (SBA) come with enticing conditions for small enterprises. They include the SBA 7(a) loan program for general financing needs, the SBA 504 loan program for real estate and equipment purchases, and the SBA Microloan program for small amounts. SBA loans require

2. Private Lenders

Private lenders, also known as non-bank or alternative lenders, are financial institutions or individuals that provide loans and financing to individuals, businesses, or organizations outside the traditional banking system. These lenders operate independently and often have more flexibility in their lending criteria compared to banks and credit unions.

3. Equipment Financing

Equipment finance enables you to take out a loan, particularly to buy the equipment you need for your company. The item of equipment itself is frequently used as collateral for the loan. You can also take some cash for business against the title. It is called a title loan.

4. Invoice Financing (Factoring)

If your business has outstanding invoices from customers, you can use invoice financing to receive immediate cash by selling those invoices to a factoring company at a discount.

5. Merchant Cash Advances

Merchant cash advances provide upfront cash in exchange for a percentage of your daily credit card sales. They are a quick way to access capital but can be expensive due to high fees.

6. USDA Loans

The United States Department of Agriculture (USDA) offers several loan programs to support rural and agricultural development, including loans for commercial purposes. These programs are designed to encourage economic growth, job creation, and rural infrastructure improvement in eligible rural areas. 

7. Hard Money Lenders

Private people or businesses known as hard money lenders offer quick loans backed by real estate. When traditional financing options are not available or are too slow to meet their needs, real estate investors, developers, and flippers frequently use these loans. Technically, hard money lenders and private lenders are almost in the same category. Hard-money lenders are more aggressive than private lenders. It is also called a bridge loan.

8. Alternative Asset-Based Lending

Some lenders provide loans based on the value of assets such as inventory, real estate, or accounts receivable, allowing businesses to secure financing even with weaker credit profiles.

9. Business Credit Cards

Business credit cards can serve as a revolving line of credit, allowing you to make purchases, cover expenses, and earn rewards. They are excellent for short-term funding.

10. Angel Investors and Venture Capital

For startups and high-growth companies, angel investors and venture capitalists can provide equity financing in exchange for a stake in the business.

11. Grants and competitions

Some businesses may be eligible for grants and participate in business competitions to secure funding without taking on debt.

12. Community Banks and Credit Unions

Smaller, local banks and credit unions may offer more personalized services and have more flexible lending criteria than larger institutions. It is also called a conventional loan.

13. Online Marketplaces for Loans

Various online platforms connect borrowers with a network of lenders and investors, offering a range of loan options. These are not reliable sources unless you find a reputable company.

If you are not qualified through any paper lender or bank, then you should find the right consulting company to find the right sources of funds. Before choosing an alternative commercial loan option, carefully consider your business's financial needs, repayment capacity, and the terms of the loan. It's advisable to consult with financial advisors or loan specialists to select the most appropriate financing solution for your specific situation. Please send your loan scenarios to [email protected] or call 571-544-6600 to find the best options. We have an experienced team available to structure the loan and find loan approval.

Sam Haq, CEO

Commercial Lending USA


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