Commercial loans are valuable tools for growing and operating a business; see how the application process works and the advantages of working with a local lender.

If you’re new to borrowing as a business owner the process might feel intimidating. Here’s a quick overview of what you need to know about commercial loans for everything from a new vehicle to fluctuating expenses.

Identify the type of loan that fits your needs

How you intend to use loan funds will determine what kind of business loan you apply for. Some of the most common types are:

• Line of credit—a flexible loan that allows a business to borrow money for working capital purposes
• Vehicle loan—sometimes called a commercial auto loan
• Equipment loan—loan funds are designated for a specific piece of equipment
• SBA loan—flexible loans that can be used for most business purposes
• Commercial real estate—loan terms vary from 5 to 20 years

If you’re not sure which loan best fits your needs, talk to one of our local commercial loan officers.

Credit scores matter

A lender will check your personal credit. As with personal loans and credit cards, the higher your credit score, the more attractive your loan terms will be—including interest rates.

Know your lender

Be wary of the many scams targeting business owners. Advance fee scams typically promise loans to business owners with bad credit. Fake online lenders pose as legit bankers and steal sensitive personal and business information. Some scammers claim to be from the SBA and offer to help with disaster loans or grants. If a business loan or grant sounds too good to be true, it most likely is.

When you work with a local lender like Consumers, you get to build a long-term relationship. Our commercial loan officers live and work in your community. They get to know you and your business, then work with you to help meet your financial goals.

Documents needed to apply for a loan

Every business loan, regardless of purpose, starts with a signed and dated application. You’ll also be asked to supply supporting documentation. For example, at Consumers we ask for:

• A copy of the bylaws or operating agreement for the business
• Personal financial statements for each owner with a 20% ownership
• 3 years of personal tax returns with all schedules for each owner with 20% ownership
• 3 years of business financial statements (balance sheet and income statement) and/or tax returns with all statement notes and schedules
• Business financial statement/federal tax returns for all other entities with a 20% or greater ownership interest
• Interim year-to-date profit and loss statement and balance sheet

These types of business loans require additional documentation:

• Business real estate loan: purchase agreement and most recent property tax notice, if available
• Vehicle and equipment loans: detailed purchase agreement or invoice for equipment or vehicle to be purchased (year, make, model, options, mileage and/or hours used)
• Line of credit: accounts receivable and accounts payable for 90 days out

Remember, when you get a Consumers business loan, you get access to local decision making without the hassles you find with big, out-of-town banks.

 

All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions. Federally insured by NCUA