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As a small business owner, you may find you need a loan but don’t know where to start. If you could answer these three simple questions, you will know how to get your commercial loan fast-tracked by avoiding wasting time on the wrong type of loan.

  1. Is your credit score good enough
  2. How long have you been in business
  3. Does your business make enough money

A commercial loan is a money-lending agreement between your business and a financial institution. Financial institutions don’t hand out commercial loans to just anyone. There are specific rules and eligibility requirements you’ll need to meet.

If you are a growing business, you may be interested in a loan because you are growing and need to buy equipment, acquire more office space, or invest in training more staff.

Learn everything you need to know about commercial loan options and how you can get approved for the loan you need.


How To Get Approved For A Commercial Loan?

One of the first steps in getting approved for a commercial loan is deciding the type of loan you want to take out. Different types of business loans can have different processes for approval. Don’t worry if you don’t know which kind of loan you need. At Ivanhoe Capital Advisors, we specialize in helping our clients find the best fit and rate for their company.

SBA Loans Vs Traditional Term Loans

SBA and traditional term loans typically both have high borrowing maximums. For example, SBA loans have a maximum of $5 million.

Lenders, including the SBA, often offer specific loan types that are meant to fit your growing company’s needs. For example, a lender may offer a specific type of commercial loan for purchasing equipment or vehicles.

By contrast, traditional loans encompass commercial hard money loans, practice loans, commercial real estate loans, and more.


3 Questions You Will Need To Answer Correctly In Order To Get A Commercial Loan

Just like how home and car loans work, to get a commercial loan it requires documentation, a good credit score, and specific information about your business and its needs.

1. Is Your Business Credit Score Good Enough?

If you don’t know your credit score, you can check it at one of the three major credit bureaus: Equifax, Experian, and TransUnion.

Lower interest rate commercial loans are offered to businesses with a score of at least 680. Sometimes it needs to be even more. If your credit score is lower than that, you may want to look into ways to improve it before you apply for a commercial loan.

Alternatively, borrowers with poor credit can consider small business loans, which typically have higher interest rates though.

2. How Long Have You Been In Business?

Small business loans require you to have been operational for at least one year. Most traditional commercial bank loans require two years of operation to qualify.

3. Does Your Business Make Enough Money?

Lenders often have a minimum annual revenue that a business must reach before they consider lending to it. Depending on the lender, this can range anywhere from $50,000 to $250,000.

If you have a lower-revenue business, you can look into short-term business loans such as hard money or bridge loans, and SBA microloans.


Average Business Loan Rate

According to the Federal Reserve, the average business loan interest rate ranges from 2.54% to 7.02% at banks. However, commercial loan rates vary widely due to many factors, including loan type, credit history, and loan length.

Commercial lenders often offer many types of small-business loans, with rates varying from product to product. The best interest rates often come from SBA loans which the U.S. Small Business Administration backs. SBA loan interest rates range from 5.50% to 8%.

Fund Your Business Needs

Commercial loans are a great way to get the finances you need to grow your small business. Getting approval doesn’t have to be difficult. Generally, banks clearly lay out their terms for approval, and if you don’t meet them, SBA loans are often much simpler for small businesses to qualify for. Contact ICA today, where it’s not about how to get a commercial loan, it is about when you will get it.