Guide to Different Types of Commercial Loans Provided by Financial Institutions

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A loan or financing service is aimed to offer you a financial help, where some valuable property or an item is kept as collateral, which is used as a recovery in case of inability to return the loan amount. These loans are of different types, which include housing loans, personal loans, commercial loans and others, where this context is based on different types of commercial loans like commercial truck loans. There are many different types of commercial loans available from the financial institutions or banks, applicable for different needs and are discussed below.

  

  • Acquisition Commercial Loan: This type of commercial loan is available for the purpose of acquiring a property by the person applying for the loan.

  • Acquisition & Development Loan: As suggested by the name, this type of loan is available for the purpose of acquiring a property and then developing it. The loan amount is dispersed through the configuration of voucher control, where the interest is paid only on the distributed funds. The loan-to-value ratio is decided by the estimation of the improved value of the property.

  • Asset Based Loans: This type of commercial loan requires collateral as a safety deposit, and can be used for any type of purpose.

  • Bridge Commercial Loan: This type of commercial loan is granted for the purpose of restoration of a permanent financing in place, where this loan is granted for a short time period. With facilitation to the borrower for a faster action, these loans offer the best option for a temporary fix to a business adventure or an acquisition, while they can be used for foreclosures, construction purposes and buyouts.

  • Construction loans: This type of loan is offered for a construction purpose or for making improvements to a property along with other assets that are used as collateral. The loan provider keeps reserve accounts of the construction owners to disburse money along with the construction’s progress, covering the cost of construction and projects available, which depends entirely on the value.

  • Debt Consolidation Loans: These loans aim at lowering the consolidation of the debts, which are transformed into one payment. Although the average rate of interest is higher, this loan can be availed at a lower rate.

  • Commercial Development Loans: These loans are available for the purpose of improvement or the development of an actually constructed property.

  • Construction, Improvement & Rehab Loan: This loan is used for the sole purpose of purchasing an already existing property, while this loan is specifically aimed to repair deficiencies and remodel.

  • Refinancing Commercial Loans: This loan offers you an option for paying off any old debt by using the financial aid of the new loan, where the same collateral is used. Refinancing can be enjoyed by the borrower in case of lower interest rate of the new loan, as compared to the original one.

These are the types of commercial loans available in the market, the study of which can help you select the right commercial loan for your financial needs. The above mentioned loans are applicable for raw land, apartments, car dealerships, facilities and many other commercial properties.

Author Bio

James is a professional writer, who has a keen interest in financing and loans like start up business loans and others. He uses his research-based data to write quality articles for his readers, offering them valuable information.

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