COMMERCIAL LOAN
Typically, a commercial loan is a large, long-term loan that can be used for a number of commercial purposes. There are a variety of reasons for getting a commercial loan. This could be to hire more staff, buy new equipment, purchase commercial property or purchase a competing business. As with other loans, the lender will want to know what the funds are for and how they will impact the bottom line.
Commercial loans are often used to purchase commercial property, such as office, industrial or retail space. Investing in commercial property tends to be riskier than investing in residential property, so banks will consider a range of factors before granting commercial property loans. This is because commercial properties have higher vacancy periods than residential properties. In addition, commercial properties can have very high maintenance costs. These risks influence each bank’s lending criteria when considering loans for commercial real estate.