Commercial Real Estate Loans

Commercial Loans versus Lines of Credit (LOC or line)

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If you’re comparing a traditional term loan with a line of credit, keep in mind that term loans often make more sense when it comes to specific purchases or one-off business investments while lines of credit tend to work better for repeated cash flow issues or small unforeseen expenses that can be repaid fairly quickly.

Whichever route makes better sense for your needs, there are many resources available and variations to consider. Summarized in this page are just a few examples. 

Do you need a loan or a line of credit for your business?

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Term Loan

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A lump sum of funds that you pay back with regular payments usually at a fixed rate but sometimes can be offered at a variable rate that is tied to a market index such as Wall Street Journal Prime (WSJP).

Line of Credit (LOC)

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Simply put, a business line of credit works similar to a credit card. The financial institution (usually a bank), will establish a credit limit for your business that you can access when you need it. The proper use of a LOC is to fund short term needs such as purchasing supplies or inventory to fulfill an order. Like a credit card, you only have to pay interest on the balance however there may be fees incurred for opening or maintaining the LOC.

Benefits & Advantages of a Term Loan & LOC

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Qualifying Factors

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Each bank and finance company has its own set of criteria. Banks are known to require a lot of information, documentation, strong credit, and a solid financial history to qualify. The great news is that Pat has a long history working at a bank as a former commercial loan officer, so she knows what it takes to get approved and has the connections and relationships to get the process moving quickly on your behalf.

Pat also has the expertise and resources available for non-traditional financing that does not require as much and is less stringent than a bank.

Six C’s to Keep in Mind (also referred to as 5 C’s when character & credit are combined)

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• Character (reputation, integrity, experience, background)

• Capacity (cash flow - ability to repay)

• Capital (liquidity - do you have equity to put down if applicable?)

• Collateral (if applicable)

• Conditions (conditions of the current economy, your industry, type of terms/requests)

• Credit (FICO scores)

Pricing, Terms, and What Do I Need to Provide to Qualify? 

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Pricing will vary with consideration weighed in some or all of the areas mentioned under the Six C’s. The type of product (loan versus line) and type of collateral, if applicable (real estate, equipment, etc) will affect the type of terms offered (1 or 5-year repayment, fixed or variable, balloon option, etc).

At a minimum to get the pre-qualifying process started, we will ask to review a recent interim and your last fiscal year-end business financials, current personal financial statement, and documents related to your collateral (accounts receivables, purchase agreement, contract, letter of intent, rent roll if applicable, etc). Once documents are reviewed and a phone consultation has taken place, you will be provided with a full list of all the documents required to get you the financing you need.

Call 936-777-3444 or click here to schedule a free 15-minute consultation