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What Are the Requirements for a Commercial Loan?

The information provided below does not, and is not intended to, constitute legal advice. All information, content, and materials available on this page are for general informational purposes only.

 

The two universal elements all businesses need: cash and capital. Simply put, businesses require cash to fund everything from their day-to-day operations to their long-term financial goals. And while many businesses earn enough cash to cover their daily expenses and invest in the capital that keeps their organizations going and growing, there are also many organizations that rely on commercial loans and lines of credit to fund business expenses.

That’s where the experts at Customers Bank come in. We offer a wide range of commercial loan products designed to meet the individual needs of businesses across the country. Our team of professional lenders is committed to building relationships and providing a complete offering of financial services to meet the present and future needs of our customers. If you’d like to learn more, visit our website or contact one of our Team Members.

Benefits of Applying for a Commercial Loan

A commercial loan can allow businesses to grow more quickly and to spread out an expense over several years. In many cases, businesses can use the funds acquired through a commercial loan to meet a variety of needs, depending on the type of loan involved. Common types of commercial loans include:  

Business Term Loan– a great loan product to use for expansion, capital improvements, equipment financing, and other major business needs.

Credit lines – the perfect loan product to provide working capital, supplement cash flow, finance receivables, or purchase inventory.

SBA Government Guaranteed Loans– an attractive option to fund business startup, acquisition, expansion, capital improvements, equipment financing, and other major business needs with loans that are guaranteed by United States government agencies.

All loans are subject to approval.

Requirements to Apply for a Commercial Loan 

As with any loan application process, borrowers are asked to provide information and certain paperwork to demonstrate the business’ eligibility for a loan. Some of this information is simple enough – you will need to provide contact information for you and your business, for example – but other pieces of information will likely require more planning and preparation on the part of the applicant. It’s also worth noting that the requirements for a commercial loan can vary from one financial institution to another, so be sure to ask your lender what they’ll need from you well in advance. Some common requirements for obtaining a commercial loan include the following:

  • Good credit score(s): Since loan eligibility is often based on an applicant’s credit history, it’s essential for a lender to know your credit score and that of your business, too. Both numbers may be taken into account when applying for a commercial loan. Lenders often gauge the 5 C’s of credit-  character, capacity, capital, collateral, and conditions- to assess the creditworthiness of potential borrowers. 
  • Proof of Collateral: While not required for all loans, there are some instances where a business will need to show proof of collateral that they can put up in order to secure a loan.
  • Evidence of revenue: Annual revenue and profits are one of the most common small business loan requirements across different lenders. Typically, lenders require businesses to share profit and loss statements from the past three years, if available.
  • Loan use documentation: While some loans carry few requirements regarding how the funds are used, others have strict rules. A commercial mortgage, for instance, might stipulate that the money be spent on the acquisition or improvement of property; similarly, a government-guaranteed loan backed by the U.S. Department of Agriculture could require that the funds be used in a rural community.
  • Business Plan: While not required for all loans, there are instances where a lender will ask for a business plan or loan proposal from the borrower. When applying for a loan, lenders are interested in learning about the business overview and history as well as why the loan is needed and how it will help the business.

Whatever the short and long-term financial goals of your business, know that the lending experts at Customers Bank stand ready to offer the support you need. If you’d like to learn more about Customers Bank’s loan application process and the documentation that is needed, contact one of our Team Members today!

All products and services are subject to approval.