Commercial Loan

What it means by Commercial Loans? This Article is all about brief description of Commercial Loans.

Definition: Commercial Loan -

- Also known as Business Loan: a bank loan granted for the use of a business.

- A Commercial Loan means a debt-based funding arrangement that a business can set up with a financial institution. The proceeds of commercial loans may be used to fund large capital expenditures and/or operations that a business may otherwise be unable to afford.

Explanation -

Commercial Loans are for small to medium sized Businesses. The reason is, because of their smaller size they are not allowed to raise Capital directly from (Primary) Equity & Debt Markets. And that’s why they have to be dependent on Financial Institutions mainly Banks.

There are so many varieties of Loan products under the heading of Commercial Loans. Some Examples are A Line of Credit, Un secured Loans & Term Loans. There are many other varieties of Commercial Loans.

In Simple words, Commercial Loan is one which a Company takes from Financial Institutes (Banks) to expand its Business. Commercial Loans are for Business Purposes.

However, small businesses should shop around at different institutions to determine which lender offers the best terms for the loan.