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Commercial business finance
The biggest difference between commercial business finance and personal finance management is that a commercial business generally includes a larger sum of money.In some cases, the amounts being requested from a lender can top a million dollars.With requests for money that are thousands of times higher than a traditional loan, it only makes sense that the process and requirements to obtain such funding be a thousand times more complicated.Legal issues, matters of collateral, credit worthiness, etc. are al loan consideration characteristics that will be scrutinized much more closely in a commercial loan than in a personal loan for an amount of money that is significantly less.Just a few other characteristics that make commercial business finance different from personal financing are that there are larger sums required for down payments and that only a portion of the total amount needed to start the business can be obtained through commercial business financing (other sources that the money must come from include the individual owner's personal contributions). Of course there are also many issues of legality that pertain to commercial business financing.The organizational type of the business (how the liability of the business is structured) can certainly have an impact on the types of financing that are available.The terms of repayment on a commercial business loan are also going to be more detailed.The lender needs to know that they will be making a return on what will likely be a more significant investment. Increasing uncertainties in financial and credit markets due to the current recessionary period have produced conflicting and misleading information about the availability of commercial financing. For most business owners, it is probably not clear if business finance funding is realistically available to them or not.The fact is that for well-qualified borrowers there are reliable funding resources for commercial real estate loans, working capital loans and for business cash advances.While these types of loans have not disappeared, those looking to obtain commercial business financing should expect that extra effort will be required in order to successfully arrange the appropriate financing. Commercial borrowers would be wise to maintain a cautious perspective in determining how to refinance or obtain small business loans simply because the banking industry has been hit hard. Many banks themselves are even unsure of what type of lending they are willing to participate in.Where asking a bank for advice regarding what should be done in order to obtain the best results when applying for a commercial loan is generally a good idea, in time when commercial lending is a less frequent practice, you may need to do more research on your own.Not only will you have to prove the credit worthiness of yourself and your business but you will also need to present an argument for why lending to you will be a smart decision for the lender even in these financially uncertain times.Considering the market in your business proposal will not only show that you are savvy enough to be sensitive to the changing markets outside of your own target market but also that you are a business owner who not only understands your own business ventures, but also the business goals of the lenders that you plan on working with as you get your business going.
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