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What You Need to Know: Commercial Bank Loans

Aug 18, 2017

A commercial bank loan can be a crucial factor in the starting phases of opening a business. As a business owner, you want to get the best deal. As a bank lender, they want (financial) assurance that you will be able to payback the loan. If you don’t have a concrete business plan, backtrack and make one. If you’re ready to apply for your loan, you’re going to want to shop around and avoid these common lending mistakes.

Types of Commercial Bank Loans

This kind of loan is most important to small businesses and can take many forms including, but not limited to:

  • Short-term loans: lines of credit, accounts receivable loan.
  • Long-term loans: equipment and vehicle loans, real estate loans, construction loan, land and subdivision development, letters of credit.
  • Secured and unsecured loans.

Three Commercial Lending Mistakes to Avoid

1. Focusing too much on the interest rate. If you’re using interest rate as your deciding factor for a loan, you’re thinking about it wrong. Depending on how long you plan on paying your loan (5-year, 10-year, etc.), consider amortization. It might be handy to bring a calculator with you when you’re looking over your loan options. Don’t completely ignore the interest rate, but don’t let it be the only thing to solidify your decision.

2. Assuming your lender has your best interest. This is about you and your business. While it’s good to build a relationship with a familiar lender, they may not have your best interest in mind. This doesn’t mean you should avoid them, just make sure that you’re reading the terms and rates carefully, no matter who you’re lending from.

3. Skipping out on hiring a lawyer. You’re going to need someone on your side. Hiring a lawyer who specializes in the loan you want to apply for is going to help you know what you’re getting to and get the best rate.

At Martin & Drought P.C., we’ve provided consistent results for our clients through rigorous preparation, innovative problem-solving and an unwavering commitment to excellence. With over 50 years of experience in San Antonio business law, call us today and let’s see how we can help your business reach its goals.