July 18th, 2008 | 
Author: 
Thomas Ajava asked:
The banks are dead! Long live the banks! So goes the story of the last few years. The banking industry was giving away money much to easily. Now they aren’t giving it away at all. As is often the case with such gnashing of teeth, the truth is somewhere in between. This is particularly true with commercial loans.
Business loans are very different than personal loans. The money is much bigger and the terms are much more negotiable. Let’s take a look at the key terms.
Due date to repay the loan – Analyze your cash flow to come up with a reasonable repayment schedule that you can afford. Don’t make the mistake of taking on aggressive repayment terms just because you need the loan badly. The bank wants an aggressive repayment schedule to reduce its risk. Don’t just agree to what is proposed. Run your numbers to see if you can handle it and then negotiate from there.
Interest payments – This subject goes without saying. Small changes in interest rates can equated to tens and hundreds of thousands of dollars in savings or waste. Be aggressive. This matters to the bottom line of your business.
Loan processing fee – Typically, a 1 percent loan fee is charged for a loan approval. Try to shop around to see if you get better deals and you should be very careful about lenders who want high loan fees or upfront loan fees as they could be outright scams. Alternatively, you can try to buy down your interest rate by points.
Prepayment – If your business flourishes, you might be in a situation in the future where you want to pay off your loan in advance. Some banks will have costly penalty fees to close the loan early and you will have to continue to pay interest even though you do not want to. You can avoid that by making sure that the loan you are availing has a reasonable prepayment clause which you can use if necessary.
Grace period – There is a good possibility that your business might come up a little short to cover repayment by a certain date. In these cases, a good grace period will provide a small cushion for the business, allowing it to work things out.
Late charges – Some banks are notorious for their ridiculous late fees. Make sure that the late fees are reasonable before you put your signature on the paper that will award you a loan.
Commercial loans are complex beasts, so the above list hardly covers everything you want to focus on. That being said, covering each is a good place to start.
Business Lines Of Credit Unsecured
The banks are dead! Long live the banks! So goes the story of the last few years. The banking industry was giving away money much to easily. Now they aren’t giving it away at all. As is often the case with such gnashing of teeth, the truth is somewhere in between. This is particularly true with commercial loans.
Business loans are very different than personal loans. The money is much bigger and the terms are much more negotiable. Let’s take a look at the key terms.
Due date to repay the loan – Analyze your cash flow to come up with a reasonable repayment schedule that you can afford. Don’t make the mistake of taking on aggressive repayment terms just because you need the loan badly. The bank wants an aggressive repayment schedule to reduce its risk. Don’t just agree to what is proposed. Run your numbers to see if you can handle it and then negotiate from there.
Interest payments – This subject goes without saying. Small changes in interest rates can equated to tens and hundreds of thousands of dollars in savings or waste. Be aggressive. This matters to the bottom line of your business.
Loan processing fee – Typically, a 1 percent loan fee is charged for a loan approval. Try to shop around to see if you get better deals and you should be very careful about lenders who want high loan fees or upfront loan fees as they could be outright scams. Alternatively, you can try to buy down your interest rate by points.
Prepayment – If your business flourishes, you might be in a situation in the future where you want to pay off your loan in advance. Some banks will have costly penalty fees to close the loan early and you will have to continue to pay interest even though you do not want to. You can avoid that by making sure that the loan you are availing has a reasonable prepayment clause which you can use if necessary.
Grace period – There is a good possibility that your business might come up a little short to cover repayment by a certain date. In these cases, a good grace period will provide a small cushion for the business, allowing it to work things out.
Late charges – Some banks are notorious for their ridiculous late fees. Make sure that the late fees are reasonable before you put your signature on the paper that will award you a loan.
Commercial loans are complex beasts, so the above list hardly covers everything you want to focus on. That being said, covering each is a good place to start.
Business Lines Of Credit Unsecured
About Wade Henderson
Wade Henderson: Domestic and International Business Finance since 1995 specializing in challenge situations. "We prefer to find a way to get your loan done as opposed to finding a reason to turn it down.” Connect with me on Google+
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