HJQ Group

Commercial loans cover various types of financing, including business loans, operational loans, and commercial real estate loans. A commercial real estate loan can be taken out by business owners who are purchasing property for business or investment purposes, or by individuals with full-time jobs seeking investment opportunities.

While commercial real estate loans share some similarities with home loans, they differ in terms of loan-to-value ratios, interest rates, and income requirements.

Like home loans, commercial real estate loans involve issues related to borrower credit, mortgages, documentation, evaluations, contract signing, and loan management. However, because commercial properties often involve business operations, these loans tend to be more complex and require more specialized expertise.

Mortgaged properties for commercial loans can include factories, warehouses, retail stores, office buildings, multi-unit complexes (four units or more), or even kindergartens. Once a lending institution expresses interest, a formal application can be submitted.

Business operation loans are applied for by business owners needing funds for operational purposes. Businesses must be operational for at least three months (or six months for new ventures) to qualify. These loans can be used for various needs such as enhancing cash flow, purchasing inventory, paying wages, or funding marketing efforts. The business must demonstrate a certain level of turnover and may have options for either short-term or extended repayment periods.

Types of Commercial Loans

Commercial loans can be utilized for equipment purchases (Equipment Finance) or to expand or invest in the business (Expand or Invest in Business).

Line of Credit

A line of credit is a common form of commercial loan, where a credit institution provides a set amount of credit that can be drawn upon and repaid repeatedly over a specified period. This type of loan offers flexibility for accessing funds as needed, supporting short-term capital needs, improving cash flow, and enhancing capital efficiency.

Interest Rates for Commercial Loans

Commercial loans can have either variable or fixed interest rates. Variable rates offer flexibility but can lead to uncertain repayment amounts due to fluctuating market rates. Fixed rates provide stability, allowing businesses to manage cash flow with predictable payments over a set term.

Loan Application Requirements

• Identification documents of the applicant
• Recent tax return and business financial statements
• Individual tax returns and notices of assessment for the last two years
• Specific requirements may vary depending on the lender and applicant