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The 4 Most Common Commercial Loan Types

June 14, 2024

A small business owner explores commercial loans and financing options for his cafe.

Business growth often requires strategic investments in equipment, property, or personnel. However, securing funding through commercial loans can feel overwhelming due to the variety and complexity of available options.

Credit unions understand the unique financial challenges local businesses face and offer a range of financing options tailored to diverse needs. Read on to learn more about the four most common types of commercial loans so you can make a more informed decision.

COMMERCIAL REAL ESTATE LOANS

Commercial real estate loans make it possible for businesses to purchase or refinance properties. And owning commercial property has several advantages over leasing. These include building equity, potential tax benefits, and greater control over the property. This stability can foster long-term business growth and success.

These loans are eligible for financing various property types, including office spaces, retail locations, industrial facilities, warehouses, and mixed-use buildings. The specific terms of the loan, such as the amount, interest rate, and repayment schedule, may vary depending on the property type, its intended use, and your financial situation.

Credit unions generally offer competitive interest rates and may offer fixed-rate terms, adjusted every five years, for commercial real estate loans. This provides predictable payments and protects you from market fluctuations. You can also use flexible repayment options to align the payment schedule with your cash flow and financial goals. Utilizing these features empowers you to manage your finances effectively. It simplifies budgeting and promotes interest savings by enabling you to make extra payments or pay off the loan early without incurring penalties.

VEHICLE & EQUIPMENT LOANS

Investing in new or used vehicles and essential equipment can significantly boost your business operations. Vehicle and equipment loans provide the financial means to acquire these assets while preserving your working capital for other critical needs such as payroll, inventory, and marketing.

These loans cover various assets, from trucks and construction machinery to medical devices and office equipment. Financing equipment carries advantages like potential tax benefits and staying competitive with the latest technological advancements.

Vehicle and equipment loans often feature flexible terms and competitive rates, allowing you to choose repayment structures that align with your cash flow and budget. Additionally, the absence of prepayment penalties and annual fees supports enhanced financial flexibility and potential cost savings.

BUSINESS VISA® CREDIT CARDS

Visa® Platinum and Classic Credit Cards are convenient solutions for managing business expenses and cash flow. These cards provide a revolving line of credit, empowering business owners to make necessary purchases and access funds while maintaining better control over spending.

Using a business credit card comes with numerous benefits, including the clear separation of business and personal expenses, streamlined expense tracking, and the ability to establish or strengthen a business credit history. Additionally, some cards offer rewards programs or cashback incentives that add up over time.

Credit union business credit cards provide exceptional value with no annual fees and low, fixed interest rates. Visa® Platinum and Classic cards have distinct features catering to diverse business needs. For example, Visa® Platinum includes a low-rate introductory period and higher credit limits, while Visa® Classic focuses on simplicity and an interest rate much lower than many other credit cards .

BUSINESS LINES OF CREDIT AND LOANS

A business line of credit offers flexible financing with access to funds up to a predetermined limit. Unlike a traditional business loan, you only pay interest on the amount you draw, allowing you to manage fluctuating cash flow, unexpected expenses, or short-term financing needs.

This revolving credit line is ideal for various purposes, such as covering payroll during slower periods, purchasing inventory, or taking advantage of supplier discounts. Seasonal businesses and those experiencing rapid growth find lines of credit particularly beneficial for managing cash flow fluctuations and seizing new opportunities. 

Credit unions assess factors like creditworthiness, financial stability, and your business plan to determine eligibility for a line of credit. Demonstrating a strong track record and a clear understanding of how the funds will be used strengthens your application.

YOUR PARTNER ON THE PATH TO GROWTH 

Finding the right financial partner is crucial when navigating the complexities of commercial loans. Credit unions offer a personalized approach to business financing. They focus on building relationships, community involvement, and taking the time to understand your unique needs.

At Fibre Federal Credit Union, we embody these values by prioritizing your business’s success. Our experienced commercial loan representatives offer personalized guidance and support to help you secure the financing that propels your business toward long-term growth.

Take the next step towards achieving your business goals. Click below to explore our diverse range of commercial loans and discover how we can support your growth.

Explore Our Commercial Loans

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