Having a Low Interest Rate on Commercial Loans When you run your own business, you should know that you must make every penny count. You have tried to negotiate great costs on the office supplies, you have the most excellent perks on your business credit card. However, have you thought on trying to have a low interest rate on the commercial loan? On the course of loan term, you will be able to save thousands in the interest payments by getting such lower rate. One of the really common ways that you can have a great interest rate is to look for and take out the Small Business Administration loan. There are commercial real estate loans and other types of loans that are backed by the SBA. This would mean that the risk factor which is considered by the bank is much lower due to their backing. You won’t have to come up with a huge down payment and you can finance the loan on a longer term and such can be really helpful for your current and the future cash flow. When you have a really valuable collateral item that you put up, you can also realize such significant savings on the interest rate. Because you are going to finance less, there is lower risk and the banks would like to do more business with you. It holds true if you are going to finance capital equipment because the equipment itself is the collateral that would be sold if the loan called. The ratio of the loan to the value of those items purchased is low and this is going to be really helpful to you.
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Moreover, you can try to negotiate the terms with the bank, particularly when you have a profitable business and the personal credit score is really high. You need to consider applying between 10-12 institutions. When you would apply at different lending institutions, you would end up with all of them to compete over you.
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The best place to have a loan with lower interest rate that is from the bank. Usually, they have that relationship with you and they can use that if they would evaluate the credit-worthiness. Once they know that you are a solid client, then such can really go a long way with the lender. There must be a track record of profitability and also a solid business plan. These are quite important irrespective when you have a loan. If you must buy so many equipment but you don’t have that credit history or such long track record, then you can consider lowering the amount which you request and purchase the items in stages. This can provide you with the opportunity of building a history which can make the banks favor you.