There are a lot of reasons you might need cash when running a business, such as maintaining payroll, investing in inventory, expanding to a new facility, and so on. However, you might not always have as much cash as you need on hand. This is where commercial business loans come in. 

Why get a commercial business loan?

When you don’t have the cash you need to do what you want in your business, a loan can help you get past a barrier or grow your business.


Cover a cash flow gap.

If payroll is coming up and you haven’t received payments from customers, you might need a bridge loan to cover the gap. A commercial bridge loan can also be used to cover other types of expenses while you wait for receivables. 


Pay off another loan.

If you have a balloon payment or want to refinance out of an existing loan, you can get a commercial loan to do this. This is useful when your existing lender isn’t willing to extend or their terms are less favorable than getting a new loan.


Do a cash-out refinance.

Leverage the equity you have in your property to get cash when you need it. A cash-out refinance allows you to refinance a property you already own for more than the existing mortgage. You get the balance in cash, which you can use for your business needs.


Invest in real estate.

Commercial real estate loans allow you to purchase property to use for your own business or to rent to other businesses. If you’re looking to expand your business or grow passive income, this could be a good path. 


Need cash now for your business? Find out if a hard-money loan is right for you.


How do you get a commercial business loan?

Getting a commercial business loan is typically a more rigorous process than getting a personal loan or mortgage. Be prepared to share not only your personal tax and income records but also financial information related to your business for the past several years. 

A lender might also want to see information about future plans, financial forecasts, business plans, and other details. If you work with a conventional lender, expect the process to take months.


What are the best types of commercial business loans?

Various types of lenders offer commercial business loans. The one that’s right for you will depend on your circumstances and how quickly you need access to cash. Three options include:


1. Contact a local lender. 

Whether you get a one-time loan or open a business line of credit, building a relationship with your local lender is always a good idea. Having personal connections at the bank helps streamline processes, but it’s important to remember that traditional banks are strictly regulated and you have to meet certain requirements for eligibility. Even with a solid relationship, you might not be able to get a business loan through a local lender.


2. Check if you’re eligible for an SBA loan.

If you operate a small business, you may be eligible for certain types of Small Business Administration (SBA) loans. You may be able to get commercial real estate loans through the SBA in addition to loans for purchasing or repairing assets, refinancing business debt, or getting seasonal financing.


3. Consider a hard money loan.

When speed matters, local lenders and the SBA may not move fast enough to serve your needs. This is where hard money loans come in. Real estate is required, but hard money lenders can lend against a single-family residence or a commercial building for business purposes. Rather than sifting through mountains of paperwork—which can take months—they look at what you have for equity when deciding how much to lend.

Because hard money lenders are subject to less regulation, they can move more quickly and be much more flexible with the types of loans they can offer. For example, most conventional lenders only offer commercial real estate loans for properties that are already occupied. 

If you find a distressed property that suits your needs, a hard money lender can provide you with funds to purchase and improve it—even if it will be unoccupied for a period of time. When urgent needs arise, such as covering payroll next week, a hard money lender can move quickly so you can keep your business moving.


Get a commercial business loan with Socotra Capital.

If you have hit roadblocks with conventional lenders, or even if you are just starting to explore your options for a commercial business loan, building a relationship with a hard money lender, such as Socotra Capital, is a good idea. We always move quickly, but the better we know you, the faster we can act when you need cash for your business.

To learn more about increasing your chances of getting a loan, read The Borrower’s Guide: Process, Preparedness, and Timeline.


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