Applying for a large business loan starts with finding the right lender – while you might be tempted to jump straight into the application process, doing your due diligence is an important step in ensuring that you find the best loan for your business goals.
If you apply with a financial institution that doesn’t fit your needs, you might end up with unfavorable loan terms, such as higher interest rates and fees or insufficient loan amounts, that may disrupt your project.
On the other hand, unfavorable loan terms may lead to strained cash flow, negatively impacting your business growth. You may even see your credit score go down – that’s why choosing the best large commercial lender is the most important first step you’ll need to make before applying for a business loan.
But how can you choose the best large commercial lender for your needs? As a leading Specialty Finance Group, National Business Capital has collected some tips to help you throughout the process:
1. Start By Evaluating Your Needs
Finding the right lender for your business loan can be challenging if you don’t know the loan purpose and amount that you are aiming for. Are you looking to purchase equipment? Acquire a real estate property? Or invest in a Digital Marketing campaign?
Not all lenders offer all types of business loans available on the market, so having a clear idea of the loan that you are going to need will also help you choose the best large commercial lender.
Here is a quick guide on the most popular types of loans and their use cases:
Asset-Based Lending
Asset-based lending allows you to use your business assets – such as receivables, real estate, inventory, and equipment – to secure extra funding for your business. It’s a great option if you need financing to:
- Meet your working capital needs
- Fund for growth or expansion
- Refinance your existing debt with better terms
- Get financing if you have substantial assets
Business Line Of Credit
A business line of credit gives you flexible access to funds up to a set limit, which you can draw as needed and only pay interest on the amount you draw. You can use a business line of credit for:
- Managing fluctuations in cash flow
- Covering your short-term capital needs
- Seasonal inventory purchases
- Covering unexpected expenses
Business Term Loans
A great way to secure lump sum funding, and pay back over a flexible repayment term, typically between 1 and 10 years, depending on the lender. Business terms loans can be used for a variety of purposes, such as:
- Taking care of large capital expenditures
- Expanding your business
- Refinancing existing debt
- Purchasing inventory in bulk
Contractor Business Loans
Contractor loans are specifically designed to manage project-based expenses, with terms from 1 to 5 years. You can take a contractor business loan in case you need financing for:
- Bridging payment gaps between milestones
- Funding materials and labor for new contracts
- Purchasing or leasing equipment
- Covering operational costs during low seasons
Equipment Financing
Equipment can be expensive – if you don’t have the funds or simply want to preserve your cash flow, equipment financing is a great option to invest in your business. It is ideal for:
- Acquiring new machinery or equipment
- Upgrading outdated technology
- Increasing operational capacity
- Conserving cash flow
Revenue-Based Financing
You can also get funding which you will have to repay through a percentage of your future revenue through revenue-based financing. This type of financing has terms between 3 and 5 years, and it is perfect for:
- Expanding marketing or sales efforts
- Scaling operations through flexible financing
- Accessing capital with limited collateral
- Handling seasonal revenue fluctuations
SBA Loans
Backed by the Small Business Administration, SBA loans offer up to $5 million in funding.
However, when researching for the best large commercial lenders, keep in mind that not all financial institutions offer this type of loan, so choose one that does, such as National Business Capital.
SBA loans are great for:
- Fueling long-term growth and expansion
- Acquiring real estate or other properties
- Refinancing high-interest debt
- Financing your working capital needs
Small Business Loans
Small business loans are among the most sought-after types of loans, as they allow you to secure a lump sum of funds for any business purpose. They are great for:
- Expanding your current business operations
- Starting a new business
- Purchasing inventory or equipment
- Managing daily expenses
Subordinated Debt
When it comes to choosing the best large commercial lenders, keep in mind that you can also choose subordinated debt as a financing option. It is debt that ranks below senior debt in case of liquidation, often used to supplement other funding and as an alternative to mezzanine debt, which can cost a borrower equity.
You can take out subordinated debt if you are looking to:
- Leverage additional capital without diluting equity
- Support high-growth initiatives
- Invest in mergers and acquisitions
- Recapitalize your business
2. Asses The Lender’s Specialization
Another tip to keep in mind when looking for the best large commercial lenders is to check the specialization of the ones that you are considering for your application process.
If you choose a financial institution that specializes in your type of loan or industry, this can significantly enhance your chances of securing more favorable terms. They will also be able to provide you with proper expert guidance throughout the process.
You can also opt for a Specialty Finance Group such as NBC, which has deep expertise in a wide variety of industries, including:
We offer a wide variety of large business loans for multiple industries, which allows us to create tailored financial solutions for your company, as well as provide expert support from start to finish.
3. Evaluate The Lender’s History & Reputation
If you are on the search for the best large commercial lenders, another thing to keep in mind before you begin your application process is the history and reputation of the financial institution.
A lender with a long history of successful lending indicates stability and reliability, which will give you peace of mind not only during the application process but for many years after you’ve received your funding.
In addition, reputable lenders are known for their fair practices, transparency, and integrity, ensuring that you won’t encounter hidden fees or unfavorable terms unexpectedly.
For example, National Business Capital is a Specialty Finance Group with over 70 years of combined financial expertise. We’ve secured over $2 billion in financing for business owners since 2007, and become the preferred capital partner for the small to mid-size market.
4. Compare Interests and Terms
When researching for the best large commercial lenders, it is also important to compare interests and rates between different offers.
The interest rates directly affect the overall cost of the loan, which means that you will have lower repayment amounts if you get lower rates – reducing the financial burden on your business.
You can choose between the following types of interest rates:
- Fixed – They remain constant throughout the loan term, providing predictable monthly payments and making budgeting easier.
- Variable – Variable rates fluctuate based on the market conditions, leading to lower initial payments but potential increases over time.
To compare rates between financial institutions and large commercial lenders, look at the APR – which includes both the interest rate and any fees associated with it.
In addition, you can also choose between the following types of repayment terms:
- Short-term Loans – They are usually repaid anywhere between 6 months and 18 months and are associated with higher monthly payments but lower interest costs.
- Intermediate-term Loans – Intermediate-term business loans should be repaid in between 3 and 5 years, although it may vary by lender.
- Long-term Loans – they can have a repayment term between 5 and 25 years, depending on the type of loan and the lender.
If you are looking for the best large commercial lenders, make sure to compare rates and terms before accepting an offer. With National Business Capital, you can get dozens of offers with a single application to make your choice easier – you can apply here.
5. Evaluate The Application Process
Another important step if you are in the search for the best large commercial lenders is to evaluate the application process of the financial institutions that you are assessing.
For example, traditional banks tend to have lengthy and complex application processes, whereas non-bank lenders – such as NBC, have a much faster and streamlined process. With National, you can get from application to funding within 24 hours.
Qualifying For a Business Loan With NBC
If you want to qualify for a business loan, look no further than National Business Capital. With $2+ billion financed since 2007, multiple awards, and an experienced team of Business Finance Advisors, we have everything you need to find the best financing options for your project.
Are you ready to get started? Apply here.
Frequently Asked Questions
Large commercial loans typically offer amounts ranging from $500,000 to several million dollars, depending on the lender and the borrower’s financial profile.
Some lenders may provide loans up to $10 million or more for qualified businesses with strong financials and credit histories. The exact amount available will depend on factors such as the business’s revenue, creditworthiness, industry, and the specific needs of the loan.
The application and approval process for large commercial loans can vary, typically ranging from a few weeks to several months. Traditional banks and credit unions often require extensive documentation and thorough review, which can take 4 to 8 weeks or more.
Conversely, online lenders and specialized commercial lenders may expedite the process, offering approvals within 24 hours to 3 weeks, depending on the complexity of the loan and the business’s financial situation.
Applying for a large commercial loan requires several key documents, including personal and business credit reports, financial statements (profit and loss statements, balance sheets) for the past 1-3 years, tax returns, a detailed business plan, bank statements, and legal documents such as business licenses and incorporation papers.
Additionally, lenders may request collateral documentation, accounts receivable aging reports, and other financial records to assess the business’s stability and creditworthiness.
To qualify for a large commercial loan, a credit score of at least 680 is typically required, though many lenders prefer scores of 700 or higher for better terms and approval chances.
Additionally, lenders consider the business’s financial health, revenue, and overall creditworthiness, with stronger profiles receiving more favorable rates and terms.
Lower credit scores might still qualify but often come with higher interest rates and stricter conditions.
Yes, you can get pre-approved for a large commercial loan. Pre-approval involves an initial assessment of your business’s financial health, creditworthiness, and loan requirements. It provides an estimate of the loan amount, terms, and interest rates you might qualify for, giving you a clearer picture of your borrowing capacity.
Pre-approval can streamline the final approval process, though it’s not a guarantee of final loan approval.
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