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Frequently Asked Questions – Commercial Loans

Frequently Asked Questions – Commercial Loans

If your question is not answered please submit it to our Help Desk.

What’s the difference between a business loan and a commercial loan?

Business loans encompass commercial loans. Business loans have the goal of solving a variety of business problems like insufficient funds for additional labor, supplies and space, mostly in cases of significantly increased orders. They also serve as a stop-gap measure should an unforeseen event like employee theft, a natural disaster or owner illness/death befall the business.

On the other hand, businesses apply for commercial loans when they want to buy property or office spaces.

Who can get a commercial loan?

At First Financial, this list includes any American business owner with—among other criteria—a FICO score of 500 or higher and no bankruptcies in the past two years. Any applicant having owned the business for one year or more meets our time-in-business criterion. Going deeper, we have arranged commercial loans for thousands of minority-, veteran- and woman-owned businesses.

Who has the best commercial loan rates?

Every business owner looking for property must shop around to find the lender most interested in his or her credit and business profile.

Still, online lending services like First Financial have lower rates and better terms. We just don’t have the exorbitant expenses traditional and bricks and mortar banks endure. We’ve replaced loan officers with algorithms (unless it comes to service; after a borrower applies, our loan officers answer calls 24/7). You won’t see us on a billboard or super bowl commercial, just coming up in your search results when you need us. Automation and an internet address cuts our costs for labor, rent, electricity, cleaning to the bone.

What are typical commercial loan rates?

Rates vary significantly based on borrower and business credit scores, industry, balance sheets and more. Still, commercial loan rates tend to range between 2.75 and 8 percent over “prime.” If prime rate is 4%, then borrowers with the best scores and profile and a 7a SBA loan can get a business property loan for 6.75%. Other borrowers who don’t qualify for SBA loans can pay 12 percent or more.

What is a commercial loan swap?

Borrowers looking for loans between $1 million and $5 million can now transact a “rate swap” agreement. In a time of rising interest rates and an improving economy, a rate swap deal can benefit both lenders and borrowers, given the borrowers have at least $1 million to negotiate with.

How will I know when to refinance my commercial loan?

Always be cognizant of when your business and personal credit scores improve. When they do, you may qualify for lower interest rates and better terms. Other events include: larger economic changes, an influx of business orders leading to greater profitability and change in your financial picture that could include an inheritance, or a sale of property and stock.

How are commercial loan rates determined?

Commercial loan rates are tied to the prime rate. As mentioned above, they run as low as 2.75 percent above prime and as high as 10 percent above prime. To keep track of prime rate, bookmark this Federal Reserve Prime Rate website.

How much commercial loan can I afford?

Go to any loan calculator and enter your loan terms and amount. Plus, lenders are happy to make these calculations for you. Pit one against the other to find your best offer. The easiest way? Our “soft” pull will give you our best rates on commercial property without dinging your credit.

What is commercial loan servicing?

Does everything have to be complicated? Apparently so. Handling commercial loan transactions includes assumptions; modifications, releases, and defeasances; workout, restructuring, and enforcement matters; and REO transactions. Keeping on top of these matters ensures you have to product you need. Your commercial loan servicer translates all kinds of legal and financial information so you can focus on getting that next client and contract.

What are the most important differences between commercial and residential loans?

Thinking of using a recent inheritance to buy a business property? Or should you just apply as an investment property.

One key difference between commercial and residential loans is that commercial loans have significant pre-payment penalties. That means they are less flexible. A residential loan can be paid in full ahead of its term at any time, typically without penalties.

If your question is not answered please submit it to our Help Desk.

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