Commercial loans are secured or unsecured advances to a business. These funds can be utilized by the business for various reasons including purchase of machinery, buying inventory or scaling of operations. Although the interest rates vary from case to case, depending on whether the lender is offering fixed or floating rates, the rate of interest is higher for commercial loans as compared to personal loans. This is because, there is a higher degree of risk involved in lending to businesses. The rate of interest differs not just from one lender to another but also from borrower to borrower. That’s because there are different factors affecting commercial loan interest rates -
One of the major hurdles faced by any business is capital. Be it a growth project, purchasing a new machinery or meet their working capital requirements, all businesses need funds. Be it a start-up or an established business, they need capital infusion from time to time to grow and sustain operations. Businesses have four options when it comes to raising funds:-