Leveraging commercial loans is an excellent way to scale your business. Even a small amount of additional funding can go a long way in accelerating business growth.
The key is finding the right loan type based on your specific business needs. Riverview Bank has been serving the Pacific Northwest for 100 years, and we want to see our community’s businesses grow, thrive, and succeed.
Looking to grow a business of your own? Here are some smart ways to use commercial loans and how to find the one that’s the right fit for you.
Strategic Uses for Commercial Loan Funding
Funding Expansion
You may want to fuel business expansion by growing your team, buying more inventory, or branching out into new markets. Expansion often requires a substantial up-front investment, but commercial loans can help ease those costs, allowing your business to grow without overextending your resources.
A business may be ready to expand when there’s a proven demand for its product or service. For example, if a busy franchise restaurant has long drive-thru lines wrapping around the building, the owner may consider opening a second location. This type of expansion could cut wait times and improve customer satisfaction and retention.
If you’re looking to elevate your business, securing additional capital may be the key to making it happen smoothly, quickly, and effectively.
Purchasing Equipment
Many businesses rely on industrial equipment and machinery for day-to-day operations. Heavy machinery can be costly to repair, replace, or upgrade. However, it can be necessary to maximize efficiency and improve workflow.
It makes good financial sense to close on a commercial loan if the equipment will get you a good return on your investment. For instance, if you secure a short-term commercial loan at a low interest rate and your equipment has an average lifespan of 20 years, you could benefit from taking out financing to power your purchase.
A low-cost loan could be all you need to get your business moving full speed ahead.
Buying Real Estate
Just as you would likely need financing to close on a home loan purchase, you’ll probably find yourself needing a loan to purchase commercial real estate. Buying real property is often a wise investment, whether for development, expansion, or other purposes.
Commercial real estate serves a variety of functions. It can support business growth by offering expansion space, the chance to upgrade to a modern facility, or the opportunity to diversify your portfolio as an investment asset. Whatever the reason for your purchase, commercial financing could provide you with the capital you need to fuel long-term growth and success.
Managing Operating Costs
Depending on your industry, your business may experience seasonal highs and lows that impact your cash flow. A business loan can help bridge the gap during slower periods, providing the financial stability you need to weather seasonal fluctuations.
Virtually every business will experience slower periods, economic downturns, and reduced revenue at some point in time. Business loans can offer support and financial stability during these standard ebbs and flows.
Tips for Securing the Right Commercial Loan
Find a Trusted Lender
Many business owners apply for commercial loans that are backed by the US Small Business Administration (SBA). However, it’s important to note that the SBA provides direct financing only to businesses impacted by a declared disaster. This means you’ll need to find another lender, such as a bank, to secure an SBA-backed loan.
If you want some help getting started, you can use the SBA Lender Match tool. It’s a quick and easy way to narrow your search for the right lender. Simply answer some questions about your business, register for MySBA, and then complete an application. After that, you’ll be matched with lenders that may be a good fit for your small business loan, such as Riverview Bank.
Consider Loan Type
To qualify for an SBA-backed loan, your business must meet certain requirements. If your business does not meet these requirements or you wish to explore alternative options, you may want to review financial solutions available through a private lender.
Riverview Bank, for example, offers several commercial loans that serve a variety of purposes. For instance, our commercial real estate loans can be used for a number of business needs, such as new construction, building renovation, land acquisition or development, or a loan refinance.
We also provide equipment financing and working capital loans, which can be used to purchase new technology or fund expansion into untapped markets. We even provide homeowner association (HOA) loans that can be used to finance a variety of HOA projects and expenses.
With our wide range of lending solutions, we’re confident we have the loan type best suited to your specific business banking needs.
Compare Terms
As with any loan, you should always compare loan terms and rates. The SBA cautions business owners to be wary of lenders charging interest rates significantly higher than competitors or fees that total more than 5 percent of the loan value.
Shop around and do your research to secure the most favorable loan terms. To get a sense of the loan’s total cost, including interest rate and fees, ask prospective lenders to provide the annual percentage rate and payment schedule for the loan.
Securing the right type of financing can help fuel business growth and prosperity. It all starts with finding a lender you can trust.
Speak with one of our commercial loan relationship managers. They can assist you in determining whether a commercial loan is the right financial solution for your business and help identify the best strategy for long-term success.
Your business goals are within reach, and our team will help you find a lending solution that’s fully aligned with achieving them.