Commercial loans are the loans sanctioned for business purpose and not to any individual for personal needs. By business purpose, it means that commercial loan can be taken for the purposes of expansion of your current operations, or the purchase of new plant and equipment in order to align growth. Commercial loans can be availed by a variety of entities belonging to varied categories. Also, a few entities in Ottawa opt for commercial lending to fund their operational expenses. Commercial lending may also be sanctioned for smaller purposes such as payroll payment requirements, or ancillary costs for the flexible running of production.
The below mentioned are few of the commercial lending types in Ottawa
-Land development and servicing loans
-Canada Small Business Financing Loans
How Commercial Loan Process Works
As in any other loan in Ottawa, creditworthiness is an important aspect in the process of sanctioning of the commercial loan, in determining the amount of loan and the security required. You will be required to present your historical financial documents such as Balance Sheet, Profit and Loss Statement, to the bank or the lending financial institution. The financial documents are assessed and are considered good if they reflect positive and consistent cash flows. This assures the lender that, apart from the Profit the business generates, it has enough cash to pay back the loan in requisite time on the terms of the loan contract. The commercial lending in Ottawa is sanctioned at the prime lending rates and only in specific cases, the rates differ.
If you are opting for a commercial lending for equipment or a depreciable asset which also poses the risk of breakdown due to reasons like natural calamities, short circuit, and other, then the banks require you to insure the asset in full, from the loan fund which is sanctioned to you. In the course of the loan, you are required to submit your monthly or quarterly financial statements to the bank till the repayment of the loan.
As commercial loans act as an aid to the businesses for reasons like working capital requirements, or short term loans for the seasonal demand push in Ottawa and such, the commercial lending also have the provision of renewal at the time of sanction. In a renewable commercial loan, the loan is automatically ‘renewed’ for an additional period as the original loan repayment is made. A capital intensive business in Ottawa most often seek for renewable commercial loans.