Why Businesses Needs to Apply for a Commercial Loan When you are just starting in the business industry, you may think that the capital to which you have set aside in order to get started is what you all need. You probably may have the plan in turning your profits back to the firm and then growing it using your proceeds as funding. The truth to this is that most expansions will cost a lot more than what your profit could actually handle. A commercial loan, even when just used for a short term is in fact considered as a crucial part on its growth. What you will find below are some reasons what you need when it comes to applying for a commercial loan. The first thing is that buying or leasing new properties is actually costly. When you are planning to add new locations for your business, you need to consider a commercial real estate loan. Banks in fact expects it when companies are ready to expand, which in fact makes commercial real estate loans to be one of the most common kind of commercial loan available. Being capable of demonstrating a profit and a positive outlook for expanding is essential for banks to actually consider the business. Also, if you ever plan on buying a new equipment or perhaps have the plan of adding one to your current or future location, you need a commercial loan. You also may want to consider leasing through purchasing, depending with how long you plan to keep the equipment. If this is going to be as long as or longer with loan terms, a purchase would be the best way to go. You also could take the depreciation tax deduction as long as you could. Another one is that you may find that you need to add it to your inventory, especially during the peak of the shopping season when you are a retailer. You may want to consider a short term loan in order to buy your inventory and then consider paying off the loan after some time. Also, you may just need a boost on your general operating capital. Such type of loans will be able to help you organize rough financial times for you to get started. Because these are considered to be more risky kind of loans, the interest rates charged are higher than short term inventory loans or with a real estate loan. Yet when a business will actually need it, the loan in fact is considered to be crucial and that it also helps to give a difference of being able to make it or not. All of these are considered as debt financing. There are also equity financing, where it’s where businesses get from venture capital firms which confers a partial share of ownership to the capital lender as collateral.