Using a Commercial Credit Loan for Supplier Goods and Services

Commercial credit loans are provided on the merits of a specific need.  You can use a commercial loan to purchase the supplier goods for short-term business movement.  However, it is not a good idea to use commercial loans consistently to pay your suppliers, this money should come from your revenues, because loans have rates and you will end up paying more. If you need a short-term boost to purchase from your suppliers, prepare your application and follow the steps below for the best deal.

Step 1: Update Your Business Plan

You need an accurate business plan when you are seeking a loan. Key elements of a business plan include corporate structure, mission statement, competitive advantage, supply costs, and marketing costs. Sample business plans are available through a number of online sources. Take the time to edit your plan regular because your original financial projections may be outdated once your business is up and running. Update the plan and include accurate financial information to show profitability and future projections.

Step 2: Determine the Amount Needed

Your business plan should include areas where you need additional funding to reach full profitability. If you are seeking a commercial credit loan for goods and services, your business plan needs to have the exact supplier needs you have and how much they will cost. Declaring exactly what you need the money for is important for your loan application. The lender needs to see how the money will be put to use to generate profits so the loan can be paid off.

Step 3: Gather Documentation on Your Needs

Your commercial loan application will require financial information on your business and perhaps your personal finances. You need to go one step further, though, and show documentation on the financial requirements for the business need you listed on your application. For example, if you stated you are purchasing a shipment of steel worth $300,000, you need to show documentation from the seller stating this quote. Invoices from previous shipments can be very useful in showing the exact cost after tax for your supplier goods.

Step 4: Submit Your Loan Application to Multiple Sources

Using one lender is not the best way to locate the most competitive loan. Try a few different lender to benefit from the power of negotiation.  You can negotiate for better terms, but remember you must be willing to walk away from a deal at any moment. You are less likely to walk away withut other options so talk to banks, online lenders and venture capitalists. If you are involved in community improvement projects or green energy, commercial loans may also be available through government programs to provide you with better interest rates.

Step 5: Select a Secured Loan with Low Interest Rates

Think beyond your initial need for capital during the loan application process. Opting for an adjustable rate or an unsecured loan may be the quickest way to get the money. However, it will hurt your business in the long run because of high fees. Offer collateral to secure the loan for lower rates. Over the life of the loan, the money you save can be used to expand your business in the future.