What is a Commercial Loan?
A commercial loan is a form of lending whereby funds are distributed to businesses from a financial institution. Typically used to purchase long-term assets or help fund operational costs, commercial loans can be beneficial to small and medium sized companies. At the Bank of Old Monroe, we provide a variety of customized commercial loan solutions with competitive rates to meet business needs. This in addition to our ability to approve your loan in a timely manner with local decision making authority sets us apart. The types of commercial lending solutions we offer include:
- Commercial Real Estate Loans: Whether you’re expanding your space to accommodate growth or purchasing a property for a new business venture, we offer numerous solutions to help you capitalize on your real estate opportunities. Â
- Equipment Loans: Financing your equipment allows you to spread the cost in equal payments over time, so you can reap the benefits of your new construction, farm, industrial, or general-purpose machinery without a large outlay of cash at one time.
- Construction Loans: A short-term, fixed rate loan used to finance the building of multi-family homes/apartments, renovations, warehouses, offices or other types of projects. Construction loans fund labor, materials, land development and more.
- Operating Lines of Credit: The flexibility offered by operating lines of credit allows companies to finance short-term borrowing needs, as well as to provide working capital to close the gap and make ends meet.
Steps in the Commercial Loan Application Process
Commercial loans may be used for various purposes, including: acquiring assets, purchasing supplies, payroll and meeting daily operations costs. During the application process, you must specify how your business will use the funds given. When you apply for a commercial loan at the Bank of Old Monroe, you can expect the following steps to be taken:
1. Contact a Bank of Old Monroe Loan Officer
At Bank of Old Monroe, we take the time to fully understand your business and your goals. Our loan officers possess expert knowledge on nearly every industry, as well as the laws and regulations you’ll need to follow when applying. Ultimately, we’re here to walk you through every step of the commercial loan process. We’ll discuss your options and determine the best loan program for your business.
2. Loan Application Approval
During the application approval process, we will evaluate your business’ financial history and income. Specifically, we’ll investigate your existing debt in addition to how your business will use the funds, thus providing a rough estimate of how much you’ll be qualified to borrow. You must complete and submit a loan application. Certain documents are required to ensure your business is able to repay the loan:
- Financial statements: At least two to three years’ worth of balance sheets and income statements.
- Tax returns: At least three years of both personal and business tax returns.
- Credit history: Your personal and business credit will be taken into consideration.
- Business history: A complete and thorough history of your business, including articles, bylaws, and operating agreements.
3. Application and Document Review
Once your application is submitted, your loan officer will review all of the documents. They will investigate your credit history, current and projected income, conduct an appraisal, and run necessary third-party reports. The appraisal is a valuation of your collateral and takes approximately three to four weeks to obtain. Third-party reports can include engineering reports, title commitments, surveys and more.
4. Underwriting
When you submit your commercial loan application along with the appraisal and third-party reports, it is sent to our underwriting department. Our trained specialists, along with your loan officer, will analyze your application and documents provided to determine whether you meet the requirements. We assess the risks of the loan by reviewing your credit history, financial strength, repayment ability, and borrowing structure. The underwriting step typically determines whether your loan application is approved, so it’s important to submit further documentation if requested.
5. Loan Package and Closing Documents
Once approved, your loan officer will arrange a time to meet with you to review and sign the finalized loan documents. The signing process takes less than an hour, but it’s important that you be thorough in your review as your signature deems it official. Post-closing, your loan officer will continue to service your loan as your trusted advisor.
6. Funding
Generally, same-day funds are attainable, but we will notify you upon availability. Your access to capital will allow you to purchase the new equipment or property, satisfy your payroll, and cover the day-to-day expenses.
Contact a Bank of Old Monroe Commercial Loan Officer Today
Bank of Old Monroe has been providing small and medium businesses financing options for over 100 years. Our knowledge and experience in each industry allows us to offer flexible, custom, and competitive commercial loan options. We know that operating a business is no easy task, but having access to capital you can afford has many benefits for your bottom line. As a locally owned and operated financial institution serving Old Monroe, Troy, Moscow Mills, Wentzville, and O’Fallon, we’re dedicated to the communities we serve. Contact a loan officer today for assistance with growing your business.
