Commercial loans


Every business needs to finance its day-to-day operations and long-term investment. A commercial loan can help your enterprise buy the stock and machinery it needs to develop new products, or update its existing infrastructure to stay competitive in its marketplace.

If you are looking at taking out a commercial loan call us and we can recommend a specialist company and commercial solicitor who is expert in giving financial advice to advise you on the benefits and risks involved.

How do commercial loans work?

Commercial loans can be offered to your business in a number of forms. The most common form of commercial loan is an overdraft. Agreed with your bank, you have a fixed amount of money you can go overdrawn by.

Using an overdraft facility for a commercial loan is advantageous in that they are usually easy to set up and manage. However, it can be expensive. And more importantly, your bank can ask you to repay the amount you are overdrawn by at any time.

Obtaining a commercial loan from your bank will often mean you have to include some form of security in case your business cannot repay the loan at some point in the future. If your bank does insist on security it is important that you take legal advice regarding:

  • The terms of the loan
  • How the security you are using is treated in the event of any default

If the commercial loans you have are for property, it is even more important to get qualified advice from a business solicitor. Buying or leasing property for commercial uses can be very complex. Your solicitor can assist you to make sure you have the right commercial loan for your business.

A commercial loan may also be available from outside the UK as part of the European Investment Bank Fund. Your business must have fewer than 250 employees and not trade in the:

  • Tobacco industry
  • Firearms industry
  • Gambling industry

If you are considering this type of commercial loan legal advice is essential. Your business solicitor can give you help and guidance to ensure that the loan you agree to is affordable and right for your business.

Why consider a commercial loan?

The commercial loans that your business may take out can be used to fund a number of projects. It is important to thoroughly understand the terms and conditions that all commercial loans impose on your business. The loan contract is legally binding.

Commercial loans should be used to fund large purchases such as:

  • New plants and machinery

Your business will know precisely how much it has to repay each month and can plan its cash flow accordingly. Your business solicitor can also give you advice about the consequences of not meeting the repayments on commercial loans.

If your business’s requirements are modest, commercial loans of below £50,000 are available via the Small Loans for Business scheme. If the high street banks have turned you down, this service could be of assistance with the commercial loans you are looking for. A business solicitor can be very useful as they can help you with the loan application process.

You should always buy commercial loans from reputable sources. Loan brokers should be members of the National Association of Commercial Finance Brokers (NACFB). If you are considering commercial loans from other sources, it is vitally important to take legal advice.

For further general advice on loans, see our information page on the topic of loan law.

Are you considering a commercial loan and require legal advice to help you through the process? Contact Law can put you in touch with a specialist company and commercial solicitor who can advise you on the pros and cons of taking out a commercial loan to fund another part of your business. Please call us on 0800 1777 162 or complete the web-form above.

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