Commercial loan online: what are the options?

by Matthew Williams

Offers commercial loan for free lancer

Offers commercial loan for free lancer

Anyone looking for a commercial loan as a freelancer or entrepreneur will probably first turn to the banks that run the business accounts. These banks are generally well acquainted with all business data. A credit decision can be made relatively promptly, if necessary after submitting further documents.

But what if the house bank refuses to grant a loan or is only prepared to issue a loan against excessive risk premiums?  Self-employed and business people then face a problem.

Establishing contacts with another branch bank to obtain a loan there will be difficult and time-consuming. Sometimes, however, the use of commercial finance does not tolerate a delay. An alternative is to search for a suitable commercial loan on the Internet.

Cream Banks and other online financial service providers are quite cautious when it comes to loans to the self-employed. But some financial service providers also allow freelancers and traders to take out loans, not only for private investments and projects, but also for corporate financing.

Cream Bank offers, P2P loans from credit exchanges and credit intermediaries are eligible.  In order to quickly get to the best loan offer, the free use of credit comparison portals is recommended.

Across Lender business loan comparison

Centiloan business loan comparison

The Across Lender comparison portal is particularly suitable for the self-employed and entrepreneurs, because not only loans for traders are compared by Cream Banks. The loan comparison also takes into account two P2P loan offers. P2P loans are financed by private investors (crowdinvesting).

Across Lender itself operates a P2P portal, which is included in the comparison. Spin Lender is the product name. Good Lender is the market leader for P2P loans in Germany and claims to specialize in lending to self-employed customers.

Credit for professionals and self-employed

Credit for professionals and self-employed 

The financial service provider provides loans and business loans to both freelancers and traders. As far as can be seen, the brokerage activity relates to both personal loans and commercial loans.  It is particularly suitable for small businesses and the self-employed who need smaller loans.

Loans up to an amount of USD 100,000 can be obtained at interest rates dependent on creditworthiness without proof of the use of funds.  There are small amounts from the first month of self-employment.  A lean application process applies to small loans. In the best case, the last bank statements should suffice.

What are business loans?

What are business loans?

A business loan or business loan is used to finance measures that serve to set up and maintain a business or a self-employed activity.  These include commercial properties such as factory buildings, workshops, storage rooms or hotels and restaurants.

Commercial equipment is used to purchase and maintain office equipment, machines or other equipment. Working capital loans are used to finance current assets (inventories and raw material purchases).

Commercial loans are taken out in order to be able to distribute a specific financing requirement over a desired period. In this way, the company account is not immediately debited with a high one-off payment.  Often, particularly long terms are strived for in order to keep the current monthly burden on the company as low as possible.  Maturities and the selected type of loan are primarily based on the intended use.

Loans for investments (investment loans) such as real estate, production facilities or office equipment are mostly granted as annuity loans. Relatively long terms are chosen for real estate and manufacturing facilities.

The term of the expected useful life (depreciation) will be adjusted for other investments.  On the other hand, working capital loans serve the short-term financing of goods and raw materials until they are processed and sold for a specific product.  Working capital loans can be repaid from the sales revenue, but they are needed again for each production cycle.

Such bridging loans are represented by overdrafts, framework loans or short-term installment loans.  Working capital loans are not only granted by banks. They can also come from business partners of a company, for example from the suppliers of the raw materials (supplier credits).

For banks, loans for commercial purposes are always a separate business area.  The award is based on different criteria than for consumer loans and the credit check is carried out according to different standards.

Credit check and lending practice for commercial loans

Credit check and lending practice for commercial loans

Credit checks in the context of commercial finance pose challenges for banks. Employees, civil servants or pensioners have easy to prove current income. Permanent employees and civil servants are expected to have sufficient regular income to repay a loan in the future.

This is different for traders and freelancers. The income of these occupational groups can fluctuate considerably.  In the banks’ view, a forecast of the future development of revenue is associated with significantly higher uncertainties.

That is why most banks charge risk premiums on interest for commercial loans. Banks try to keep the risk low by carefully examining a number of documents.  This is hardly possible only with the help of a computer. Rather, it has to be checked manually whether the economic creditworthiness meets the award criteria of a particular bank.

In a first step, private credit checker information and often also information from other credit agencies is obtained. Private credit checker develops its own score tables for the self-employed and small businesses.