Characteristics Of A Commercial And Industrial Loan
C&I Loans ( Commercial Loans and Industrial Loans)
There are commercial loans and industrial loans that starts with 5 million dollars and it is being offered by providers of commercial real estate loans. The purpose of commercial and industrial loans is not for individual use but for capitalization of a business, capital expenditures, legitimate business financing requirements, and working capital. If you have a non-real-estate-collateral you can avail of the commercial and industrial loan as it is only good for a short period of time.
The Difference Between a Commercial and Industrial Loan and a commercial real estate loan
One thing that these loans have in common is that they are specifically made to improve the financing of business enterprises. But these two loans actually differ in some ways.
What Are Commercial Real Estate Loans?
As the term implies ‘Commercial Real Estate Loans’ it is not surprising that this loan is intended for real estate businesses that are income generating such as hotels, office buildings, apartment buildings and retail stores also known as shopping centers. Since the world of real estate is unpredictable, commercial real estate loans are often times difficult to obtain compared to commercial and industrial loans. The income of the property is the main reason why a loan is made in the first place that is why both the commercial real estate loans and commercial and industrial loans can both be used at the same time.
These characteristics represent a commercial real estate loan:
They are being used for the procurement, construction and refinancing of a commercial real estate.
Commercial real estate loans have lower loan to value ratio than that of a home mortgage.
You can adjust the rate of your commercial real estate loans since you can be able to pay a huge amount for it all at once and that is known as the balloon payment.
If you have a new property or an existing property that you have to refinance, then you can do so with your commercial real estate loan.
You can replace your short-term commercial loan with a permanent commercial loan also known as a takeout loan.
Commercial and industrial lending
Commercial and industrial loans are being utilized by a lot of business sectors such as manufacturers, professional firms, retailers, industrial companies, health care providers and hospitality companies such as motels and hotels.). The characteristics of commercial and industrial loans are as follows:
These loans are used for capital expenditures such as the hiring of workers, purchasing of equipment and filling seasonal gaps.
Although it is best for you to utilize a commercial real estate loan when it comes to your construction, you can still use a commercial and industrial loan for it but you can not collateralize it with a real estate.
Your account receivable, assets such as your machinery in the business and future credit card receipts can secure your commercial and industrial loan since you will not be able to use a real estate as a collateral.