When companies want to take on large projects, they may not have funds on hand to cover the costs upfront.
If they do have cash reserves, they may want to preserve those funds for an emergency. In either case, the business can choose to take out a commercial loan to get the funds they need to complete their project.
A commercial loan application is a form they use to apply for a loan in the first place. Lending institutions use these forms to judge whether giving a business a loan is a good investment.
If a company doesn’t have a good financial history or a solid repayment plan, lenders may choose not to extend them a loan.
There are generally three phases to a commercial loan application. First, the applicant business will submit the relevant information through an application form.
The lender will examine the submission and run initial checks on the company to see whether the application is worth pursuing.
If the business passes these first checks, the lender may request an in-person meeting along with additional information. This phase involves more in-depth research to look for unusual risks that may not be obvious on the initial form.
Finally, if the lender believes the business is a good investment, they will make a loan offer with repayment terms. The company that requested the loan can then choose to accept or decline the offer.
The purpose of a loan application is to collect relevant information about the business so a lender can judge whether to offer a loan. To do this, the application form gathers information, including:
Applicant contact information:The applicant’s name, address, phone number, and any other important information.
The loan amount:How much money the applicant is requesting to borrow.
The purpose of the loan:What the business will use the money for, such as new facilities or equipment.
A description of the business and its history:What the applying business does, how long it’s been in business, and any critical events.
The management team for the business and their responsibilities:The members of the senior decision-makers and their roles.
The business’s financial history:Major financial events in the business’s history and its current financial status.
The financial projections demonstrating how the loan will be paid back:The applicant’s plan for paying off the loan over time and where those funds will come from.
Any collateral for the loan:A description of any property the company offers in exchange if they aren’t able to pay off the loan, like equipment or buildings.
A signature field to ensure that the application is legally sound:The signature should be that of the business owner.
Commercial loans and small business loans are related, but they have different eligibility requirements. A small business loan, also called an SBA loan, is a loan backed in part by the federal government.
Lenders offering SBA loans face less risk because the government has guaranteed that they will receive a certain amount back no matter what.
That allows lenders to be more relaxed with their eligibility requirements. So, if a business owner meets the SBA’s requirements, they can get an SBA loan with fewer hurdles.
On the other hand, a commercial loan is not backed by the government. Businesses do not need to meet SBA requirements to get a commercial loan. Still, they will face stricter terms and eligibility requirements from the lender.
If you regularly use commercial loan applications in your financial organization, you will likely benefit from using a template to create them.
Anytime you need a new form, you can use the template to ensure you’ve included all the required sections and maintained robust legal elements. Furthermore, by removing the need to write new forms from scratch, you can save time, money, and effort.
Download the free template from PandaDoc to get started. It’s fully customizable, free, and can be used as the basis for your commercial loan application forms going forward.
Using an online commercial loan application form as the first step of the application process offers several benefits.
Lenders appreciate these forms because they:
Provide a straightforward method to collect relevant information and documentation in one place
Offer the opportunity to filter potential clients upfront
Allow simple transfer of information into databases
Lower costs by reducing the need to print and store paper
Simplify form creation with the use of templates to reduce time and effort spent
Any organization that offers commercial loan services will need to collect applicant information; custom loan application forms are the simplest way to do so.
A commercial loan application form is a document that businesses use to request a loan from a lender like a bank or credit union. Application forms are the first step of a more extensive application process.
They give lending organizations the initial information they need to judge whether a business is a good investment and how much interest to charge on the loan.
Commercial loans can be taken on by anyone who operates a business or runs a financial institution. This includes self employed people, or entities such as limited liability companies, partnership firms, trusts, corporations, sole proprietorships, and more. In most cases, small and medium businesses opt for a commercial loan.
To apply for a commercial loan, you will need documents such as your personal credit score, business credit score, company permits and licenses, information about your company and/or yourself, such as entity type, EIN number, Tax ID, etc. You will also need to show tax returns of yourself and your business, bank statements, profit and loss statements, debt schedule, business plan, etc.
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