What is a Commercial Loan?
What is a Commercial Loan? A commercial loan is a form of credit that is extended to support business activity. Examples include operating lines of credit and term loans for property, plant and equipment (PP&E). While there are a few exceptions (including commercial property owned by an individual), the overwhelming majority of commercial loans are extended to business entities like corporations and partnerships . Private businesses that have financing needs generally borrow from a commercial bank or credit union; however, they may also seek credit from equipment finance (leasing) firms or other private, non-bank lenders (like factoring companies). Key Highlights A commercial loan is credit earmarked for a specific business purpose or expenditure. Commercial loans tend to have much more complicated credit structures than personal loans. Three of the most common types of commercial loans are lines of credit, term loans, and ...