UK Accounting Glossary
A commercial loan is a loan borrowed by a company to pay for any of several financial needs. A commercial loan is short term, and it may be renewable once it matures. A commercial loan is used to finance working capital needs; that is, needs for operations and other current requirements of the business. A commercial loan can be borrowed from a bank or a credit union. The business’ tangible assets are usually used as collateral to secure the loan. To qualify for a commercial loan, the business must be seen as a good credit risk. Commercial loan officers look at various financial and tax statements, plus a business plan, to determine how good a credit risk the business is.
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This glossary post was last updated: 4th February 2020.