Commercial loans are defined as loans provided to companies or small businesses to meet business and operating expenses, since commercial loans are a transaction that involve high cash transfer and require more often than not certain collateral be put down against the loan, getting a commercial loan can be quite a challenging task. Almost all banks in Australia offer commercial loans, and in addition to banks there are also firms that can either help you get a commercial loan, or offer commercial loans independently.



Applying for a commercial loan is not as simple as applying for a personal loan, as there are a lot of parameters that are involved before any bank or financial organization approves a commercial loan, understand the way a commercial loan is processed often helps in improving your chances of getting a commercial loan.

Once a business plan or proposal is submitted to a bank or financial organization, the organization assigns the case to a loan officer, the loan officer then analyses the business proposal and does a back ground check on the company, if you are starting a company from ground up then you will have to show collateral against the loan, the loan officer then verifies the collateral and assess the value of the collateral involved. In addition if there are any additional transactions involved, like a proposal to buy property or to set up a an office, then the loan officer might ask you to submit additional documentation like the blue print of the proposed office, or an estimate from a real estate agent, clearly mentioning the proposed pricing of the land to be purchased.

Once all the paperwork is ready, the loan writer then submits the entire package to an underwriter or a loan committee, the loan committee then presents you with a letter of intent, that makes sure that all parties involved are on level ground and understand each other. Depending on the organization the approval time can be anything between 1 day to a month, however most decisions are usually taken within one week of the final package being submitted to the underwriter or loan committee.

If your loan is approved, the organization will then have you sign a contract, or agreement, which will clearly mention what property or properties have been put up as collateral, what are the transaction fees involved, and what will the interest rate. Once the agreement is signed, there is usually a transfer of funds to the account of choice, or you can get a cheque from financial organization you are dealing with. So far what we has been discussed is just the framework of how all commercial loans operate.

Depending on the amount of the loan and the collateral involved, a loan can sometimes go through both an underwriter and a loan committee before it is approved. Although such cases are rare, but you should be prepared for a delay if you find out that the loan is actually being scrutinized as mentioned above.

How to improve your chances of getting a commercial loan

A majority of commercial loans are rejected because there is just not enough paper work to support the claims made, this means that instead of actually going out and spending money on impressive proposal writers, the first thing you need to do is get all your paperwork in order, as mentioned earlier the loan officer's task is pretty simple, his job is to verify everything you claim is true, from the collateral being offered, to the various pricing involved. To make his job simpler (usually loan officers are working on multiple loans at the same time) you can go ahead and get all the necessary paperwork done in advance, this will speed up the loan process, and will also put you in better standing with the loan organization.