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Proper financing provides many tools to keep your business growing, whether it be for inventory investment, startup purposes, or equipment.



What to Do When a Standard Business Loan Doesn't Seem to Fit

October 30, 2018
By Comerica Bank

The American business sector specializes in a broad array of products and services, providing many scenarios where financing may be necessary. Proper financing provides many tools to keep your business growing, whether it be for inventory investment, startup purposes, purchasing real estate for expansion, or the leasing or buying of equipment.

Since loan types serve specific purposes, what do you do when your lender doesn't have the product that matches your business needs? Lending services ought to be made to fit you, not the other way around. From lines of credit to commercial real estate, working capital and more, these options may seem fine at first thought, but what looks right on paper may be all wrong in practice. This is why the relationship you form with your lender, who's tasked with personalized customization, is critically important.

Before you go about applying for a loan, it pays to understand the loan options available to you. This way, you avoid choosing a loan that doesn't work or missing an opportunity to secure one that is more suitable. Here is a brief description of a few such solutions, along with some of the pros and cons to be aware of before you decide.

Equipment financing

What do you do when you need more equipment, have to repair broken parts or upgrade tools that are badly in need of rejuvenation? Tapping into what funds you have available can throw a wrench into your normal operating business processes. Equipment financing serves as a smart solution for keeping your money where it is so it can be used for other purposes. Plus, approval is quick, allowing you to address time-sensitive projects when they arise.

Depending on how frequently you go through your equipment, it may have depreciated significantly by the time the loan is repaid. That's something to be mindful of before obtaining this type of financing.

Working capital

A company's long-term well-being often hinges on its short-term operational needs. When cash flow is low, perhaps due to the nature of the sales cycle - like for seasonal businesses - working capital loans improve liquidity so services can continue, vendors are paid and capital expenditures are addressed.

There are some caveats to working capital loans that may be drawbacks. A low business credit score can make approval more difficult, and repayment windows tend to be shorter than with other loan products.

Commercial real estate loans

Commercial real estate loans allow for a more diversified financial portfolio, among other potential benefits. Financial services such as these are ideal for building or implementing renovations. You do need to be mindful of some of the potential obstacles to obtaining commercial mortgages, which can include a sizable deposit and the interest rate environment, which is subject to fluctuation if you select a variable rate.

Running a business is tough enough - an endeavor filled with all types of uncertainty. You deserve a loan that's aligned with your goals and eliminates the guesswork. That's what sets Comerica Bank apart. Whether you're expanding your business, seeking an injection of working capital or financing a professional practice, the lending services from Comerica Bank work with you in mind, the way it ought to be.

There's a reason why we're the Leading Bank for Business1. At Comerica Bank, our business is business.

1Comerica ranks first nationally among the top 25 U.S. financial holding companies, based on commercial and industrial loans outstanding as a percentage of assets, as of June 30, 2018. Data provided by S&P Global Market Intelligence.
This information is provided for general awareness purposes only and is not intended to be relied upon as legal or compliance advice for your business.