Any time you are seeking a commercial loan from Commercial Lending Corporation, you have to understand how loans are approved. One of the most important aspects to obtaining financing has to do with the loan-to-value ratio based upon the appraised value of secured collateral. Many lenders prefer providing funds when they know their interests are protected. In the unfortunate event of a default, the lender has the ability to use the collateral in order to satisfy the remaining balance on the loan. Even with Private Placement Programs, your investors have a stake in your company which can be sold should you default.
There are different methods used to calculate the loan-to-value ratio amounts that are influenced by the type of loan you obtain from Commercial Lending Corporation. For example, a non-recourse loan typically has a lower loan-to-value ratio than a recourse loan. This is due to the fact the lender has different recovery options when defaults occur. With a non-recourse loan, the lender is only able to seize and sell the collateral, while the business’s other assets cannot be touched. On the other hand, a recourse loan gives the lender the ability to not only seize and sell the collateral, but also take legal measures to secure additional assets of the business operation, until the debt has been fully recovered.
Another determining factor used to approve your loan is your creditworthiness. If you have a lower credit score, you may still be able to be approved. However, because you could be viewed as a higher risk to lenders, you often end up paying a higher interest rate on the loan proceeds.