Commercial loans are known to most business owners. The chances are that you, as an entrepreneur, needed one of these when you started up your company. However, a less known type of commercial loan is the C & I.
This stands for Commercial and Industrial Loan, and it is a little different from the simple commercial loan we’ve all come to be accustomed to. The notion is a little complex, so make sure you read the article with extra attention.
If you ever need one, you’ll know what it is and how it works beforehand. This will shorten the time you need to get your application approved.
What Is the C & I Loan?
You know by now that commercial loans are usually given to individuals like business owners. In the case of C & I (which is, fundamentally, still a commercial loan), the lender gives the loan to the business itself, and not to the one to whom it belongs.
If traditional commercial loans can be secured or not, the C & I is almost always secured on a certain asset belonging to the business that has been granted the loan.
Regarding the purposes the C & I loan serves, it has pretty much the same uses as the working capital loan. However, the term is considerably shorter (2 years maximum). Also, the C & I can be either a line of credit or traditional loan.
The main difference between the C & I loan and other commercial loans is that the former is never given to an individual, but only to a business or a corporation. So, if you want commercial loans for you, as business owner, the C & I is not for you.
It is widely accepted that any loan given to a business and not to an individual is a C & I, so the spectrum of types is quite broad, comprising all kinds of existing loans. The process of getting a C & I loan, however, might differ a lot.
How Do I Get It?
First of all, you should know that many banks are faced with an incredible downfall in the number of C & I provided. This is due to a recession that affects them and makes people not buy them.
Because of this, you might actually get some very good terms. You can talk to the representatives of the bank you’re working with and ask for details. You can also take a few minutes to make an enquiry on us.
Make sure you ask for precise details, and you’re not beating around the bush. And moreover, keep in mind that it’s not you who gets the loan, but the business. You’ll be the one to make the repayments, however. Not fair, is it? That’s life.
Is It Worth It?
If you’re in need of quick and large funding for expenditures, then yes, it does make financial sense to get a C & I type loan. If not, any commercial loans will do.
One thing that we didn’t mention until now is that interest rates on C & I loans are not fixed. They are based on the prime rate. Commercial loans may have this feature, too.
A good alternative to the C & I loan is the working capital one. It does provide pretty much all the perks of the C & I, and it can be granted without being secured.
Secured loans are great, but only for the lenders, most of the times.
For you, as a consumer, they can be a worry you could have done without because you can lose valuable assets easily if you fail to pay for whatever reason. The working capital loan has the same effects as the C & I, but the terms are a little bit more palatable.
You are the only one in the position to say whether or not you need a C & I loan, or you can make do with a simple working capital one. Don’t make a hasty decision that you might live to regret.
The C & I type of loan is a tricky concept, and it is not recommended for you to get to the bottom of it on your own. You need a team of professionals that can provide guidance through the screening process.
If you think a C & I loan would work for you, speak with the representatives of your bank and see if they have such a product in their catalogue. If not, you may need to go to another bank. But first of all, make sure a C & I is really what you need.
It wouldn’t do you much good to change your mind after you’ve taken the actual loan. Therefore, proceed with care.