Commercial financing is basically offering loans to businesses and franchises for either start-up or expansion of the existing business. The loans are such that they are dependent on the assets the business owns. In other words, they are secured loans. The loans can also be referred to as asset based loans. Some examples of commercial finance loans are start up loans, growth loans and improve credit.
A business person like Phil Thow has to approach a commercial lender before approval is done by commercial financing. Commercial lenders fall into two categories of micro-finance and banks. Some deal in real estate, mortgages and property. These commercial lenders aid in specific loans and educate the likes of Phil Thow on the most attractive asset based loans available. Without this information any business person can makes mistakes that would proof to be very expensive especially in the long-term.
The one main disadvantage with this arrangement is that a commercial lender chooses on the assets he wants to be security. Defaults will results in the lender selling that asset to recover his/her money. Philip Thow has to ensure that he understands the terms of payment. The interest should not be astronomical to drive him to debts. Philip Thow should also ensure the time set to complete his loan repayment is reasonable and manageable for him to recover the loan.