Business Loan Down Payment Calculator – Find out what business loans are, how to apply for them, how a lender determines how much you can borrow and how long the process can take.
A business loan, also known as a business loan, is a type of financing used to cover the costs associated with running, operating and growing your business.
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This can include working capital (day-to-day business needs), equipment purchases, real estate, and inventory. Business loans can also be used for startups.
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The bank or credit institution you work with determines how much financing you can get.
Lenders apply the maximum amount they can lend. This is called the legal borrowing limit. Per loan type that can be borrowed is based around this number; The specific type of loan product does not matter.
With National Bank of Commerce (NBC), our company has a legal credit limit of $22.5 million*. This is the maximum amount we can lend to an entity.
For businesses that require larger loans, NBC may provide financing by “partnering” a portion of the financing with another entity above our statutory credit limit, essentially provided by a second lender. A percentage of the loan amount is required. Think of it as a collaboration between banks, which we do sometimes!
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Typically, a bank will finance up to 80% of the purchase price or the value of the collateral – and a 20% down payment is required.
For example, if you need €100,000 to buy a piece of real estate, the bank will lend you €80,000 – and the required down payment will be €20,000.
It starts with a conversation between you and your banker. During this conversation, the banker will ask several questions to get direction and information about which loan product best suits your needs. Here are some examples of questions you may be asked:
If a potential customer’s loan request does not fit within NBC’s lending policies, we will often explore other financing options, such as partnering with the SBA or local business development programs. The banker will also try to identify the root cause of why the company may not be ready and will work with it to get it there, or direct it to other avenues for resources.
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This information provides your banker with insight into your company’s financial history and prospects and is used as part of a business application.
Once your banker has this information, they can begin the underwriting process for loan approval. Much of this work is done by a credit analyst who works within the bank.
The underwriting process involves gathering financial information and determining the borrower’s qualifications. Credit analysts will analyze a company’s financial history to determine whether it is profitable. They will also look at the company’s repayment history to ensure that all outstanding payments have been made as agreed. The underwriting process is also a time when the value of the collateral and the company’s ability to repay the loan are determined.
These loans can be completed in 3-5 business days from start to finish (assuming all information is collected on time).
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The time frame for closing a real estate secured loan is usually between 30 and 60 days. The timeline will be as long as the title works and an appraisal must be ordered and completed.
For more complex real estate loans, you may need additional time for due diligence. For example, if the property is in a flood zone, we will require flood insurance and may require a survey. Environmental reports come into play when there is a chance that the country has some concerns about cleaning up the environment.
The type of collateral usually determines how quickly you can get the loan. Real estate may take longer to use as an asset than equipment, for example, because the value of the equipment is already fixed.
A business loan is specifically for business purposes, while a personal loan is used for personal expenses such as a car, vacation or wedding. A business loan can be considered a bit risky for a bank because of the collateral. For example, it is easier to liquidate a car or house (personal) than inventory or equipment (business). Due to its risky nature, rates for business loans will generally be slightly higher than rates for personal loans. Many other factors also play a role in your interest rate, such as loan-to-value (calculated by dividing the loan amount by the appraised value of the property), collateral, credit history and the current interest rate environment.
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Business loans and business loans are similar and synonymous with each other. These words are used interchangeably!
There really isn’t one. The process for business applications and loans is very similar for banks and credit unions.
We believe that communication and teamwork between a banker and borrower are the foundation of success. At National Bank of Commerce you have the opportunity to work with the same commercial banker throughout the credit process and on future credit applications.
We truly value the opportunities and time spent with our clients, that’s what we’re here for! NBC is a community bank; We come to work every day to help companies of all sizes achieve their goals. As a community bank, lending decisions are made locally by people with extensive knowledge of the area. Your deposit accounts with NBC help our community grow and your business relationship creates an environment for future growth and continued success.
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Understanding what business debt is and how it works is an important first step toward making good financial decisions. But there is one important aspect of business lending that we still need to cover. This is a large enough and important topic to warrant its own module. When you’re ready, click through and discover the different types of business loan products offered by financial institutions and what differentiates NBC’s products.
Dan Berg is a VP – Commercial Banker based out of NBC’s Duluth branch at 1314 E Superior St. He is originally from New Ulm, MN and has been in the banking industry for 13 years. Dan is a graduate of Leadership Duluth and is now a board member of the Duluth Area Chamber of Commerce. He said, “With the wide range of financial products and services that NBC offers, my goal is to share and promote them with our customers to help make more possible for them.”
Learn the differences between term loans, lines of credit, and real estate loans, as well as key insights into other types of loans available for your business.
Discover the five most important components of a business loan, what they include and what you should keep in mind when applying.
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Understand the documents required for a business loan, the qualifying (and disqualifying) factors, and even what to do if your loan is denied.
Find out what happens after you’re approved for a business loan, what steps you need to take to close the loan, and how loan financing, payments, and annual maintenance work. A commercial mortgage finances the purchase of income-producing assets, such as apartments. , shops, offices and industrial buildings. Use the commercial mortgage calculator below to see how much a commercial mortgage will cost, whether you’ll qualify for a CMHC-insured commercial mortgage, and see your repayment schedule.
Most conventional commercial mortgage lenders allow you to borrow up to 75% of the property’s value, while CMHC-insured commercial mortgages can have up to 85% loan-to-value. With CMHC’s new MLI Select product, new and existing multi-unit rental properties can qualify for a CMHC-insured mortgage loan with an LTV of up to 95% for the residential portion and 75% for the non-residential portion.
Commercial mortgage lenders often allow higher LTVs for commercial residential mortgages than for other types of commercial real estate. For example, MCAN’s average LTV at issuance for commercial multifamily mortgages was 74%. By comparison, MCAN’s other commercial mortgages had an average LTV of 53.7%.
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Commercial mortgage rates are higher than residential mortgage rates, with conventional commercial mortgages around 5% and insured commercial mortgages around 2%.
CMHC’s commercial mortgage rate is tied to the Canada Mortgage Bond (CMB) yield relative to the mortgage term, plus an additional spread on top. The spread is approximately 100 to 150 basis points (1% to 1.5%).
For example, if you want to find the estimated rate for a five-year insured commercial mortgage, you want to buy the yield on a five-year Canadian mortgage bond. A CMB issued by CMHC in March 2020 with a June 2025 maturity date has a yield of 0.963%. Estimated mortgage interest rates range from 1.96% to 2.46%.
The Canada Mortgage Bond yield to June 2026 (5-year maturity) was 1.21%, while the yield to March 2031 (10-year maturity) was 2.03%.
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The average five-year mortgage rate for 2020 has risen to 1.76%. The insured commercial mortgage rate is linked to the CMB yield because CMHC guarantees both commercial mortgages and Canadian mortgage bonds.
Uninsured commercial mortgages are not backed by CMHC, meaning they are based
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