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How do I… get commercial lending?

Finance your next commercial project with ease

Looking to secure a large business loan, but don’t know where to start?

Sometimes growing your business means making a larger investment in equipment or real estate, and that's where commercial lending comes in.

Commercial lending, or large business loans, can be a great way to achieve your business goals. But navigating this new space can be murky, especially if you’re just diving in.

There are often hurdles to jump and unfamiliar jargon to understand, and different lenders may have different requirements when providing a larger business loan. Fortunately, with the expertise of our Commercial Account Managers at Gulf & Fraser, you don't have to do it alone.

Commercial lending basics

Before diving into commercial lending, get familiar with key terms and concepts. Understanding these basics will not only help you navigate the commercial lending process, but also help you make more informed decisions. 

Commercial lending involves obtaining financing for your commercial business. Businesses often need to borrow for investments in a building, getting equipment or making other large capital purchases. 

If you want your business to expand and grow over the long or short term, you will need enough funds to initiate your business strategy such as increasing your product offer, hiring new talent or expanding your workplace. Commercial financing will provide businesses the opportunity to achieve its goals.

Here are some key definitions:

  • Principal: The amount of money you borrow, not including interest

  • Term: This is how long your loan agreement is good for

  • Interest Rates: The extra money you have to pay on top of the principal each year. It's a percentage of the money you borrowed, and you pay it over time 

  • Amortization: This is how many years it will take to pay back both the money you borrowed (principal) and the extra money (interest) on a loan

  • Base Rate: This is like a starting point for figuring out how much you'll pay in interest. Different types of base rates can be used, like the Government of Canada (GOC) bond yield, prime rate, market rates or banker's acceptance (BA) rate. They help lenders decide how much interest to charge you for your commercial loan.

Find the right financing

The type of commercial lending you'll need depends on your project's size, scope and risk assessment. If you're building a brand new warehouse, for example, you'll likely require a construction loan. If you want to purchase and renovate an existing property, you may need a commercial mortgage. 

Several financing options are available through Gulf & Fraser, depending on the type of property you want to finance. These include:

  • Development loans: Used to finance the development or construction of industrial, commercial and residential properties. This includes single-family dwellings, multi-family townhomes and condominiums

  • Commercial mortgages: These are used to purchase or refinance investment properties, such as retail plazas and office spaces

  • Lines of credit: These offer flexible access to capital, allowing you to cover expenses or investments quickly and efficiently

  • Term loans: Used to finance equipment, inventory or other fixed assets

Explore commercial loans

Choose the right commercial lender

Commercial projects can be complex, and finding the right lender is crucial. Not only do you want to find a lender with competitive rates, but you also want one that understands your specific needs and goals.

While traditional banks offer extensive business loan products, their rates are often out of reach for small or medium-sized businesses.

On the other hand, credit unions, like Gulf & Fraser, provide more personalized service and competitive rates, making them a great option for commercial lending. As other cooperatives, credit unions are focused on the well-being of their members and communities, rather than maximizing profits. For members, this often means preferred pricing and more personalized business solutions through a community-oriented approach.

Our members are pillars of their communities, often shaping the neighbourhoods and cultures they exist in. George Pitman, who co-owned the Elephant and Castle restaurant brand for 32 years, is one such member. Read George’s story to learn about his more than eighty years of credit union membership. 

Read George's story

Five tips to consider when choosing a commercial lender

  1. Consider the relationship you have with your lender and ensure that they understand your goals and vision for your business

  2. Look for lenders who offer flexible terms and personalized service, rather than a one-size-fits-all approach

  3. Check for hidden fees or penalties, such as pre-payment penalties, and make sure you fully understand the terms and conditions of the loan

  4. Find lenders who have experience in your specific industry or property type—or those who are invested in the community you operate in

  5. Ask for recommendations from other business owners or industry professionals to find a reputable and trustworthy lender

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Secure your financing

Once you know what type of financing you need, it's time to talk to your lender. Applications for commercial lending can be lengthy and involved, as lenders will want to assess your business's financial health, creditworthiness and overall risk profile. They may ask for documents such as:

  • Business plan

  • Cash flow projections

  • Tax returns and financial statements

  • Collateral assessment

This is where having a Commercial Account Manager on your side can help. Our advisors are experts in commercial lending, and they can guide you through the application process, help you understand your options and identify any potential risks. They will work with you to build a strong case for financing and negotiate on your behalf to secure the best possible rates and terms.

As you shop around, here are some key considerations to keep in mind:

  • Interest rates: Look for competitive interest rates and terms that fit your budget

  • Repayment options: Consider if you want a fixed or variable rate and what repayment schedule works best for you

  • Additional fees and charges: Make sure to read the fine print and understand any fees associated with the loan

  • Collateral: Lenders may require collateral in case of default, so make sure you have a solid repayment plan

  • Pre-payment options: Look for a lender who allows pre-payments without penalties, as this can save you money in the long run

Speak to an advisor

Grow your business long term

Commercial lending is just the start. As your business grows, new opportunities and challenges will arise. Stay ready, no matter what the world throws your way, with our guide to growing a successful business.

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Get advice on the go

Life gets busy, but don't let that stop you achieving your goals. Whether you’ve got $50 or $50,000, we want to help power your possible – and we'll come to you to do it.

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Grow your business

Learn how to grow your business sustainably with financing, payroll services and cash flow advice from trusted Gulf & Fraser advisors.