What Is Commercial Credit?
Commercial credit, also known as business credit, is any credit acquisitioned by an individual or business for business purchases. Commercial credit comes in many forms and is used for many types of business-related expenses, from supplies to equipment. The lender determines the credit amount, fees, terms and interest rate upfront.
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Determining Credit
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A lender determines the commercial credit limit by the corporation's credit history, the value of their assets and their debt.
Bank Loans
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Bank loans are one type of commercial credit. Corporations can opt for short-, intermediate or long-term loans, and repay them either through a fixed schedule or lump sum payment.
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Lines of Credit
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A line of credit is a form of commercial credit that is revolving, which means that the corporation can take funds out as often as they choose, as long as they are within their credit limit. Because the account is revolving, unlike with a bank loan, this reduces the need to reapply for credit.
Leasing
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A corporation may also opt to lease their equipment.
Business Credit Cards
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Business credit cards are another form of commercial credit. While similar to personal credit cards, business cards may offer different rewards and perks, as well as interest rates and credit limits.
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