In contrast with a personal loan, a commercial loan is used for business purposes.

Commercial loans are usually available for terms between one and fifteen years and are provided by banks as well as specialist brokers.

As with any loan, the lender will make a risk assessment before agreeing to forward any money. To do this they will consider your business status, including cash-flow, as this indicates how likely you are to repay the amount borrowed. They will also look at your business and personal credit history, especially if you are a sole trader or a partnership.

Liability for repayment of the loan will depend upon your business structure. If you are a sole trader then you are responsible for the repayments. In a partnership, the partners are liable and in a limited company, it is the company directors.

Commercial loans can be much larger than personal loans. A lender may therefore require collateral or additional security.