9 Types of Commercial Loans for Your Business

As the saying goes: sometimes you have to spend money to make money. But not every business has the cash on hand to fund its next move. That’s where commercial loans can be helpful. If you’re looking to expand your footprint, purchase equipment, or just keep operations running smoothly, there are financing options for almost every situation. 

Here, we’ll take a look at nine types of commercial loans to help you determine which one is right for your business with the help of Amplify’s own Commercial Loan Officer, Rene Flores.

1. Commercial Real Estate Loan

A commercial real estate loan can be used to purchase or refinance a commercial property.

This could be an owner-occupied office space, a retail store, or an investment property. They function similarly to a residential mortgage loan, but instead of buying a private home, they are structured for business use. It’s important to note that there are different types of loans within this category, such as permanent loans (these act as the primary, long-term mortgage on a property, so they take priority over other liens) and blanket loans (these cover multiple properties under a single loan.

A local lender familiar with your market can help you find the right structure for your situation.

2. Business Line of Credit

A business line of credit works similarly to a credit card. With this type of loan, instead of receiving a lump-sum amount upfront, a lender approves your business for a maximum credit limit that you can draw from as needed. The key thing to remember with this type of financing: you only pay interest on the amount you actually use—not the full amount available.

As a result, a business line of credit is useful for companies trying to manage cash flow, cover short-term operating expenses, or purchase equipment on a rolling basis. It’s a flexible tool for businesses whose funding needs tend to fluctuate.

“Business owners sometimes assume they need a traditional term loan when what they actually need is access to revolving capital,” says Flores. “If your business expenses are unpredictable or seasonal, a line of credit gives you the flexibility to respond without over-borrowing.”

3. Equipment Financing 

For many businesses that rely on large or specialized equipment—think construction firms, bakeries, or dentists—purchasing it outright may not be realistic. With an equipment financing loan, you can spread the cost over time while keeping cash reserves on hand.

The equipment itself usually serves as collateral, which makes qualification easier. However, defaulting on the loan means the lender could seize it, so be sure to read the fine print of the loan before signing on the dotted line.

4. Business Term Loans

Similar to a personal loan, a business term loan provides a lump sum upfront that is repaid on a set schedule over a defined time period—usually two to five years. The interest rate on these loans can be fixed or variable, and unlike some loan types that place restrictions on how the funds can be spent, a business term loan allows you to use the capital for a broad range of expenses. This makes them a practical choice for expenses such as renovations, marketing costs, debt consolidation, and more. Their versatility is why they’re one of the most common financial tools for fueling business growth.

5. Commercial Construction Loans

If you’re planning to (literally) build your business from the ground up, a commercial construction loan might be for you. This type of loan funds the design and construction of a new structure, which can be an owner-occupied office building, a mixed-use development, or a multi-family investment property. Unlike a traditional mortgage on an existing building, construction loans are short-term and usually convert to permanent financing only once the project is complete.

6. Commercial Auto Loan

Many businesses rely on vehicles for their day-to-day operations—for instance, contractors, field sales teams, and delivery services—but it’s not always best practice to buy those vehicles outright. So as not to tie up cash in physical assets, companies often choose to take out a commercial auto loan. These are structured similarly to a consumer auto loan, but are held in the business’s name and used to finance cars, vans, or pickups. 

7. SBA Loans

The U.S. Small Business Administration (SBA) offers multiple loan programs designed to help small businesses access capital that they might not qualify for through conventional lending options. An important note: the SBA loans aren’t funded directly by the SBA. Rather, the SBA guarantees the loan, which reduces the risk for the lender, while the actual funds come from participating financial institutions.

The three most common SBA loan types are:

• SBA 7(a) Loans: This is the SBA’s flagship program, which can be used for real estate, working capital, refinancing business debt, supplies and more.
• SBA 504 Loans: These loans are designed for businesses purchasing major fixed assets—such as an office building—that support long-term business growth. 
• Microloans: As the name implies, these are smaller loans (up to $50,000) and are intended to help small businesses begin or expand. 

SBA loans can be an excellent option for businesses early on, or those that don’t have the collateral or credit history required for conventional commercial loans. “SBA loans are often the right answer for small businesses that have a solid plan but are still building their financial track record,” says Flores. “The guarantee structure opens doors that might otherwise be closed—and if you’re unsure whether you qualify for conventional financing, it’s always worth exploring the SBA options alongside it.” 

8. Bridge Loans

Much like a bridge, a bridge loan is intended to cover a gap. Bridge loans are short-term solutions designed to cover an immediate need while longer-term financing is arranged. These loans usually carry higher interest rates than permanent loans, but they serve a specific purpose: providing access to capital quickly when timing matters. The most common use case for a bridge loan is commercial real estate—for example, when a business needs to purchase a property before an existing property sells.

9. Inventory Financing 

Many businesses have to purchase inventory long before they can sell it. For instance, a clothing retailer may buy seasonal merchandise months before it’s put on racks. Alternatively, a manufacturer may have to stock raw materials long before production even begins. Inventory financing helps companies cover upfront costs by using the inventory itself as collateral.

However, because inventory can often be harder to value and liquidate than real property, these loans are typically reviewed on a case-by-case basis, so a conversation with your lender is especially important.

Choosing the Right Commercial Loan for Your Business

While this overview provides a snapshot of the most common types of commercial loans, your industry, cash flow, credit profile, and growth goals will shape which option is the best fit for your business.

“There’s no universal right answer when it comes to commercial financing,” says Flores. “The best loan is the one that aligns with how your business actually operates and where it’s headed. The most important step isn’t researching all the different loan types. It’s having a candid conversation with someone who understands your business and can help match the right product to the need.” 

Before you decide to take out a commercial loan, take time to understand the loan amounts available, the interest rates involved, and any restrictions on how funds can be used. Working with a community-oriented lender who takes the time to understand your business can make all the difference—not just for today, but for your long-term growth.

This article was first published on June 16, 2021.