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What are some different types of corporate loans?

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Quick Answer

Some different types of loans for corporations include commercial, term, unsecured, acquisition and revolving credit, according to Investopedia. There are also more complex lending corporate financing frameworks that include self-liquidating, asset conversion, cash flow and working capital loans.

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Full Answer

Commercial loans fund very large expenses that a business would not otherwise be able to afford, reports Investopedia. These loans often offer flexible interest rates that fluctuate according to the prime rate. Term loans provide a specific amount of money, have a set repayment schedule and are used by businesses to fund month-to-month operations. Lenders grant unsecured loans based on a corporation's credit history and do not require collateral. Acquisition loans are approved in order for companies to purchase specific assets, and companies often receive favorable terms on such loans based on the value of the assets that they use the funds to acquire.

Revolving credit allows companies to purchase inventory or supplies with vendors through establishing a maximum amount that the company can use on a revolving basis, explains Investopedia. Providers charge interest only on the amount of the credit line that businesses actually use. Other types of loans are also granted on the condition that their repayment is guaranteed through the liquidation or conversion of current assets.

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