One of the most common ways to finance both large companies and small businesses is through commercial loans. Such credits are nothing new, actually evidence of the use of commercial loans were found in old Mesopotamia dating at least 5,000 years.
In ancient times, merchants were granted loans long before the invention of money, writing on clay tablets the amount of the debtor and breaking the tablet when paid off. Although much has changed since, the essence remains the same as confidence and reputation still play a role in the decision of whether of you are subject to credit or not.
Since the bank credit intended to be used in current expenditures is normally unavailable to average businesses, among other things, such as the large number of papal and proof required, this financing option becomes especially attractive to those who, either temporarily or permanently, have trouble finding funding for day-to-day operations.
A commercial loan can be given explicitly, through a contract or a bill of exchange or unofficially as a “delay” in payment for services rendered or products purchased. The latter mode is the delivery of goods or services to a company whose payment is made with posterity within a previously agreed time. This type of credit facilitates the production and circulation of goods, sales and capital development and can help increase profits. Notably this type of credit is usually short term.
