For many people the chance to open their own business can be a lifelong dream as they have put years of preparation and hours of thought into what will make their business unique. A part of the process of starting your own business is to apply for different local commercial loans. These are loans that are used to provide some or all of the upfront cost for starting a small business and the market for local commercial loans can be huge. That being said, it is important to understand what you will be facing when you are applying for local commercial loans, to ensure that you can be prepared for anything that you may encounter, helping you to increase your chances of being approved for the loan. Watch the interest rate: In general local commercial loans are based on calculated risk meaning that most lenders consider local commercial loans to be more risky than home loans and will more than likely charge a higher interest rate. The way the lenders see things is from the standpoint of risk meaning that there is less risk involved with a home mortgage as opposed to local commercial loans because most home mortgages are backed by a government agency in many situations. With local commercial loans they are not backed by the federal government in any way and since the lender considers the risk to be higher the interest rate that you will have to pay will usually be more. One way that you can be able to bring the interest rate down on local commercial loans is to offer some sort of collateral for the loan. In many cases the lender is willing to offer you a lower interest rate since you put up some kind of collateral for the loan, reducing the lenders amount of risk.