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A Guide To Using Commercial Finance

Are you a small business owner? Having trouble sourcing finance from a bank? Or maybe you do have a shot at getting a business loan, but the lending criteria and loan terms aren’t as flexible as you expected. That’s why a lot of people turn to commercial finance providers.

What Is Commercial Finance?

Commercial finance is kind of an umbrella term. It’s a broad term that refers to loans given to a business.

Take a look at these 3 types of commercial finance:

  • Loans: This is when a fixed amount is borrowed and repaid over an agreed period, and at an agreed rate of interest.
  • Lines of credit:  Is an ongoing borrowing facility that’s established allowing a business to borrow continually within agreed terms. You can secure these borrowings against invoices, inventory, or other assets.
  • Property finance: This is when borrowed money is used for specific property-related outcomes.

Now, moving on to the advantages of commercial finance.

Advantages Of Using Commercial Finance 

Vast Variety Of Financial Solutions 

Invoice financing: Allows you to borrow against part or all of your sales receivable, enabling you to access the capital locked in late or unpaid invoices.

Bridging loans: Can bridge the gap between current capital needed and future funding.

Asset refinance: This secured loan lets you borrow against an asset owned by your business to open the capital it represents and turn it into cash.

Sale-and-lease-back: In this case, you sell an asset to a lender, and pay a monthly fee for ongoing access. This is a fantastic way to access high-value assets with brief lifespans.

Crowdfunding: Numerous types of crowdfunding exist, from equity-based to donation-based. Depending on the project, other types will be more favorable than others.

Lower interest rates

Each lender will be unique, but interest rates usually tend to be lower when it comes to commercial borrowing. The interest rate varies depending on the finance type.

Quicker access to funds

Commercial finance providers have a way less time frame of releasing funds compared to traditional lenders. They also have shorter application processes.

More forgiving to struggling businesses or businesses with bad credit histories

Businesses struggling to stay afloat or businesses with bad credit histories looking for commercial finance will have a number of options, each of which will be appropriate to a different business outcome.

Commercial Finance Brokers

Commercial finance brokers are experts in finding the perfect finance solutions for people’s business needs, and have an abundance of experience in relevant industries.

Commercial Property Finance

The term commercial property finance refers to any financial product intended to enable the obtainment of new property, the redevelopment of an existing property, or the refinancing of a property.

The Right Commercial Finance For You

A key question as a small business owner is whether commercial finance is right for you. There are a vast amount of situations in which a business needs to borrow money. To answer this question, you may need to take a long hard look at your business, your business plan, and the obstacles you’re looking to overcome.

When you’ve got a crystal clear picture of your business and where you want to be, then you can decide on choosing from commercial finance providers.

Hopefully, this article has guided you through commercial finance, it’s benefits, and whether it’s right for you.

Zaraki Kenpachi