As a business owner, there was a time when you could secure a loan with someone you knew and talk through finance options at a bank. Things are different today, and securing a loan is no longer that simple.
If your finance has been approved and the lending criteria are strict, the terms of your loan may not be what you hoped for.
Entrepreneurs need many things to be successful, such as dedication and tenacity. Finance can move a company to the next level. Commercial finance matters for businesses of all sizes.
What is commercial finance?
Commercial finance is a business loan, treated as a secured loan funded by a financial institution. You use it to build, develop, or purchase any property meant for specific professional enterprises or trading purposes.
You can also use it to secure finance against a wide range of business properties, such as retail units like shopping centres, pubs, restaurants, office spaces, leisure facilities, factories, and more.
Types of commercial finance
There are several commercial finance options available. With that range of options, your business and property can be financed when you need it.
Loans
You borrow a fixed amount of money and pay it back over time at an approved interest rate. Loans are normally used to expand or invest in the business. They can be short term or long term, and either secured or unsecured against equipment, assets, or real estate. They also come with variable or fixed interest rates.
Property finance
Property finance is money borrowed specifically for property-related purposes. If you want to purchase property or land for your business, a property finance loan is a good option. A property finance loan can help your business grow and expand. You can pay it back in various ways, such as interest-only repayments, principal interest repayments, or fixed and variable interest rates.
Line of credit
A line of credit (LOC) gives you access to an agreed amount of funds arranged with your lender, drawn if and when you need it. The money is there when you require it, but you only pay interest on what you use.
You can also secure this borrowing against inventory, assets, and invoices. A line of credit suits businesses that need flexibility and quick access.
The benefits of commercial finance
A wide variety of finance solutions are available
We touched briefly on commercial finance options above, so here are a few others open to you.
Bridging loans
This type of finance covers the gap between deciding to get a mortgage and buying a property, so things keep moving.
Sale and leaseback
Sale and leaseback means selling assets to a lender outright and then paying a monthly fee for continued access.
Crowdfunding
There are several types of crowdfunding, from donations through to equity-based crowdfunding. Some types will suit your project better than others.
Asset refinance
Asset refinance is a secured loan that lets you borrow against an asset you own, turning the capital it holds into ready cash.
Invoice financing
This revolving credit facility lets you borrow against part or all of your sales receivables, so you can reach the capital tied up in late or unpaid invoices.
More forgiving to fledgling businesses
For a smaller business that lacks the track record or assets a bank needs to make lending viable, commercial finance is a more feasible alternative. Small business owners looking for commercial finance will find plenty of options, each suited to a slightly different business outcome. Working with a reputable commercial finance company means their advice can help your business.
Interest rates will be lower
Every lender is different, and because the market is so competitive, interest rates are much lower for commercial borrowing. The rate can vary between finance types. With various borrowing solutions available, you get more time and more choices while you shop the market.
More forgiving to businesses with an adverse credit history
Not every company has a good credit history, but your future success shouldn’t be held back by it. Some banks may refuse to lend because of your credit history, whereas commercial lenders will often overlook the issue and focus on your future.
Short application process
Commercial finance usually takes far less time to apply for. You fill in a form online and then discuss the loan agreement and terms with your chosen finance company.
Quicker access to funds
In general, when you borrow from a commercial finance broker, you get access to the funds you need in a shorter time frame. Many loan applications are approved within 24 hours.
The benefits of using a commercial finance broker
A fully independent broker should have the experience, contacts, and skills to offer you the best package for your needs and give your business financial flexibility. Finance brokers have grown in number in recent years and offer complete solutions for what you need.
They will save you money and time
Many business owners now outsource their financing to a specialist broker, which frees up more time to manage the day-to-day running of a business. A broker will work out the best loan lender for your proposal, which means they find that lender for you much faster.
A broker will offer expert financial advice
The finance you think you need may not be the right option, and this is where a professional finance broker helps. Instead of a loan, a broker might recommend a leasing agreement as a cheaper and more suitable solution for your requirements. A broker can give you expert guidance on anything to do with finance. They have the experience and knowledge to talk through all the options open to you, so you get the best outcome possible.
They will give you continued support
Once your funding is secured, a broker keeps supporting you by helping you work through the early small issues and making sure your finance works for you over time. A good broker is always on your side and works closely with you.
Commercial finance is worth considering if you want to increase cash flow or expand and grow your business. The right commercial loan for you depends on your business goals and specific needs.
Commercial brokers have the expertise and industry knowledge to help any business understand its finance options. Using a commercial broker is the best way to be sure you are getting the most value for your money. Brokers can see the bigger picture and will find you a suitable lender for your specific needs. A broker stays with you from start to finish.
