Commercial Finance
You're a business, and you want to be successful. In addition to talent, tenacity and creativity, you need access to funds to help you reach your ambitious goals. This is where commercial finance can come in.
What Is Commercial Finance?
Let's start with a simple definition. Commercial finance is an umbrella term that covers a range of short-term and long-term financing options to help businesses meet their needs, such as buying assets and property, funding growth opportunities and providing working capital.
Accessing Commercial Finance
Commercial finance is also known as business funding and is for anyone who owns a business, from sole traders to large corporations.
Commercial Finance Options
There is a considerable number of finance options on the market tailored to meet the needs of a
wide range of businesses and projects. Among them are:
Commercial mortgages - a long-term loan typically made to a company to purchase a property for its own occupation. Commercial buy to let mortgages are also available where the business borrower intends to rent out a business premise and earn from the rental income.
Bridging loan - a loan that usually runs from between one month and two years and is designed to bridge the gap between the need for finance and the principle repayment source becoming available. Bridging loans are used for any number of purposes, but generally, they’re for the purchase a property.
Development finance - for any type of construction project, such as building a new commercial
property.
Commercial overdraft - to help a company manage fluctuating cash flows and to assist with a variety of other business situations.
Inventory finance - customised financing solutions to optimise inventory and cash flow.
Asset finance - to help with the purchase of business assets such as vehicles and machinery. These assets are the security for the lender. Businesses can also refinance fixed assets to release cash.
Cash flow finance - this type of commercial finance provides funds for national and international trade or when a business is looking to expand. There are several products available, including:
- Invoice discounting (a cash injection against the value of outstanding invoices).
- Factoring (extending credit based on your needs secured against the book debts of your company).
- Trade finance (a variety of finance solutions to fund trading activities).
Commercial finance also encompasses a variety of traditional and alternative finance solutions such as crowd funding, peer to peer lending, bank loans and merchant cash advance.
Debt Vs. Equity Funding
There are two basic types of commercial finance solutions for UK businesses: debt and equity funding.
Debt funding - typically, this is a loan which is paid back with interest.
Equity funding - this is when an individual or individuals invest in your company in return for a share in its ownership.
The best option for your business will, of course, depend on your needs. In general, debt financing is seen as the best option because you are not giving away any controlling stake in your company.
You're a business, and you want to be successful. In addition to talent, tenacity and creativity, you need access to funds to help you reach your ambitious goals. This is where commercial finance can come in.
What Is Commercial Finance?
Let's start with a simple definition. Commercial finance is an umbrella term that covers a range of short-term and long-term financing options to help businesses meet their needs, such as buying assets and property, funding growth opportunities and providing working capital.
Accessing Commercial Finance
Commercial finance is also known as business funding and is for anyone who owns a business, from sole traders to large corporations.
Commercial Finance Options
There is a considerable number of finance options on the market tailored to meet the needs of a
wide range of businesses and projects. Among them are:
Commercial mortgages - a long-term loan typically made to a company to purchase a property for its own occupation. Commercial buy to let mortgages are also available where the business borrower intends to rent out a business premise and earn from the rental income.
Bridging loan - a loan that usually runs from between one month and two years and is designed to bridge the gap between the need for finance and the principle repayment source becoming available. Bridging loans are used for any number of purposes, but generally, they’re for the purchase a property.
Development finance - for any type of construction project, such as building a new commercial
property.
Commercial overdraft - to help a company manage fluctuating cash flows and to assist with a variety of other business situations.
Inventory finance - customised financing solutions to optimise inventory and cash flow.
Asset finance - to help with the purchase of business assets such as vehicles and machinery. These assets are the security for the lender. Businesses can also refinance fixed assets to release cash.
Cash flow finance - this type of commercial finance provides funds for national and international trade or when a business is looking to expand. There are several products available, including:
- Invoice discounting (a cash injection against the value of outstanding invoices).
- Factoring (extending credit based on your needs secured against the book debts of your company).
- Trade finance (a variety of finance solutions to fund trading activities).
Commercial finance also encompasses a variety of traditional and alternative finance solutions such as crowd funding, peer to peer lending, bank loans and merchant cash advance.
Debt Vs. Equity Funding
There are two basic types of commercial finance solutions for UK businesses: debt and equity funding.
Debt funding - typically, this is a loan which is paid back with interest.
Equity funding - this is when an individual or individuals invest in your company in return for a share in its ownership.
The best option for your business will, of course, depend on your needs. In general, debt financing is seen as the best option because you are not giving away any controlling stake in your company.
Read less
