It’s rare for a business to always have the capital or the cash flow it needs. Thankfully there’s a wide range of business finance packages available to assist.
Business Lending Facilities
Loan arrangement under which a bank extends credit up to a maximum amount (called overdraft limit) against which a current account customer can write cheques or make withdrawals. The most common form of business borrowing, an overdraft is a type of revolving loan where deposits (credits) are available for re-borrowing, and interest is charged only on the daily overdraft (debit) balance. It is, however, also a demand loan: the facility can be cancelled (and entire outstanding amount ‘called’) at any time by the lender at its discretion, without any warning notice or explanation.
A mortgage loan secured by a lien on commercial, rather than residential, property. Commercial property refers to any income-producing real estate that is used solely for business purposes, such as retail centres, office complexes, hotels and apartments. Typically, an investor (often a business entity) purchases commercial property, leases out space, and collects rent from the businesses that operate within the property. Financing, including the acquisition, development and construction of these properties, is typically accomplished through commercial real estate loans. Commercial real estate loans are typically made to business entities formed for the specific purpose of owning commercial real estate.
A loan specifically intended for business purposes. As with all loans, it involves the creation of a debt, which will be repaid with added interest. There are a number of different types of business loans, suited to the requirements of different types of business’s, such as bank loans, mezzanine financing, asset-based financing and invoice financing.
Seek help to find the right package
With so many finance providers offering different finance types, with varying structures and repayment options, it can be difficult to find the one that’s best for your business.
Finding the right loan
A business overdraft gives you access to cash to cover short term requirements, such as bridging the gap between service delivery and payment. An overdraft is usually unsecured, but is likely to offer a cheaper interest rate than a credit card.
If you need to make a larger purchase, you might consider a business equity line, which is suited to businesses that might need a cash injection on a very occasional basis. This form of business finance is likely to require security.
If you know how much you need to borrow, you might consider a business fixed rate loan, which gives you the certainty of fixed month payments. But if your cash flow is volatile you might opt for a business variable loan, as you may be able to reduce repayments if needed.
What you’ll need
To be eligible for business finance, you’ll need to demonstrate a history of financial performance, including evidence of solid cash flow and the ability to manage expenses and liabilities.
The sheer variety of loans can be overwhelming, but our brokers can help you navigate through the various options to find the one that’s right for you.