Commercial Finance
Commercial finance is effectively another term for ‘business finance’. This is where a borrower acquires money from a lender in order to fund their company growth plans.
There are three areas in which a business can use commercial finance to invest in itself. These three areas include assets (also known as ‘equipment’), cash flow, and property.
Asset finance allows a company to get hold of important equipment, without draining their cash reserves. Instead, they will pay for it in a series of manageable installments.
In comparison, cash flow finance allows a business to trade smoothly and consistently. Your cash flow would no longer be hindered by things such as late customer payments.
And finally, property finance allows a company to purchase, develop, and refurbish a commercial premises. This can be achieved through finance products like a mortgage.
Commercial Finance
What is Commercial Finance?
Commercial finance is effectively another term for ‘business finance’. This is where a borrower acquires money from a lender in order to fund their company growth plans.
There are three areas in which a business can use commercial finance to invest in itself. These three areas include assets (also known as ‘equipment’), cash flow, and property.
Asset finance allows a company to get hold of important equipment, without draining their cash reserves. Instead, they will pay for it in a series of manageable installments.
In comparison, cash flow finance allows a business to trade smoothly and consistently. Your cash flow would no longer be hindered by things such as late customer payments.
And finally, property finance allows a company to purchase, develop, and refurbish a commercial premises. This can be achieved through finance products like a mortgage.
Why should you use commercial finance?
There are four important parts to every business. These include staff, assets, property, and cash flow. In order to grow your business, you will have to invest in these four areas. And to do that, you need commercial finance.
Commercial finance allows you to make business investments without eating into your cash reserves. You could invest into multiple areas, repay the finance with your cash flow, and keep your savings in the bank.
When you invest in your business through finance, you will pay for this investment over a series of manageable installments. The income which your investment generates might even cover the repayment amount.
Important business equipment can be acquired through a type of commercial finance, which is appropriately called asset finance. You could invest in your computer hardware, software, machinery, and even office furniture.
A strong cash flow is one of the most important things for growing your business. Sometimes your cash flow can become staggered, due to things like late customer payments. Cash flow finance will solve these problems.
Finally, one of the most valuable assets that a business can have is a property. A commercial premises can have a huge impact on your company’s output. And you can spread the cost of buying this premises with property finance.
Why should you use commercial finance?
There are four important parts to every business. These include staff, assets, property, and cash flow. In order to grow your business, you will have to invest in these four areas. And to do that, you need commercial finance.
Commercial finance allows you to make business investments without eating into your cash reserves. You could invest into multiple areas, repay the finance with your cash flow, and keep your savings in the bank.
When you invest in your business through finance, you will pay for this investment over a series of manageable installments. The income which your investment generates might even cover the repayment amount.
Important business equipment can be acquired through a type of commercial finance, which is appropriately called asset finance. You could invest in your computer hardware, software, machinery, and even office furniture.
A strong cash flow is one of the most important things for growing your business. Sometimes your cash flow can become staggered, due to things like late customer payments. Cash flow finance will solve these problems.
Finally, one of the most valuable assets that a business can have is a property. A commercial premises can have a huge impact on your company’s output. And you can spread the cost of buying this premises with property finance.
What is asset finance?
Asset finance is also known as ‘equipment finance.’ And it is used to buy important business products. This is achieved through leasing and hire purchase, as well as certain types of loan (like a ‘tech loan’).
A lease is a type of asset finance where the lessee is not recognised as the legal owner. This is useful for equipment which rapidly depreciates in value. These types of products are then called ‘soft assets.’
Soft assets have a notoriously low resale value. It therefore wouldn’t make sense to have them on your company’s balance sheet. Leases prevent this because you are effectively paying to use the equipment.
A hire purchase is a type of asset finance where you (the borrower) are recognised as the legal owner. This is useful for equipment which slowly depreciates in value. These products are called ‘hard assets.’
Hard assets hold on to their value for a much longer time. It would then make sense to have these high-value products on your balance sheet. And a hire purchase achieves this by charging you a ‘title fee.’
What is asset finance?
Asset finance is also known as ‘equipment finance.’ And it is used to buy important business products. This is achieved through leasing and hire purchase, as well as certain types of loan (like a ‘tech loan’).
A lease is a type of asset finance where the lessee is not recognised as the legal owner. This is useful for equipment which rapidly depreciates in value. These types of products are then called ‘soft assets.’
Soft assets have a notoriously low resale value. It therefore wouldn’t make sense to have them on your company’s balance sheet. Leases prevent this because you are effectively paying to use the equipment.
A hire purchase is a type of asset finance where you (the borrower) are recognised as the legal owner. This is useful for equipment which slowly depreciates in value. These products are called ‘hard assets.’
Hard assets hold on to their value for a much longer time. It would then make sense to have these high-value products on your balance sheet. And a hire purchase achieves this by charging you a ‘title fee.’
What is cash flow finance?
Cash flow finance is used by business owners to (unsurprisingly) strengthen their company’s cash flow. There are also three subdivisions in this category of finance.
These three subdivisions include commercial loans, invoice finance, and overdraft alternatives, which also include facilities such as trade finance and revolving credit.
A commercial loan will provide you with an immediate sum of funding. And what makes a loan very attractive is that you can use this capital for whatever you want.
Invoice finance allows you to access a percentage of an invoice’s value ahead of the customer’s payment. This is useful if your customers are paying beyond your terms.
And finally, overdraft alternatives allow you to smooth out the peaks and troughs of trade. This is useful to businesses which operate in turbulent or seasonal industries.
What is cash flow finance?
Cash flow finance is used by business owners to (unsurprisingly) strengthen their company’s cash flow. There are also three subdivisions in this category of finance.
These three subdivisions include commercial loans, invoice finance, and overdraft alternatives, which also include facilities such as trade finance and revolving credit.
A commercial loan will provide you with an immediate sum of funding. And what makes a loan very attractive is that you can use this capital for whatever you want.
Invoice finance allows you to access a percentage of an invoice’s value ahead of the customer’s payment. This is useful if your customers are paying beyond your terms.
And finally, overdraft alternatives allow you to smooth out the peaks and troughs of trade. This is useful to businesses which operate in turbulent or seasonal industries.
What is property finance?
Property finance can be used to spread the cost of commercial buildings and premises. In light of this, the property which is being financed must then be used to generate a profit.
This profit can take the form of capital gains, rental income, or investment. The finance itself can include a commercial mortgage, development finance, or even a bridging loan.
A commercial mortgage is a loan which is then secured against the property you are financing. The idea of this is therefore very similar to a traditional consumer mortgage.
In contrast, development finance is a two-part facility which covers all of the building costs associated to the property. It covers the purchase of land, as well as construction.
And last of all, a bridging loan is a short-term finance facility which is typically used to kick-start a property project. The end goal of this is to move onto a longer-term facility.
What is property finance?
Property finance can be used to spread the cost of commercial buildings and premises. In light of this, the property which is being financed must then be used to generate a profit.
This profit can take the form of capital gains, rental income, or investment. The finance itself can include a commercial mortgage, development finance, or even a bridging loan.
A commercial mortgage is a loan which is then secured against the property you are financing. The idea of this is therefore very similar to a traditional consumer mortgage.
In contrast, development finance is a two-part facility which covers all of the building costs associated to the property. It covers the purchase of land, as well as construction.
And last of all, a bridging loan is a short-term finance facility which is typically used to kick-start a property project. The end goal of this is to move onto a longer-term facility.