In an ideal world a business would generate the capital it required to trade from the cash generated through its trading activity. In reality this is rarely the case and therefore the majority of businesses look to commercial finance in one form or another to help fund trading.
Commercial finance may also be appropriate if you are setting up a new business or planning to increase productivity via the purchase of new equipment etc. Whatever the reason you should carefully consider your options and what form of commercial finance is best suited. In this regard speaking to your professional advisor is a good starting point to understand the process and suitability.
Types of commercial finance
The options available can be briefly summarised as follows:
Business finance – a generic term covering many aspects of finance from commercial loans and overdrafts to refinancing
Short Term Loans - often a solution for businesses with short term cash flow problems where it is usually repaid within a year
Asset Finance – provides the option to obtain equipment by lease or HP, sell assets and lease back to raise capital or refinance current agreements
Property Finance – usually secured against your property and loans are typically repaid over a longer term
Invoice Discounting/Factoring – the option to raise capital against the value of your unpaid invoices