Understanding Commercial Loans: Find the Right Loan for Your Business

Understanding Commercial Loans: Find the Right Loan for Your Business

Commercial loans come in many forms. For a start-up, getting the right loan is essential for making it through the first crucial stages; for an expanding business, a loan can be extremely beneficial to your brand’s growth and development.

Whilst some business owners think that business loans are a one-size-fits-all arrangement, there are actually many different business loans, with varying terms, repayment plans and interest rates. For instance, when looking to acquire another business, you will find that there are specialist loans designed specifically for this purpose. Also, if you are looking to expand your warehouse, you may need equipment financing to keep your operations running smoothly.

Finding a Business Loan

Whilst the bank is likely to be your first port of call when seeking a loan, there are various lenders you can look at and many types of loans to consider. Some options include:

  • Borrowing from friends and family – this is one of the easiest ways of getting extra funding for your business. Without the high interest rates of the banks and lenders, this lending route is the most cost effective and low risk.
  • Traditional secured loans – more and more small business find it difficult to get a traditional bank loan due to tougher underwriting conditions and demands for high value assets to act as security. It is important to be aware that securing a loan on an asset could mean the loss of the asset if repayments are not met. If you want a traditional bank loan with low interest rates, be sure in research the interest rates and prerequisites.
  • Working capital loans – for day to day cash flow needs, lines of credit can be the quickest and easiest way for fixing short-term cash flow problems.

These examples of business borrowing loans could help you make the purchases you need. If you are a growing business and are struggling to fulfil new trade, another alternative is to look at alternative financing options.

How Can Alternative Financing Help My Business?

Alternative financing is the best way of fulfilling immediate business needs without having to risk cash flow problems. If your orders are growing day by day and you are unable to fulfil these orders – either due to lack of production equipment or the lack of funds to undertake further orders – trade financing could be your solution. Financing specialists such as Touch Financial provide a number of different financing options which could be a great option as a commercial loan to help a business grow. Alternative funding options include:

  • Order financing – if you are unable to fulfil new business trade because you don’t have the funds to place forward orders with your suppliers, order finance (also known as trade finance) may help you cover these costs.
  • Asset financing – if your business is expanding and you can’t accommodate the growth because you don’t have the equipment or machinery, asset finance may be able to assist you in acquiring the assets you need without damaging your cashflow. With no upfront payments, you can create immediate expansion and make the repayments comfortably over an agreed payment period.
  • Invoice finance – if you are awaiting outstanding payments from your customers, invoice finance will allow you to receive the money upfront, allowing you to reinvest the cash back into the business, immediately.
Factoring infographic
Via http://www.touchfinancial.co.uk/factoring-infographic/

For more information on how to expand your business successfully, visit The Guardian for Sirena Bergman’s latest business advice.

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