Commercial finance can be defined as a business loan by a financial institution such as a bank. It is considered to be a secure loan. It is important to note that many companies require loans to run their businesses. It is normal for businesses to seek commercial finance so as to avoid getting into financial difficulties, or to help grow their operations.
When you are setting up your business or trying to expand, the cost might be too much for you to handle with just your cash reserves alone. This is often the point at which you need to invest heavily so as to acquire equipment and stock, take on new staff members or purchase commercial property that will accommodate the growing operations of your business. In this case, you will need to find external funding. Seeking commercial finance from a bank or private lending institution can be a wise move in these circumstances.
Some of the advantages of accessing commercial finance this year are:
It allows your business to grow and not contract.
If you are a business owner, accessing commercial finance can help to ensure that your business will flourish and not flounder. Instead of using up your own savings or taking away funds from other equally critical areas in your business, financial assistance gives you more options and allows your business to grow in the ways it requires.
Accessing commercial finance enables you to continue pushing your business forward, instead of stagnating.
Quick cash solutions at the times you need it.
Commercial finance will help improve your cash flow. You have a steady supply of cash at the times you most need it. This can be invaluable if waiting on payments from customers is giving you cash flow headaches.
With a commercial loan, you are able to spend your money where you see fit because you are given the autonomy and the flexibility to spend the money on whatever you wish, without huge long lists of limitations.
You can use your assets as collateral.
By using your existing assets as collateral, you can access loans quickly, perfect for those times when you need cash fast. Perhaps you’re waiting on payments from a couple of poor payers and it’s holding up all your operations. With flexible funding solutions that arrive in your bank account as soon as you need them, your business can keep operating without any potentially disastrous disruptions to your business. with favourable terms.
It helps you keep control of your business.
Taking out a commercial loan helps you maintain total control of your business as there is no need to give up any of the equity in your business when choosing one of the many financial products on offer.
Sometimes, when accessing other forms of funding, in order to raise funds you are required to sell interest in the business.
With a commercial loan, the success you achieve is yours to keep.
It can reduce taxes on depreciated property.
Accessing commercial finance is also important because it reduces taxes and it improves cash flow on depreciated property. It makes it possible for you to write off the interest that was paid on your property and allows you to claim a depreciation deduction.
This in turn will allow you, the business owner, to deduct the total amount that your property depreciated by in the previous year. Your depreciation deduction could reach to tens of thousands of pounds depending on your property, which is great news for your balance sheet.
It provides a flexible finance source.
Whatever industry you’re in, whatever the size of your operations, whatever purpose you need a loan for, there will be a commercial finance product designed just for you.
Commercial finance providers are experts at tailoring products so that repayments can be adapted to suit your specific circumstances. Repayment of loans can at times prove to be very tough for a business owner and give you tricky crunch points. Some institutions require you to pay the total cost back very quickly, including interest. This can cause some obvious problems, especially when the interest rates are high.
But there are plenty of commercial loan providers offering more favourable repayment schedules and low interest rates so take advantage of the various options available. This is more of a relief if your business has cash flow issues which may prevent the prompt repayment of the loan. By discussing your business’s needs with your loan provider, it is possible for you to design a repayment schedule that will perfectly suit your cash flow needs.
Accessing commercial finance has many benefits, but perhaps most importantly, it provides your business with the capital it needs to continue operating fluidly when you’re going through a tricky period, and allows your business grow in the right direction.