The financial aspect is a critical component of any business. Businesses that fail to manage this properly fail. Thankfully, there is a broad range of commercial finance lenders that are willing to give businesses in various industries a helping hand. They come in various forms, both short and long-term, to help address business needs.
If you are a business owner, fret not because there are several options that you can avail of to help your business thrive. You can use commercial loans to raise capital to start a new business, pay off your existing debt, keep your operations afloat when account receivables have yet to be paid, and more. You just need to gather enough documentation to qualify for the commercial financial aid that you require. In order to fully understand how this works, read on below.
A Sensible Option Available
Regardless of your reason for needing commercial financing, take comfort in knowing that help is within the easy reach of business owners. It is commonly the most sensible solution when getting a bank loan or a loan from another traditional lender is not an option.
Thanks to the presence of commercial finance lenders, getting the funding necessary for your business growth or upkeep becomes easier. When money is tight, there is still a chance for you to infuse funds into your business with the help of these institutions.
Different Commercial Finance Options
If you are a company owner and you believe that commercial finance can provide the solution that you need, it is important to find the right type of product. Currently, there are different commercial finance options available. There is no single way to define each of them because of their various scopes, functions, and purposes. You can expect to find variations among the same options.
Here are the basic commercial finance options around:
- Asset finance – This gives you the opportunity to spread the costs that have something to do with acquiring new assets. Often, the dispersal of the costs is gradual and extends over a period of time. The assets themselves serve as a form of security for the commercial finance lender.
- Refinancing – This is an option to consider if what’s keeping your business from operating or moving forward is insufficient cash flow. It releases cash for your use. The external lender of your choice will use your assets and their value as security.
- Hire purchase – This commercial finance option requires you, the business owner, to pay an initial deposit. Then you will need to pay the rest of the debt on an installment basis. What’s so nice about this kind of agreement is that you still retain total control over your assets while you are in the process of completing your payments.
- Leasing – It’s just like hire purchase because it also involves making an initial deposit, along with paying the lender in installments. However, there are different options available near the end of the arrangement. Some of these variations are upgrading the lease, having a new lease, or making a one-time payment to own the assets for good.
How to Avail of Commercial Financial Products
Processing your application for this kind of loan is a bit complex because of the required paperwork that you need to submit. Lenders usually begin by pre-qualifying potential borrowers through an assessment of the financial history and income. They take a look at your existing debt and your purpose for getting the loan.
If you intend to use the loan to fund a new business venture, you will be asked to submit a detailed business plan. Should you need it to pay off some account receivables, you will be required to submit your business’ financial reports. Other standard requirements are your income tax return, financial statements, and some type of collateral. The latter can be in the form of bonds, stocks, and real estate. From there, the lenders will determine your loan terms.
Choosing the right commercial finance is important because the terms can make or break your business. If you are saddled with a loan that has a large interest or with a very short payment scheme, you may struggle paying it off every month. It is critical to choose a reputable institution when you are in dire need of financial backing. Do your due diligence by researching your option, so you can find one that suits your needs, as well as your business and the industry in which it belongs.