What are my finance options to support my business?

What are my commercial finance options?

Business finance presents itself in different forms, such as invoice financing, asset-based lending, classic business loans, and funding for commercial properties. Selecting the correct choice for your company, considering its short-term funding requirements and your long-term goals, is vital to guarantee suitability now and affordability in the future.


We compare the corporate finance market for you

When employed appropriately, obtaining fresh finance for your company can serve as an excellent means of investing in new equipment, enhancing working capital, and supporting cash flow, ultimately fostering growth. Securing funding for your company doesn’t have a universal solution. Commercial finance offers diverse options, including asset finance, invoice funding, and traditional loans from high street lenders.

The suitable funding for your company hinges on various factors, such as the desired loan amount, the purpose of the funds, and your capacity to repay over a specific period. Our specialists in commercial funding will thoroughly evaluate your requirements, then explore the market to secure the most fitting avenue for new finance at the most competitive rate available.

I. Asset Finance – Asset finance entails acquiring new loans secured against a specified company asset, assets, or asset class. This form of finance allows you to obtain funds for purchasing a new asset, such as machinery, equipment, or vehicles, or securing a loan against an existing company asset. Utilising asset finance can effectively facilitate the acquisition of new equipment, enhancing operational capacity and potentially generating additional funds. Repayment of asset finance typically occurs through monthly instalments over a predetermined period. Following this period, options may include upgrading to newer machinery or making a lump-sum payment to retain full ownership of the asset.

II. Invoice Finance – Invoice finance manifests in two primary forms: invoice discounting and invoice factoring, both operating on the shared principle of unlocking funds tied to unpaid invoices. Upon establishing an invoice finance agreement, each time you send an invoice to a client, you can promptly access a fixed percentage of the total, usually ranging from 80-90%. After the invoice is settled, the invoice financing company deducts their fees before transferring the remaining amount to your company. Invoice finance serves as a valuable means to introduce stability and certainty to an unpredictable cash flow scenario.

III. Business Loans – A commercial loan operates similarly to a personal loan, where you receive a lump sum of cash from the lender to spend as you see fit (within reasonable bounds). The repayment involves a series of monthly instalments with an interest rate applied to the balance. Depending on the qualifying interest rate, a traditional loan can provide an economical means of injecting capital into a business. This, in turn, enables essential purchases without adversely affecting daily cash flow or depleting the company’s cash reserves.

For information on how our commercial finance experts can assist your business in obtaining the necessary funds, please get in touch with us.


How do I choose the best finance option for my company?

With various financing options available for your limited company, it’s crucial to select the one that suits your company’s needs. Consider the amount of money required, the purpose of the funds, the duration of funding needed, and the company’s capacity to repay the borrowed amount. Some businesses seek capital for a specific project or purchase, while others require a long-term and flexible funding source that can align with business growth. Opting for the wrong finance option can lead to significant long-term costs in terms of interest paid. Hence, seeking expert advice before committing to a loan or other finance agreement is highly recommended.


What is the difference between invoice factoring and invoice discounting?

Invoice factoring and invoice discounting are two types of invoice finance, both allowing a company to access the cash tied up in unpaid invoices. The difference lies in how this is achieved. Invoice factoring involves the factoring company lending against the value of the invoices and taking charge of collecting payments from your customers. On the other hand, with invoice discounting, the responsibility for receiving payments from your customers remains with you and your company. While both options suit certain companies, some invoice finance providers may prefer a factoring arrangement, considering it a lower-risk option as they have control over recovering the money owed by your customers.


Can I refinance existing borrowing?

Expensive debts can significantly impact a company’s cash flow; however, there is a potential solution to reduce this monthly burden by refinancing some of your existing borrowings. This could involve shifting to a lower interest rate, which can be particularly beneficial for companies with an improved credit and trading history compared to when the borrowing was initially secured. Another option is consolidating multiple debts into a single payment with one lender. Depending on your company’s current financial standing and anticipated future performance, extending the repayment period might be considered. Although this means paying more over the loan’s lifespan, it provides immediate relief by reducing the monthly payment amount.

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Can I get funding for my start-up business?

While obtaining funding for businesses without a proven trading history may pose challenges, it is available. The right finance can accelerate a company’s growth, enabling the pursuit of opportunities, and acquiring essential equipment or machinery for enhanced efficiency and productivity. However, it is crucial that the secured funding is affordable and suitable for both the present and future needs of your company. Lenders may be cautious about extending borrowing to a business with little or no trading history, potentially offering a lower amount, a slightly higher interest rate, or requesting a personal guarantee for additional security. Before agreeing to these terms, carefully consider and seek the guidance of a finance specialist before finalising any agreements.

Senior Partner at Vanguard Insolvency Practitioners | Website | + posts

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.