Commercial finance is an umbrella term that applies to any loan issued and used specifically for business purposes. Before applying for commercial finance of any kind, we strongly advise using an online commercial finance calculator for an overview of the options available and to assess affordability.
What Are the Main Types of Commercial Finance?
Any type of loan provided for business purposes qualifies as commercial finance. The three most common types of commercial finance currently provided by UK lenders are as follows:
- Loans – Where a specific sum of money is borrowed and repaid over a fixed period of time at an agreed rate of interest.
- Lines of Credit – An ongoing form of commercial finance where the business can borrow money on a regular or period basis, often with more flexible repayment options.
- Property Finance – A specialist type of commercial finance issued exclusively to fund your property development, renovation and improvement projects.
Bridging loans are another popular form of commercial finance, which provide access to significant sums of money in a matter of days for prompt repayment within 6 to 18 months.
What Are the Benefits of Commercial Finance?
Specialist commercial finance products can be advantageous for business borrowers in many ways. Particularly when compared to conventional consumer financial products, commercial finance is considered beneficial for the following reasons:
- Small Business Support. Many specialist lenders are understanding and sympathetic to the needs of smaller and newer businesses, providing flexible and accessible funding solutions than traditional High Street lenders.
- Poor Credit Facilities. An imperfect credit score likewise need not necessarily be a barrier to competitive commercial finance. If the applicant can clearly afford the loan or credit facility, their credit history may not be held against them.
- Lower Interest Rates. Borrowing costs vary significantly from one lender to the next, but rates on commercial finance products are typically much lower than those of comparable consumer products.
- Fast Access to Funds. Some specialist types of commercial finance (like bridging loans) can be accessed within just a couple of days of the application being accepted, far faster than a traditional loan or credit facility.
- Easier Applications. Particularly in the case of secured commercial finance, the application process can be surprisingly streamlined and straightforward, resulting in faster access to the funds required.
Along with the above, there is often a greater degree of flexibility in the terms and conditions attached to specialist commercial finance products, for the benefit of the borrower.
Why Should I Use a Commercial Finance Broker?
By working with an independent commercial finance broker, you have the opportunity to take advantage of all of the benefits of a quality commercial finance product. In terms of speed, simplicity and access to the most competitive deals on the market, expert broker support can be worth its weight in gold.
Importantly, there are countless specialist lenders in the UK that offer their services exclusively via approved brokers. Hence, the only way to access their products is to commission a broker to conduct a whole-market search on your behalf.
For more information on any aspect of commercial finance or to discuss your requirements in more detail, contact a member of the team at UK Property Finance today.
