There are several options for financing your business:
- loans from a bank or other type of financial institution
- using your personal savings
- borrowing money from friends and relatives
- venture capital
What types of facilities are available?
It is important to select the right finance to match. Generally speaking, short-term finance should be used for short-term assets, such as stock or debtors, and long-term finance should be used for long-term assets, such as property. Following is an overview of the most common types of finance facilities.
Overdraft
A credit limit on a cheque account that provides the business with short-term funds for working capital. This is considered a short-term facility as the bank can withdraw the facility by giving the business notice (generally a month).
Commercial bills
A form of commercial loan that can be structured on an interest only basis, or reducing basis, for short-term and long term debt.
Development Loan
Loans tailored for developments that can be drawn down in progress payments as required up to an agreed total.
Chattel Mortgage
A loan that generally uses collateral security e.g. equipment, goodwill or real estate.
Leasing and Hire Purchase
A leasing finance contract is based on monthly rental payment in advance or arrears over fixed term, sometimes with a “residual” payment due at the end. Normally used for plant and equipment. Hire purchase is a loan facility for plant and equipment that has a fixed term with fixed monthly principal and interest repayments and also may have a final lump sum instalment or “balloon” payment.
Having access to credit when you need it most!
Whether you are looking for a new credit facility or a better deal, contact us for a professional opinion.
Planning ahead makes the diference!
Diversifying your lenders and having the correct structure can save your business!
You can easily avoid disasters by planning ahead. The best time to review your credit terms and limits is when you are doing well, this is because lenders see you as a lower risk. Unfortunately, many people think about seeking more credit or reviewing their credit terms at a time when they need money most. Our team can provide comprehensive review to help your growth strategy.