5 Things You need to understand About Commercial Finance

A lot of people, especially “very first time buyers”, tend to believe only in terms of approaching their particular banks as it pertains to arranging finance. You will find, however, other sources. You will find Commercial mortgage Lenders, Asset Finance Lenders, Lenders that specialise in factoring/invoice discounting, lenders that could provide finance centered on existing pensions, refinancing of existing commercial finance and much, much more. Also look at a personal loan or mortgage.

What Security Do You Have For The Loan

For large commercial loans, commercial finance lenders usually require land and buildings as security for the loan. In the present economic climate it is Mezzanine financing Dorset extremely tough to have finance for a lot more than 70% of the worth of the loan – although in an exceedingly limited number of cases – not impossible! If you should be looking for a lot more than 70% – be prepared to try to find other alternatives. For smaller loans, vehicles, plant, equipment etc. may be acceptable. Some lenders even permit you to refinance equipment that you already own (say a car) thereby enabling you to release capital into your business.

Which Commercial Finance Sector Does Your Application Fall Into

Its not all lender is enthusiastic about lending across the whole range of business sectors. They are competitive only in the sectors where they are keen to lend. Like, land and property – mortgages, vehicles, plant and machinery – asset finance. You need to therefore decide which business sector your requirement falls in.

What Is Your Credit History

The higher your credit history the low the interest rate that you will have to pay. If your credit history is not perfect (and in this current credit crunch hardly any will be regarded as perfect credit history) you will have to be applying to a specialist commercial finance lender.

Government Grants

The UK government provide various grants for businesses. Some of the very common are Underneath the Small Firms Loan Guarantee Schemes [EFG] (which are easy to set up),. 75% of risk is taken by Government and provides another way of introducing vital growth capital to small businesses. Unavailable if you have existing potential security such as high equity in property in which a secured loan could possibly be set up.

R&D Tax Credits can be available to companies who carry out any research and development, including engineering, software, computer hardware or any product development, can be entitled to claiming R & D tax credits. This could mean the equivalent of an injection of capital for as much as £70,000.

DTI Marketing [and other] Government grants can be available to companies generally in most sectors for the development of business by utilizing DTI Marketing (and other) Grants.

Approach A Lender Direct Or Use A Broker.

When obtaining a commercial loan, the Lender usually charges a fee for providing the loan. If you decide you make use of a Broker then a Broker will even usually charge a fee for arranging the loan. Whilst the natural reaction is always to approach Lenders direct, a Broker will deal with lots of lenders covering a variety of sectors and so can be better in the long run. A good Broker will have the ability to offer help in sourcing of finance for all of the above loan and more.

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