Finance Home / Business FinanceThere are a variety of different ways to obtain commercial finance depending on your needs and plans. Commercial finance can be used for a variety of purposes, including loans for business development, and loans to help improve your business cash-flow. Adept Finance UK can offer our clients a complete range of services:
Business Loans
Loans using a variety of types of security to finance your business.
Personal Loan for Business Equity
Secured by the equity in your home.
Factoring and Invoice Discounting
Factoring: Funds advanced against business invoices. Invoice Discounting: identical to factoring except that you have responsibility for the sales ledger management (collection).
Asset Financing and Equipment Leasing
Both tax and cash efficient way of financing equipment and vehicles for your business.Immediate use of the asset; pay for the period you need it; tax efficient structure.
Car Leasing and Contract Hire
Both tax and cash efficient way of financing equipment and vehicles for your business. Immediate use of the asset without paying for it all at once; pay for the period you need it; uses the most tax efficient structure for your company.Factoring and Invoice Discounting
Think of factoring as a form of short-term loan secured with your accounts receivables.
Factoring has become extremely popular in recent years and is in some cases tended to replace the traditional bank overdraft type of finance. As with all methods of financing it needs to be carefully considered when looking at the possibilities for your business:
Extremely useful in improving cash flow
In factoring, the bank takes over the collection of the business' unpaid invoices. For each invoice factored the bank pays to the business a fixed percentage of the invoice value. This has the advantage of improving cash flow by realising funds immediately.
The bank may also be prepared to maintain a full sales ledger and credit control service for the business that is factoring.
The banks are usually only interested in "clean" debt. If an invoice is subsequently disputed it is handed back to the business to settle, and the bank will reclaim the monies paid to the business in respect of the invoice.
Invoice discounting is similar to factoring, but does not include the sales ledger or credit control function that remains with the business.
The customers receiving the invoices are not therefore usually aware that the invoice discounting arrangements exists.
Leasing and Asset Finance
Hire purchase or leasing arrangements are extremely flexible methods of enabling businesses to acquire a variety of assets such as plant, machinery and vehicles. The arrangements can greatly assist the cash flow, as they do not require the large down payment normally expected with the acquisition of such assets.
Furthermore such schemes can often have considerable tax advantages for the business. The tax implications of this form of finance should be carefully and thoroughly considered with your accountant at an early stage.
Adept Finance have partnered with a number of High Street finance companies to bring you competitive quotes. Click here to request a quote from Adept Finance.
Bank Loans
Bank loans are available to cover medium to long term finance requirements involving capital expenditure.
Sometimes a substantial amount of the borrowing is held back from the regular repayments (to keep them down) but is repaid in one lump sum at the end of the term. This is known as a "balloon payment".
Interest rates on term loans may be fixed or variable.
The Bank is not able to call in a term loan before the end of the term unless the borrower has defaulted in making a repayment or is otherwise in breach of the lending arrangements.
Borrowers must also bear in mind that the Banks make additional charges for arranging the loan and also for effecting any security.
The Banks will often take steps to protect the amount they have lent by taking security from the borrower. This will usually involve a fixed charge over land and fixed assets owned by the borrower. Assets subject to a fixed charge cannot be sold without the bank's consent. Indeed if the borrower defaults on the loan repayments, the bank has power to sell the charged assets and recover the outstanding amounts under the loan. A fixed charge is therefore like a mortgage.
If the borrower is a limited company the banks may go further by requiring a floating charge in addition to a fixed charge and asking the directors to give personal guarantees.
A floating charge literally "floats" over a specified type of asset of the company (usually stock) and does not prevent the borrower from selling or otherwise dealing with those assets. The consent of the bank is not required.
As noted above, the directors may also be required to give personal guarantees to the bank in connection with the loan. This makes them personally liable up to the amount of the guarantee. It is essential therefore that directors take legal advice in connection with the guarantee and ensure that the guarantee is limited to a sensible amount (where possible).
Bank mortgages are available and can be arranged for property purchases or improvements.
A commercial loan is a finance option only open to companies, or businesses that need a capital injection; business development may demand that you purchase more equipment, premises, or stock.
Whilst a commercial loan is your most flexible option, it's not always the cheapest and leasing or factoring may be more viable; however a commercial loan company will offer you the flexibility to structure the repayments to suit your business needs.
As part of your application you will be asked to provide a track record of your trading, preferably three years worth of accounts. Your loan will be structured as either a variable rate that can fluctuate with any changes to the base rate, or a fixed rate, which will remain steady for the term of the loan and provide stability.
Some of the benefits to obtaining a commercial loan are that you retain ownership of the business - and any equipment you purchase with the loan, that these loans are typically very flexible and the proceeds can be used for almost any purpose, and interest payments are tax deductible.
One of the negative aspects is that your lender may ask for collateral to secure the commercial loan against, such as your personal property.
A commercial loan is a finance option only open to companies, or businesses that need a capital injection; business development may demand that you purchase more equipment, premises, or stock.
Whilst a commercial loan is your most flexible option, it's not always the cheapest and leasing or factoring may be more viable; however a commercial loan company will offer you the flexibility to structure the repayments to suit your business needs.
As part of your application you will be asked to provide a track record of your trading, preferably three years worth of accounts. Your loan will be structured as either a variable rate that can fluctuate with any changes to the base rate, or a fixed rate, which will remain steady for the term of the loan and provide stability.
Some of the benefits to obtaining a commercial loan are that you retain ownership of the business - and any equipment you purchase with the loan, that these loans are typically very flexible and the proceeds can be used for almost any purpose, and interest payments are tax deductible.
One of the negative aspects is that your lender may ask for collateral to secure the commercial loan against, such as your personal property.
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