Business finance should solve a specific problem. The right facility for a vehicle purchase may be completely different from the one used to manage seasonal cash flow or buy commercial property.

Start with what the funds need to achieve, how quickly you need them and how the business will repay them.

Match the Finance to the Purpose

Common business finance options include:

• Term loans for planned investments or larger one-off expenses

• Equipment and vehicle finance for business assets

• Overdrafts or lines of credit for short-term cash flow gaps

• Invoice finance against eligible unpaid customer invoices

• Trade finance to help fund goods before customers pay

• Commercial property loans for owner-occupied or investment premises

Using short-term finance for a long-term asset can place unnecessary pressure on cash flow. Likewise, taking a large term loan for a temporary gap may leave the business paying interest on funds it does not continually need.

Secured and Unsecured Business Loans

A secured loan uses an eligible asset as security. It may offer a larger limit, longer term or lower rate, but the secured asset may be at risk if the business cannot meet the agreement.

An unsecured loan does not rely on specific property or equipment as security. Approval may depend more heavily on business performance, cash flow and the applicant’s credit profile, and the cost may be higher.

Personal guarantees may also be requested, so it is important to understand exactly what you are agreeing to.

Compare Cost, Flexibility and Risk

Look beyond the repayment amount. Consider interest, establishment fees, ongoing charges, early repayment rules, loan term, security requirements and whether the facility can grow with the business.

The cheapest option on paper may not be the most useful if it restricts access to funds when the business needs them.

Final Thoughts

The right business loan should suit the purpose, the repayment cycle and the wider financial position of the business.

Prestige Finance Brokers can help you compare business finance options and structure an application around what you are trying to achieve.

General information only. Business lending terms, security requirements and eligibility vary between lenders.