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.
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).
A form of commercial loan that can be structured on an interest only basis, or reducing basis, for short-term and long term debt.
Loans tailored for developments that can be drawn down in progress payments as required up to an agreed total.
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.