Business finance can encompass a broad spectrum of funding solutions. It covers areas such as secured loans, unsecured loans, asset finance, invoice factoring, commercial mortgages and acquisition finance. All are very different in their own right and have been designed to suit specific business needs.
Throughout the past 12 months there have been 5 very specific finance solutions which have been the most popular. Let’s explore these in more detail:
1 – Supplier / stock funding
Stock funding or stock finance is used to purchase stock which can sit in a warehouse or storage location until future orders are received for the goods. A typical example would be in the automotive sector where a car dealership will finance the purchase of new motor vehicles to then sit in a showroom or on a car forecourt until they are sold.
2 – Merchant cash advance
For businesses in the retail and hospitality sector they will predominantly generate most of their income through both debit and credit card transactions. A merchant cash advance gives a business a much-needed boost in cashflow. The repayment agreement will then be developed based on future card payment transactions, with part of the funds received being paid back to the lending company.
3 – Invoice finance
Managing cashflow is never easy and it is made very challenging when customers want long payment terms. Invoice finance or factoring is the perfect solution to eliminate these issues. An agreement is established with a lender whereby the moment an invoice is raised and sent to a customer; the lender will arrange for payment to be made. Once the customer finally pays the invoice the lender will recuperate the funds they have previously paid out.
4 – Refinancing
At some stage a company will have set-up some form of business finance. Often this will be left to run until the end of its term. On occasions there will be a need to seek additional funding which is where it could be beneficial to refinance an existing deal. By completing a refinancing deal, you can take advantage of better repayment terms and potentially lower interest rates. This has been very popular within the commercial investment sector especially in relation to property.
5 – Commercial Mortgages
There has been a surge in businesses taking ownership of their own commercial property. This is because more and more business owners are recognising that they can secure the future of their company by taking ownership of their building. A commercial mortgage is a very popular choice allowing a company who would have initially been renting to take on the ownership of the building.
We are excited to see what the most popular deals will be in 2024.
If you are looking for support, advice or guidance on any aspects of business finance please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.
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