What are the types of business finance?
Answers
Asset
Finance
Often used to buy or lease essential equipment needed to run and grow a business. As alternative business funding solution to a bank loan, it is a popular choice to finance anything from computers, office equipment, machinery to motor vehicles. The funding is secured against the asset and many agreements have fixed repayment terms.
Business
Loans
There are a wide variety of loan products available for businesses from challenger banks, alternative finance providers and high street banks. Loans can be obtained on a secured basis against business assets, or on an unsecured basis, where your credit score and ability to offer a personal guarantee will be more important.
Commercial
Mortgage
A commercial mortgage and can be used for several purposes including, buying business premises, extending existing premises, and making residential or commercial investments. Typical repayment periods extend from 10 years up to a maximum of 30 years. Mortgages with shorter repayment periods are usually referred to as bridge finance.
Equity
Funding
Limited companies can sell shares in their business to an investor. The investor in turn will take a share of any profits or losses that the company makes. This can be a good way to fund growth, where you don’t have to make loan repayments and also add new skills and expertise into the business.
Invoice
Finance
Invoice finance is a way of borrowing money against unpaid invoices for a fee. You typically receive up to 85% of the value of an invoice immediately, which can help to ease cash flow worries. The funder will collect the money owed from your invoices, and pay you the balance, less any fees.
Pension
Finance
Pension funding is still a relatively unknown product and offers the ability to raise funds based upon the pensions accrued by one or more owners or directors of the business they control. Any money lend to the business is paid back with interest and will increase the size of the pension .