Your business may need cash flow to expand, build a new product, hire additional employees or pay a tax debt.
Having a conversation with an industry finance specialist will help you determine the most appropriate finance and structures to suit your business and cash flow. It is worth a chat.
The following finance solutions support business owners when they need to source additional cash flow.
Traditional loans are drawn down at the beginning of the loan term and are typically repaid in equal instalments over the agreed loan term.
Business loans are generally provided on either a secured or unsecured basis depending on the amount borrowed and the nature of the business.
Secured business loans
Security for the loan can either be assets within the business or personal assets outside the business (eg your home) with a guarantee provided by a director or business owner.
Secured loans will by their nature have lower interest rates as they provide greater certainty of repayment to the lender.
The term may vary significantly depending on the amount of the loan. Usually, smaller loans are repaid over shorter terms and depend on the nature of the security.
Unsecured business loans
Allow you to cover any business related finance needs
A short term facility – usually up to a maximum of 12 months
Interest is repaid daily or weekly
No security (collateral) required
Unsecured business loans can provide a boost to your working capital and allow you to make investments in inventory, equipment, renovate or hire new staff – ANY business activity.
Some business owners use this type of business facility to cover cash flow fluctuations and new business opportunities. It is a popular loan type to repay outstanding tax debt.
- Applications are usually fast and easy
- No security required
- Available for SMEs that don’t meet banks’ rigorous lending criteria
However, unsecured business finance is a higher risk for the lender.
- Interest rates are likely to be higher
- Terms, rates, fees and conditions may result in higher borrowing costs
- Depending on the amount you borrow, you may need to provide a personal guarantee. This means you will be responsible for repayment if your business is unable to meet its obligations
This funding alternative is generally utilised to assist in increasing the cashflow of a business. There may be times when cashflow is constrained by long payment terms of major companies (some at 90 days or possibly longer) for the payment of goods already supplied.
Invoice funding, also known as invoice factoring or debtor finance, allows you to access an immediate cash injection up to a percentage of the outstanding invoice.
How does it work?
The invoice is in effect assigned to the financier who chases and receives payment. Upon collection of payment, the financier will deduct their fees (usually a percentage of the invoice amount) with the balance then being remitted to you.
- Compare each finance option before entering into any agreement.
- Talk to us, your industry finance specialist. Learn how we have helped other companies use these finance techniques and assisted them to determine the most appropriate for their business.