Art Creative Ltd

Which type of commercial finance is right for me?

Martin Castilla            No comments            Sep, 18

Commercial finance can often be a brilliant solution for those in search of financial aid. There are several different options available, with certain packages designed to suit certain business types and sectors. Importantly, commercial finance gives you alternative options to the traditional bank loan, or even borrowing money from friends and family. Commercial finance can be helpful for all manner of reasons, growth, gaining new assets, stopping bailiffs or just getting yourself enough cash to keep going.

So what are the options, and how can you decide which one is right for you? Each of the below represents a general form of commercial finance. However, each has the potential to be slightly modified by the lender, if it suits both parties.

Trade finance

Trade finance is a form of commercial finance used to fund international trading. With such big complications involved in trading across the seas, there are often lots of considerations that need to be listened too.

A common problem for international traders is both importers and exporters being left waiting for payments. Essentially trade finance is there to help businesses have the necessary working capital so that they are able to meet all of their day-to-day obligations. Importantly for importers and exporters, trade finance can also help strengthen relationships. If you can obtain or receive goods, without having to wait for repayments, then both business parties can build a strong relationship base to grow from.

The majority of finance will communicate in a range of different languages and will look to provide finance in the preferred currency, whilst also keeping tabs on the potential interest rates involved from different parts of the planet.

Asset finance

Regardless of how big your business is, purchasing brand new equipment, whether it be new tech, office equipment, assets or machinery, it can be a huge cost. Asset finance gives you the option of spreading out all those costs and slowly paying back the debt over time, gaining the new asset. The sort of costs incurred here, especially for start-ups and SME’s can potentially be huge, so forms of asset finance gives you the option of spreading the costs gradually over time.

The assets themselves form security for the lender, so if you do end up debunking on payments, they will claim the asset back. The cost is normally spread over the course of the asset’s lifespan, but vitally, asset finance can give you a level of stability cash flow wise, as you are able to plan ahead and better work out your incomings and outgoings.

Hire Purchase

Very similar to asset finance, hire purchase falls under its bracket and is likewise a great solution to paying huge upfront costs. The agreement would see a business paying an initial deposit, then paying the remainder of the asset in instalments, which are usually monthly, however, this can be changed depending on your agreement and circumstances. As a business, you are able to acquire the top assets within the market place, replace old ones or grow your business without having to pay the large up-front outlay required.


If you’re looking for an injection of cash without any of the hassles of a bank loan, refinancing could be an ideal solution. However, for lenders agree to a refinancing deal, you need to be asset rich, as essentially you borrow money, which is then secured against the value of your assets. In certain sectors, businesses can often find themselves asset rich but cash poor, which can massively halt a businesses progress.

When it comes to repayments, just like asset finance, you are able to repay back any loans in monthly instalments. Refinancing also doesn’t stop you using any assets so you can continue trading as normal.


Included with a lot of commercial finance deals is a debenture. This is effectively a holding charge which allows the lender to take the assets in question, if your repayments fail. When it comes to assessing your various options, the most important thing any business needs to consider, are the potential costs involved if you don’t decide to use asset finance. What bearing could this have on this business? You could miss the opportunity to grow the business, to give employees their well-deserved pay rise, or in the absolute worst-case scenario, face the prospect of administration or liquidation.