Choosing the right funding source for your business

The market for business finance is continually evolving and in particular the emergence of fintech lenders in the growing alternative finance scene.

In order to avoid the pitfalls and fully understand the most appropriate solution for a business’s funding needs the client should engage with a commercial finance broker rather than rely on the internet search bar.

Typically the alternative finance market looks to provide fast decisions to businesses looking for a loan, more often than not these are secured by way of a personal guarantee or even tangible security such as a property, or outstanding billing.

Whilst this arena is growing with new entrants almost daily, the balance sheet does still offer the most likely and secure source of finance.

Asset-based lending is a facility secured by assets such as debtors, plant & machinery (P&M), property etc. Such facilities are mainly revolving lines of credit but can be structured as a term loan.

The balance sheet does still offer the most likely and secure source of finance.

Lenders calculate the amount you can borrow on the market value of the asset. For example, up to 85 per cent against debtors for invoice finance, 70 per cent on property and 60 per cent against P&M on asset finance. This type of facility provides security to the lender in the worst-case scenario, as an asset-based lender can recover their losses by realising that collateral.

Guiding a business owner through the journey of selecting the right funding product and finance partner is what we at Reach Commercial Finance do best.