In business there are a number of reasons why you may need finance. Whether it is to expand your business, refinance, purchase commercial property, or manage your cash flow, you need to shop around for the best deal.
A lender will usually want some sort of security against a loan, just like they do with a home loan. With business finance there are a number of options for securing a loan. The best one will depend upon your specific business or investment needs.
With commercially secured business loans you can utilise commercial property as security on the loan. These loans are typically suited to investors wishing to invest in commercial property, refinancing existing commercial loans, or for businesses wishing to purchase their own commercial premises.
With a residentially secured business loan you can utilise your residential property as security. Typically these loans are suited to purchasing capital items, expanding your business, or refinancing existing business loans.
A Business Line Of Credit or Overdraft is often used to meet the day to day cash flow requirements of your business. This line of credit allows your balances to fluctuate within an approved limit, so you don’t have to reapply for a new loan each time you want to take advantage of a new business opportunity. You only pay interest on funds used. The line of credit can be secured against residential or commercial property, against a term investment or may be considered unsecured.
A Guarantee Facility is an alternative to cash for security deposits. It can allow you to optimise negotiations without tying up valuable capital. Here, term investments as well as residential, rural, industrial and commercial property can be used as security.
Talk to your financial institution’s business banking team about the best option for you.
Greg Taylor is Chief Financial Officer for the Hunter-based Greater Building Society.
This article appeared in the Newcastle Post 18 April 2012