A business loan broker performs a role just like a mortgage broker or indeed any other brokerage firm. They will act as a middleman between those seeking a loan and the loan providers. They’ll collect information on your business and with your approval apply to small business loan providers on your behalf. Businesses tend to need finance for expansion, acquisition of another business, buying inventory or equipment, or to meet immediate and often unforeseen expenses.
We have outlined some of the financing options available to businesses, depending on the type of business you operate and what you are looking for.
Invoice financing, also referred as debtor financing, is a great alternative to traditional banking, which can be difficult to obtain if your business is still in the startup phase. It allows you to grow your operations without putting cash flow on hold. Businesses pay a percentage of the invoice amount to the lender as a fee for borrowing the money.
There are two avenues that you can go down for a business loan; secured or unsecured.
Secured line of credit
A secured business loan uses the business’ assets as security. A secured business line of credit is a revolving credit line that you can secure with a variety of collateral options including real estate. You use a secured business line just like a credit card, only paying when you borrow money.
Unsecured line of credit
On the other hand, an unsecured business loan is approved based on a business’ creditworthiness, it is not secured against any type of collateral, so the interest rate is often higher than a secured loan. With unsecured business loans, the lender cannot seek repayment by going after your assets. However, you still need to meet income and credit requirements, and many alternative lenders ask for a personal guarantee from the directors of the business. A line of credit is also referred to as a ‘revolving loan’ as the borrower can withdraw funds, repay, and withdraw again. Unsecured loans carry more risk than a secured loan, which is reflected in the interest rate.
A trade finance loan is short-term working capital finance allowing importers/buyers and exporters/sellers to finance their trade commitments on a transactional basis For an importer, it means receiving funding in order to pay a supplier and allow time for the goods to be received, sold and turned into cash. For an exporter, it provides working capital until the overseas customer pays for the goods or services that have been delivered.
To be eligible for business finance, you’ll need to demonstrate a history of financial performance, including evidence of solid cash flow and the ability to manage expenses and liabilities.
Contact us today to find out the options available to you and your business.