How to Grow a Business with Commercial Finance

Starting your own business is one of the most exciting things a person or partnership can commit to. But once the business is up and running, how do small business owners move their small businesses to the next level of growth and expansion? How and where you invest in growth can make or break your business. Using commercial finance to help grow a business could be one of the most effective strategies in your business plan.

Here we break down the most common commercial finance options and explain how you can harness them to facilitate growth and incrementally increase revenue.

Commercial Finance as a tool for business growth

Commercial finance is an umbrella for a variety of business finance options. Many options leverage existing assets, such as a mortgage over a property or utilising a vehicle as security, while others are unsecured. If you’re looking for quick cash flow to purchase essential items for your next job, upgrade machinery, hire staff, upgrade facilities, or invest in other marketing efforts or sales activity, a commercial finance option could be right for you.

Success takes planning, strategy, teamwork, and of course the funding to drive it. Investing in your brand identity, your point of difference, the quality of your product or service and the professionalism of your overall offering are essential to facilitate growth.

The double-edged sword that strikes at the heart of any business is where to turn for that quick cash when you need it most. Not every Australian has a clean bill of credit health, and not every Australian business owner wants to deal with a big bank. When you’re trying to get off the ground, expand your offering, or pay off an existing debt that’s holding back progress, some practical and efficient commercial lending options can help.

Asset Finance

Asset finance can provide business owners with the funds needed to purchase business equipment, machinery, vehicles or other assets. Under a chattel mortgage, the asset being funded is used as security for the loan. Because the loan is secured, interest rates for asset finance are generally much lower than an unsecured business loan.

Financing business assets can help with increasing output which gives the opportunity to take on new customers, and improve efficiencies which can lead to more revenue and lower costs. As a driver of growth, it often makes commercial sense to upgrade your assets and expand your fleet, machinery and capability as your business grows.  Knowing this, it’s important to remember that a growing business will often require a flexible cash flow solution to keep up with day-to-day operation.

Invoice Finance

With Invoice Finance (also known as Debtor Finance), your invoices are used to secure the facility, and the credit is paid down once your debtors pay your invoices. Once an invoice is issued, you can draw up to 85% of its value in accessible cash to spend where it’s needed most. Thanks to technology, setting up an Invoice Finance facility can be quite quick as many financiers offer facilities that seamlessly link with your accounting software.

Invoice Finance can be a great cash flow solution as it allows you to continue paying wages and purchasing stock to grow your business and expand your customer base, while offering your customers the credit terms they value.

By utilising Invoice Finance, business owners can accelerate growth and increase sales because they have access to cash flow needed to take on their next projects without having to wait for their customers to pay their invoices. Other businesses implement a customer loyalty program or offer discounts for early payments, however, these tactics eat into profit. With Invoice Finance, you can allow your customers time to pay their invoices (without having to chase them for payment or offering discounts) which increases customer satisfaction, while also having access to the working capital you need to become a successful business.

Business Overdraft

Many banks and commercial lenders offer a revolving line of credit through a business overdraft facility. This specified credit limit can be secured or unsecured, but is often leveraged against real estate property. The facility allows business owners to adopt a flexible credit option because interest is charged on the amount of credit drawn down rather than the total available credit. Working with an experienced commercial finance professional (like us at darkhorsefinancial.com.au) can negate the need to involve a bank, reducing paperwork, credit check hurdles, time spent waiting for decisions, and convoluted application processes.

An overdraft can be a handy cash flow solution to have in the background for when you’re short on cash to pay wages or other timely and essential business expenses.

Sale and Leaseback

This type of asset finance allows businesses to use the equity in their equipment to invest in the business’s rapid growth for long-term gain. This option allows you to borrow against the value of equipment, machinery or vehicles, securing your loan over a period of time, so you can pay it off in affordable instalments. This commercial loan allows you to release cash flow to either invest in growth areas or perhaps to repay creditors and improve customer relationships.

Fitout Finance

Looking to finance a fitout at your premises? Fitout Finance has been developed for just that reason.

Whether moving into a new location or giving new life to your business’s existing home, fitout finance can be used in a retail shopfront, a warehouse, setting up a gym, a manufacturing site, or your office. 

Fitout finance allows you to take advantage of a loan that is repaid over a fixed term once the works have been completed. No more waiting to accumulate savings before you even get your idea off the ground. This way, you can start making money in your new premises and pay off a loan as that money starts rolling in.

Different types of commercial loan options available

Whether your finance needs are immense or seemingly small, there are commercial loan options available for a wide variety of purposes — cash flow constraints, debt management, seasonal business issues, and large capital needs are just a few of the problems commercial finance can solve. If you need finance that’s short term, long term, bad credit, unsecured or something else, we can help you find the perfect commercial finance solution to facilitate the business growth you’re hoping to achieve.

Given the range of variance, security and suitability between commercial lending opportunities, it’s always a good idea to seek the assistance of experienced business finance professionals. Let us handle the weight of the finance so that you can get back to the actual heavy lifting — the day-to-day operations of your business.

Access the finance your business needs

While growing a business may require things like attending networking events with your target market, updating marketing strategies, and prospecting out there in the business world, ultimately, business growth requires investment. But accessing cash flow can sometimes be complicated. If you’re considering a commercial lending option to give your company the injection it needs to stimulate essential growth, now is the time to talk to us. Phone or visit us to speak to one of our experienced business finance team members.

We look forward to getting to know you and your business and devising the best commercial finance plan to get you moving in the right direction.