Commercial finance refers to the various financial products and services offered to businesses to help them manage their financial operations and facilitate growth.

Some common forms of commercial finance include:

Business Loans: These are loans provided to businesses for purposes such as working capital, expansion, equipment purchases, or real estate acquisition.

Asset-Based Lending: This involves obtaining finance secured by the company’s assets such as accounts receivable, inventory, or equipment. The amount of financing available is typically based on the value of these assets.

Commercial Mortgages: Businesses can secure finance to purchase or refinance commercial properties such as manufacturing units, office buildings, or retail spaces.

Hire Purchase financing: This type of finance allows businesses to acquire equipment or machinery through leasing or financing arrangements, spreading the cost over time, with the business owning the equipment after the final payment has been made.

Merchant Cash Advances: Businesses receive a lump sum cash advance in exchange for a percentage of future credit card sales. Repayment is typically made through a portion of daily credit card transactions.

What are the benefits of securing Commercial Finance?

There are many reasons why businesses make the decision to secure commercial finance for their business. A recent survey from the Federation of Small Business found that cashflow concerns, were the primary reason for businesses seeking to access finance, representing 55% of applications in 2022.

Benefits of commercial finance for businesses include:

Access to Capital: Commercial finance provides businesses with access to capital they may not have otherwise. Whether it’s through loans, lines of credit, or other financing options, businesses can secure the funds needed to expand operations, purchase equipment, or invest in growth opportunities.

Flexibility: Commercial finance options often come with flexible terms and repayment schedules, allowing businesses to tailor the finance to their specific needs. This flexibility can be crucial for businesses with concerns around cash flows or working with seasonal demand.

Asset Acquisition: Commercial finance allows businesses to acquire assets such as equipment, machinery, or real estate without having to pay the full cost upfront. This preserves cash flow and allows businesses to spread the cost of the asset over time while still allowing the business the same benefits as if they owned the asset.

Tax/VAT Benefits: Some forms of commercial finance, such as leasing arrangements, may offer tax benefits for businesses. Some lease payments can be tax-deductible expenses, which can lower the overall tax burden for the business.

Commercial Finance and Northern Ireland

While the ongoing cost-of-living crisis, staff shortages and rising interest rates, has been felt by SMEs across Northern Ireland and the UK, there has been some recent good news.

It’s been reported that Northern Ireland’s leading SMEs have seen sales increase by 20% and both turnover and pre-tax profits are on the increase also.

Johnston Financial Solutions are an independent finance broker, servicing business through the Northwest, Belfast and beyond. Johnston Financial Solutions help business owners access commercial finance for a wide range of purposes, whether it be for business growth, cash flow concerns or the purchasing of new equipment for your business.

If you are interested in finding out more about commercial finance, book a free call with Johnston Financial Solutions today.