Types of Business Finance

Every business owner is often considering the continuation and financing for their operations. No matter how long you have been in your own commercial enterprise, this would usually be a common concern.

The terms and conditions of these financial services will vary based on the lender, your needs, and your trading details and history. If you are thinking about a loan, be sure to compare the fees and commitments required via benefits to ensure you are completely satisfied before making your selection. There are many options for financing for companies and good debt decisions can assist in the long-time success of your business.

Typical Business Loans

There are several financing alternatives available for small organisations. These don’t always have a need for security such as property but secured loans will typically have lower interest rates than unsecure finance. A typical loan will typically fulfill the following characteristics.

  • Fully drawn up front
  • Fixed period loan and interest rate
  • Best for one-time purchases or multiple purchases within a short time frame

The typical loan is a good fit for long-term financing. Which is beneficial especially when you are buying larger items, or multiple assets.

Bank Loans

A bank loan can offer a huge lump sum to cover different purchases or fund the expansion of a business generally with a strong credit rating and financial documents. The principle plus interest is repaid over a set period of pre-agreed payments.

Loans are a completely inflexible type of finance, and the application process can take a little time depending on the business and requirements of finance. Banks typically have the strictest lending criteria, and will want to submit a detailed business plan, potentially offer collateral or guarantees, and have a sturdy monetary history.

Business Credit Cards

Business credit cards can guide operating capital and cover ordinary business costs. More reachable than a commercial enterprise loan, but credit card costs and prices can be pricey and can mount up in case you do not clear your balance every month.

Credit cards are generally used to cover small purchases, though are flexible in that they can be used for any small or large purchases up to the balance maximum. If you require larger amounts to pay suppliers, cover overheads, or fund growth, there are more inexpensive and better-applicable options for your business.

Invoice Finance (Factoring)

Invoice Finance is a versatile funding solution that allows a commercial enterprise to receive monies on lodged debtor’s invoices. Instead of waiting 30+ days for your customers to pay, you may use invoice finance to receive between 80-100% of the invoice, depending on the lender and agreements. When your clients pay the amount, you receive the invoice balance less the funding fees (factored costs).

Asset Finance

Asset Finance is a finance that enables an enterprise to fund the purchase of assets including new and 2nd-hand equipment, and vehicles. It also can be used to assist on business launch, using the capital tied up in assets they already own, or by financing certain assets as opposed to buying out right.


This form of financing commonly includes lease buying, finance leasing, and operating leasing. The organisation makes normal payments over a set period to pay back the loan amount, and typically at the end the full legal ownership of the asset passes to the business.

Line of Credit

This type of business financing loan lets a commercial enterprise pay for items from a bank account, which can be linked to card, on a revolving line of credit basis. It works in a comparable way to a commercial enterprise credit card or overdraft but can come with less fees and interest rates.


As you take out funds and make repayments, the available credit balance will increase and reduce consequently. This type of loan can be used alongside an invoice finance facility to maximise available cashflow to a business and ensure available credit to the business.

Merchant Cash Advance

A service provider cash enhancement is a financing solution for businesses that process extensive volumes of client cards through EFTPOS. The amount you could borrow is determined by using the trading history of payments you process at your business over the past 3-6 months. Re-payments can then be tied to future EFTPOS receipts, as a pre-agreed percent, to offer maximum flexibility.


Nearly every type of business needs a loan at some stage during their business cycle. Choosing the right finance from the get go, can greatly enhance the possible success of your business. Contact a business loan broker such as those at Orchard Lending to assist you in choosing the best finance for your current and future business needs and objectives.