When it comes to business finance solutions, there is no cookie-cutter best approach for every company and situation.
As leading business finance brokers in Perth with over 30 years of experience, our team understands that when it comes to securing leading commercial finance solutions, there are no easy answers. To secure the best option for your business, all factors have to be considered including the wider industry, company position, company finances, and local economy.
While it is a complex process, by developing an understanding of the financial options available to you and asking some simple questions, you can develop a more in-depth understanding of your financial possibilities.
Types of Business Finance
At Southshore Finance, we connect Perth businesses with financing solutions tailored to their specific needs. Depending on where you’re at in your business, there are some key types of finance you may want to consider.
Equipment Finance
As your business grows, you may need to upgrade your tools and machinery without large upfront costs. Equipment finance allows you to spread the cost of new assets over time, helping you stay competitive and efficient. This type of finance can cover a wide range of equipment, including:
- Vehicles for your company fleet
- Manufacturing and production machinery
- Office technology and furniture
- Specialised industry-specific equipment
With the proper equipment finance, you can keep your business up-to-date without putting a strain on your cash flow.
Business Acquisition Finance
Buying a business is a significant step that often requires substantial capital. Business acquisition finance is designed to help you navigate this complex process. It addresses several key challenges:
- Providing the funds needed to purchase an existing business
- Offering repayment terms that align with the acquired business’s cash flow
- Potentially using the acquired business’s assets as security
Whether you’re looking to expand your current operations, enter a new market, or take over a competing business, this type of finance can help you make that important move.
Working Capital Finance
Every business experiences fluctuations in cash flow. Working capital finance provides the flexibility to manage these ups and downs effectively. It’s particularly useful for:
- Managing seasonal changes in revenue
- Covering operational costs during growth phases
- Taking advantage of supplier discounts
- Bridging the gap between invoicing and payment
This type of finance acts as a financial buffer, allowing you to seize opportunities and navigate challenges without compromising your day-to-day operations.
Each of these financing options comes with unique lender offerings and solutions that can help your business reach its goals without straining cash flow.
Which Source of Finance Is Best for Your Business?
Choosing the right finance option depends on your business’s current position and future goals. A conversation with a business finance broker can help clarify which option might be best for you.
To give you a head start on thinking about the best financing solution for you, we’ve included some of our biggest client considerations below, for you to assess your own business against.
1. What are you funding?
Some types of business finance are better suited to different needs so it is important to have a clear idea of what you will be spending the funding on. Maybe you are buying a business or funding a start-up that requires a different type of funding than financing a business growth plan.
2. How much funding do you need?
Be clear and honest about how much funding you need for your business to narrow down the best business finance option.
3. What do you hope to spend the business finance on?
The requirements for asset finance, as part of equipment finance, for example, will be different to the parameters for funding to ease a short-term cash flow crisis. If you have no assets to put up as security, it may be difficult to get a large loan.
4. How long do you require business finance?
The timeframe for when you need the funding to start and the longevity of the loan will affect your financial choice. Our experienced team of business finance broker in Perth may suggest different types of finance in the short term, to get a new business up and running, plus another longer-term solution to keep you afloat in the early years of trading.
When establishing a loan facility, it is critical to ensure that the impact on cash flow is as low as possible but with the flexibility to increase repayments/reduce the loan term without penalty.
5. How risky is your business?
A proven business idea can make attracting certain types of business finance easier, while some more traditional lenders will be reluctant to take a punt on a quirky or high-risk industry without a proven track record.
6. What is your history with business/personal finance?
A proven track record with a lender or investor may make it easier to obtain finance, alongside a proven track record of paying back other debts.
7. What are the associated costs of finance?
The costs of finance will usually include interest over the period of the loan and maybe some administration costs associated with the set-up of the business finance arrangement.
8. What financing option makes sense for my business?
This important question is often overlooked but is a crucial part of the financing process. It asks, is the purpose of this financing reasonable? To assess whether the purpose behind your financing is reasonable consider:
- What are the chances of having sufficient cash flow to service the debt?
- Do you have the necessary management skills, business plan, systems and procedures to make it work?
What is the best type of business finance?
There is no “best type of finance”, only the best type of finance for your business and what that looks like depends on a huge variety of factors, including those we have discussed above.
If you’re hoping to find the best type of finance for your business, you will need to consider holistically your business position, the purpose for your financing, your industry and the wider market.
It’s a lot to account for, and finding the best type of finance for your business isn’t always an easy endeavour, but it can be.
Finance solutions for your business
We’ve been helping businesses find their ideal financial solution for over 30 years. With a strong commercial broker team paired with great lender relationships and business partners, we have a comprehensive understanding of commercial financing which helps businesses establish healthy, strong cash flow while pursuing their goals.
Interested to learn more about how our commercial finance brokers can help your business? Speak with our friendly team today.