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What are the finance options for a growing or expanding business?

PUBLISHED ON: 29/01/2024

With such a wide range of finance options available for growing and expanding businesses, it’s difficult to know which one is the most suitable. This stage of business is crucial, however, and it’s important to make the right funding choices.

The wrong form of financing will slow down growth and can hinder operations, so here are just a few of the potential finance options available. They’ll all support the growth and expansion of your business, and enable you to take it to the next level with confidence.

Machinery or equipment refinancing

Refinancing an existing piece of machinery or equipment can be a good decision at this stage as your rights to use the asset are continuous. Sale and leaseback agreements offer a cash lump sum for you to invest in a growth or expansion programme, with the added benefits of budgeting certainty and a return to full ownership of the asset at the end of the contract.

Commercial property finance

Maybe you want to expand to larger premises or become a commercial landlord and are looking for suitable ways to fund this development? If this is the case, commercial property finance will help you to purchase a new property.

You can opt for an owner-occupier mortgage if you’re buying it for your own business’s use. Alternatively, a commercial investment property mortgage provides the funds to purchase a property to rent out on a commercial basis. A further type of business property finance is a property portfolio mortgage, and this is useful if you plan to invest in several properties in the future.

Vehicle finance

Whether you want to expand an existing fleet of vehicles or purchase your first van, commercial vehicle finance offers you flexibility without using up your business capital. If your intention is to fully own the vehicle at the end of the financing deal, hire purchase can facilitate this.

It involves making a deposit, usually around 10 per cent, followed by fixed repayments, typically for up to five years. Conversely, a vehicle finance lease offers you choices if you don’t need to own the vehicle(s) but you still want some flexibility when you’ve repaid.

Invoice finance

Invoice finance is a great option for supporting your business’s expansion plans as the level of funding available can grow alongside the business. This form of funding involves releasing the value locked inside your unpaid invoices, so as you grow and the sales ledger expands, so does your funding facility.

There are several different types of invoice finance available, but the most commonly used are factoring and invoice discounting. If you find that managing your sales ledger is too time-consuming, the factor can take over control of this and release more time for you to focus on the business’s growth.

UK Business Finance are highly experienced commercial finance brokers and can provide further guidance on the best types of finance for your growing business. We offer free, same-day consultations and operate an extensive network of offices throughout the UK.

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