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Commercial Finance: Preventative not just Curative

Business finance can be seen by many owners and operators primarily as a cure. When a business faces hardship, financial problems, snags in their plans, they look to taking out some form of a loan. The wide use of the term financial solutions, which yes we also use consistently, can be partly to blame. ‘Solutions’ conveys the impression that you only apply for finance when you have a problem. But that is really only one way to view business loans.

Commercial finance can be designed and structured to work as a prevention for many scenarios. More than a back-stop or backup, it can be the intervention or tool that actually prevents that bad stuff and the associated problems from occurring.

Let’s look at specific commercial finance products from that preventative point of view to illustrate our point and how business financing works with business owners to shore-up their operations with structured finance.

Business Overdraft

Many businesses operate continuously with a business overdraft facility or line of credit. They have the benefit of dipping into the funds as needed and paying a tax-deductible interest charge for the use of lender funds. By having this resource available a business can avoid serious problems which may arise if they are caught with a cash flow shortfall.

When you need stock for your retail store or supplies and components for a manufacturing operation or when importing goods from overseas. Many suppliers will require you to pay upfront for goods that you may not receive a return on for some time. Without the use of an overdraft, if you don’t have the cash to pay, you might either have to go without or face possible credit issues for failure to pay your bills.

Creditor Issues

Not receiving payment on time from customers can be one of the most common problems that can result in many businesses, especially SMEs, facing major problems. They can’t meet their obligations which flows onto their own credit issues. Setting up a Debtor Invoice Funding arrangement can be a smart way to prevent problems from occurring.

Insurance Premium Funding is a similar form of commercial finance except it is specially structured to meet those large insurance premiums. When you purchase equipment loans and vehicle financing you will be required to take out insurance. The premiums can be significant on large items of machinery and for other indemnity-style policies.

Setting up a funding arrangement at the same time as you take out the policy may assist in avoiding problems when the annual premium is due.

Unsecured Business Loans

Predicting the unforeseen is an attribute that very few people possess. But knowing how to deal effectively when unforeseen surfaces is a skill that business owners should have. Business Finance works with individual business owners to deal with unforeseen expenditures with cost-effective unsecured business loan options.

Commonly faced issues may include having to invest in staff training and development or expenditure related to new compliance regulations. Hospitality sector operators are only too familiar with new regulations and compliance rulings being imposed on their industry, often with little notice or warning.

The coronavirus pandemic is a perfect example. Staff at many businesses were required to undertake training in COVID-safe operations and to qualify as COVID marshalls. Many businesses had to erect barriers and other fixtures, print and display COVID signage, directional signage, and set up IT and QR code systems to ensure they met the COVID compliant rulings. Failure to meet these regulations had the potential for significant fines. Read more.

The expense of instigating these compliance measures needed to be borne by the business at a time when their capacity was restricted to one customer or patron per 4 square meters.

Short-on with cash, an Unsecured Business Loan could be used in these and many other similar circumstances. By having the funds available to ensure the business is fully compliant and with the funds repayable over a longer time period, the business can avoid getting into serious financial hardship and avoid the penalties for non-compliance.

This is just one simple and current example of the use of Unsecured Business Loans. This type of business finance has many applications and when sourced at cheap interest rates so as to be cost-effective, it can be an effective action to avoid future problems. View our unsecured business loan interest rates.

Averting Crises with Commercial Finance

Business loans can be effectively utilised to avert crises. Having access to cost-effective financial products and the expertise to assist you source and structure those loans is in itself a critical element of the prevention plan.

Working closely with a business loan broker such as Business Finance, can deliver significant benefits to business owners. Our team has the expertise, connections, and skills to provide information and structure preventative finance deals for all types of business.

So don’t always think of business loans as a solution to a problem. Finance can be extremely effective in preventing more serious business issues when implemented in a timely manner.

To discuss preventative measure for your business,
contact  1300 000 033

DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.

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