Mar 1st, 2012 at 9:06 am
Commercial finance is all about the loans that allows most businesses to function. Most of such financing is offered by banks or other lenders and normally involves the securing of the assets owned or pledged by the business requiring the loan. Some lenders may also take a risk on offering loans without any security , but this is only where companies have proven cash flows that can repay the loan.
Assets that are normally accepted by banks and other lenders for commercial finance are real estate, equipment, supplies and money receivables against invoices. It is said that this form of financing is more against assets and quite often does not take into consideration the actual business prospects of the commercial enterprise. Even in cases where invoices are pledged, the lender will concentrate on looking at the financial soundness of the customers to whom the goods are supplied on the particular invoices that are pledged.
Commercial financing is looked for by companies that want to expand their business. Needs can be either short term or long term. They can also look for such finance when they require working capital. Interest rates for such commercial financing will normally follow the existing bank rates and will be a few points higher. The gap between the rate agreed and bank rates will be determined by the soundness of the company requesting the loan.
Tags: business, commercial, finance
Source: http://www.hopekus.com/commercial-finance-can-help-a-business-to-expand/
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