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Commercial finance typical revolves around what are considered the assets of your business and are often called "asset based loans". The assets of your business are things such as your outstanding account receivables, open purchase orders, inventory, import/export contracts, large equipment, reoccurring credit card billings and other hard assets such as bonds or certificates of deposits, etc.
Commercial financing types are loans like invoice factoring, purchase order advances, credit card receipt advances, secured working capital credit lines, inventory flooring financing, franchise financing, and import/export letters of credit.
To get approved for commercial financing it is typically much more about your assets than it is about you or your business. For example, a commercial finance lender will look much harder at the credit worthiness of your client for that invoice receivable than they will at you. For that purchase order you want to finance, a commercial finance loan will require that the company issuing the purchase order has good credit.
If a commercial finance lender is going to approve your business for a secured line of credit they will want to know that the asset's liquidation value is enough to pay back the loan. So if they have to sell your crane or backhoe, they want to be sure they can get paid back.
A great way to get a dollar for dollar secured business loan is to secure it with a certificate of deposit or CD. With this method you can borrow money from friends or family, or even use your own savings to secure a business loan that then makes your business much more real to other lenders because they see the credit line on your business credit reports, but they don't see that it is secured.
Finding commercial finance lenders is easy, simply click search and you can match your business to commercial finance lenders for free. Or you can read more about the types of commercial finance below:
| Capital Type |
Capital Type Definition |
Account Receivable
Factoring |
Account receivable factoring serves as collateral for short term working capital loans that you can obtain fast and cost effectively. |
| Asset Based Loan |
Seeking to convert a company assets into working capital. Giving a security in an asset(s) in exchange for cash. |
| Bankruptcy Reorganization Financing |
Financing to reorganize in company in a turnaround. Typically secured by assets; equipment, inventory, A/R, PO's, etc. |
| Expansion Financing |
Growth has outpaced existing business. Loan for existing demand. Key here is existing demand, not projected. |
| Import and Export |
Loans to promote the shipping or receiving of products or materials. Based on existing market, demand or orders. |
| Inventory Loan |
A loan typically made as part of a relationship where the lender will also provide retail financing for the product. |
| Purchase Order Financing |
Loans on the written order to purchase goods at a stipulated price with an agreed to delivery date. Credit rating of orderer is key. |
| Secured Credit Line |
A pre-arranged amount of credit based upon existing inventory, A/R and PO's. |
| Merchant Account Advance |
Up to a $150,000 advance against regular occurring monthly merchant credit receipts. |
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