The most common business finance product is an overdraft. Often secured by the directors and unless the business is in top shape, secured by assets as well. It is the cheapest and most used funding for a business. However, it is a not the most flexible. If a business grows, then the bank overdraft takes time to do the same. Often frustration from clients as it clearly doesn’t grow with them.
Line of credit offsets against business assets. Very good on pricing and easily controlled by the client. Big risks if the business decision goes bad as it affects assets. Again it hasn’t got the flexibility in most cases, as you only have credit to the value of the assets on offer.
Alternative Finance Product for Business Owners.
Factoring of invoices. Funding is reasonable in most cases on pricing. Cost of funding is off your profit margin, so you have to have plans in place to make this worthwhile. Not a good idea to factor to just get in front on some bills. Factoring is very flexible and will grow with your business plans, as your invoicing grows. Important to remember as you grow, you facility grows, you actually pay less for funds the bigger you are, but the lender wins either way.
Loans. Not widely used as its limited and the cost of funds is high. Business owners need to have plans to get such funding, so the others above will get better results. However if you don’t have invoices, and looking to buy stock its still a good way of doing business.