Commercial / Business loan is the debt provided by a Financial Institution to another eligible entity at agreed interest rate, and evidenced by a note which specifies, among other things (not limited to), the principal amount, interest rate, and date of repayment. A loan entails the reallocation of the subject (being acceptable asset from borrower) for a period of time agreed between the lender and the borrower. Each of the obligations and restrictions agreed to are enforced by contract, which can also place the borrower under additional restrictions known as loan covenants.
A commercial mortgage is a mortgage loan secured by acceptable commercial property, such as shopping center, industrial property, retail development, office building; or complex. The proceeds from a commercial mortgage are typically used to acquire, refinance, or redevelop commercial property.
Key terms include the loan amount (sometimes referred to as “loan proceeds”), interest rate, term (sometimes referred to as the “maturity”), amortization schedule, and prepayment flexibility. Commercial mortgages are generally subject to extensive underwriting and due diligence. The lender’s underwriting process may include a financial review of the property and the property owner (or “sponsor”), as well as commissioning and review of various third-party reports, such as a property appraisal.
A business mortgage loan is secured by acceptable business property. This may include but not limited to small office, vacant land for property development, farming land, industry licenses and leases.
If current assets are less than current liabilities, that entity has a working capital deficiency, also called a working capital deficit. This may be attributed to expansion or growth. During these periods a business may need a finance solution to fund this short fall, which is referred to as a working capital solution. A couple of solutions may include introduction of a overdraft facility or debtor finance facility.
Plant and Equipment
One of the most popular forms of equipment finance is under a chattel mortgage (C.M). Chattel mortgages are commonly used by companies, partnerships and sole traders to fund the purchase of Business Vehicles and Equipment Trucks, Trailers, fishing boats, Cement Trucks, Excavators (). The purchaser borrows funds against acceptable property which is generally portable (the chattel) from the lender. The lender then secures the loan with a mortgage over the chattel. Legal ownership of the chattel is transferred to the purchaser at the time of purchase, and the mortgage is removed once the loan has been repaid.
Debtor Finance is a flexible product which may provide a solution to your working capital requirements by releasing funds tied up in outstanding invoices and bridging the cash flow gap between expenses incurred to point of sale and getting paid.
We have a highly experienced team of accredited professionals ready to help you reach your lifestyle goals by assisting you with finance for residential or investment purposes.