Commercial Financing - Heartland Financial Group

How Commercial Financing Benefits Your Business and Your Customers 

Commercial financing options are ideal for when you need an influx of capital without endangering your cash flow or seeking traditional lending options.

Commercial financing only differentiates itself from other kinds of financing in that business-specific loans may be easier to apply for and offer lower overall interest rates than personal or traditional loans.

If you further specify what you need a loan for, you may even be able to qualify for a higher loan value or opt for a tax-advantageous lease when purchasing land or equipment. Commercial equipment financing will often net you more money to work with because the equipment can act as collateral, making it a safer investment option for lenders.

Commercial loans, on the other hand, are unsecured – but because they require you to provide in-depth information about your business’s financial viability, credit history, and current revenue, they are still a much better option over a non-commercial loan. Let’s explore some of the ways they can benefit you and your customers.

More Revenue Up Front

Commercial financing means access to more money than you would otherwise have – money you explicitly reinvest into your business by increasing your inventory, launching a marketing campaign, hiring more workers, buying more workspaces, or purchasing equipment. No matter where you put it to work that means getting more done. Process more orders, earn more money.

The trick is to earn more than what the loan will ultimately cost you. A simple loan analysis on your part can help you determine if your business is in the right position to capitalize on a cash influx – and thereby benefit your customers directly by massively boosting your inventory, catching up on late orders, and expanding your offering.

A commercial loan can also help you offer a brand new value proposition by investing in the development of a brand new product, for example.

Boost Your Cash Flow

Some businesses are greatly limited in what they can do by the day-to-day operation costs that their industry demands. Many businesses profit mostly seasonally or are tied down by numerous obligations with little to no room to make improvements, purchase new equipment, or build a second facility due to employee and production costs, for example.

Commercial financing can alleviate this worry by giving you more liquid cash to work with, so your business can finally acquire the positive cash flow it needs to stay afloat and continue to turn a profit, attract investment, fix fundamental problems, and provide a much-needed buffer against financial challenges – such as those presented by a global pandemic and unprecedented supply chain issues.

Easier to Qualify For

One of the primary benefits of commercial financing for businesses is that it is easier to qualify for than personal loans.

If you need a massive cash infusion for your company, even while it’s still in its early stages, you can turn to financial lenders rather than your bank to negotiate a commercial term loan with far lower interest rates and greater overall loan value than what a bank might be prepared to give you personally.

Keep Your Capital for Other Investments

If you already have a positive cash flow and significant capital, you can reinvest that capital elsewhere and take out a loan to keep your money working.

It isn’t a good idea to needlessly sit on more than an emergency buffer – you want to make sure that it’s reinvested in an appreciating asset adding to your company’s equity or a tax-deductible depreciating asset that is providing value to the business. A commercial loan gives you the flexibility to reinvest your cash as you see fit.

Boost Your Business Credit

As a business continues to grow, it becomes more and more important to establish strong, positive relationships with lenders and vendors. You will need to acquire new equipment on a regular basis, finance your growth, and acquire capital for major investments. As such, it’s important to have good business credit.

One way to boost your credit aside from presenting good cash flow and favorable balance sheets is by paying your loan dues regularly and paying them early when your business is doing well and is in the right position to do so. This gives you the advantage of great credit and better loans when your business needs to borrow.

Is a Commercial Financing Solution Right for Your Business?

Commercial financing preserves your cash flow, and your current capital provides you with a tax-advantaged way to acquire equipment and land and can help you finance the next step in your sole proprietorship’s growth without the need of a traditional investor and without selling your company equity.

Commercial financing empowers you to expand operations, purchase and develop a new branch, go on a hiring spree to expand your team, or multiply your inventory and take advantage of astronomical growth in demand in your niche.

But as always, whether the choice to opt for commercial financing is right for you depends on a very important question: are you able to capitalize on the money your business would be qualified to borrow? Can you turn it into a worthwhile investment that will directly boost revenue and result in a profit?

And of course – can you qualify for the kind of financing you’re looking for in the first place? If all you need is another forklift for the warehouse, you might not have much trouble finding vendors or financing groups willing to negotiate a fair lease agreement or equipment loan with you.

But when you’re looking for a much more substantial investment to scale rapidly, you will need your paperwork to do the heavy lifting and prove to any prospective lender that your business is more than capable to turning a profit from such a large investment.

If you are interested in seeking commercial financing – whether for a small expansion or something much bigger – let us know. We can help you walk through your options based on our quick online questionnaire.