In the United States, commercial finance is the function of offering
loan
In finance, a loan is the tender of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for the use of the money.
The document evidencing the deb ...
s to
business
Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise entered into for ...
es. Commercial financing is generally offered by a bank or other
commercial lender. Most commercial banks offer commercial financing, and the loans are either secured by business
asset
In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can b ...
s or alternatively can be unsecured, where the lender relies on the cash flows of the business to repay the facility.
Assets used to collateralize commercial finance loans include:
* Real estate
* Receivables from invoices
* Equipment or supplies
While qualifying for financing is generally easier for large, well-established companies, some small businesses can qualify for commercial financing from the
Small Business Administration
The United States Small Business Administration (SBA) is an independent agency of the United States government that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and str ...
(SBA).
The SBA may provide either financing or insure a lender who takes a risk on a smaller company to provide commercial finance.
Businesses can also seek the assistance of
Commercial finance advisors in the structuring and sourcing of commercial finance. These are known as Independent Financial Advisers or
Commercial Finance Brokers.
See also
*
Finance
Finance refers to monetary resources and to the study and Academic discipline, discipline of money, currency, assets and Liability (financial accounting), liabilities. As a subject of study, is a field of Business administration, Business Admin ...
References
Corporate finance
Loans
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