At many times in the operating a commercial concern, business owners will often require support for cash flow. Support to fill a gap between purchasing stock and materials and selling the products and services to receive an income. Support to cover a lull in trade or unexpected increase in outgoings and many other scenarios. When the need arises, the decision as to the most suitable credit facility needs to be made. Operators can compare commercial overdrafts with loans as two of the most widely-used facilities for cash flow support and non-asset expenses.
The decision as to the most suitable credit facility can depend on a range of factors, the specifics of the reasons or the scenario, the individual objectives of the enterprise and many other issues unique to the circumstances. More generally, the purpose for the support, the timeframe the funding is required, when certain amounts of credit are required, and possibly the amount required are some of the overarching considerations. These considerations may determine whether a line of credit or secured or unsecured finance will best meet the need.
Business Support Finance Facilities
We offer a range of commercial credit facilities to support enterprises with ongoing, short-term and specific purposes. A line of credit is a widely used facility and can suit many purposes and many businesses.
Where the requirement is to cover non-asset expenditure for a set amount at a set time, secured or unsecured credit may be more cost-effective. We work with individual operators to identify the core of the issues and where appropriate, suggest targeted credit solutions.
Where the issue emanates from slow-paying creditors, Debtor Invoice Funding may provide a long term solution. Where credit is required to pay a large insurance premium, Insurance Premium Funding is a specialist credit facility that we offer.
The features, benefits, rates and costs of each option should be considered when arriving at the decision as to which will provide the most effective solution.
Compare Overdraft with Loans – Features
A line of credit is typically arranged through the enterprise’s bank. However, we have non-bank lenders that offer cost-effective lines of credit. This facility provides a ceiling on the credit and operators can draw on the amount as required. It provides flexibility as only what is needed is used and cost-effectiveness as interest is only charged on the amount drawn down and the time it is drawn down. Monthly fees to maintain the facility may be charged by lenders.
This facility can suit when credit is required on a more intermittent basis. A line of credit may be established as a short-term solution or over a longer period. This may suit operations that need to purchase stock which will be then sold in a retail or wholesale environment. The enterprise has certainty that the funds will be recouped through sales as the stock moves. It will also suit many other scenarios.
Secured and unsecured facilities provide a set amount over a set funding term. A fixed repayment schedule is established. These facilities can suit the purchase of non-asset requirements such as training and development courses, marketing campaigns, items of equipment not considered suitable security for asset acquisition purposes, and many other scenarios.
The difference between unsecured and secured is the collateral provided for the credit. Our broker will discuss these issues with individual customers to determine the most cost-effective solution.
In regard to tax deductions, both a line of credit and secured/unsecured facilities allow for the interest charged and lender fees to be deducted.
Compare Overdraft with Loans Interest Rates
The interest rate can be a major factor in deciding which way to go. The interest rate is higher for a line of credit than a secured facility. But take into consideration that interest is only charged on funds drawn on over the timeframe used. If need is spasmodic with different amounts needed at different times of say a month and only for a short time until cash flow picks up, a line of credit may be more cost-effective.
Rates for unsecured credit are higher than for secured facilities due to the collateral and risk factors. If a set amount is required to cover non-asset expenses in one payment, secured or unsecured may be the preferred choice.
Regardless of the choice, our brokers will covering off on our vast lender market to secure the best rates to suit individual customer profiles and requirements.
Quick Quotes to Compare Overdraft with Loans
Jade Finance provides a quick quote service for operators to easily compare our low business loan rates, overdraft with loans to assess the most suitable credit facility for their business. As these types of credit facilities can be very specific to the needs of the individual operation, it can be advisable to request quotes when making comparisons.
Our brokers will provide quotes on both options to enable operators to assess the costs and benefits to their individual operation. Our calculator can be used to obtain estimates.
To easily compare overdraft with loans for business support contact Jade Finance on 1300 000 008 for quick quotes.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.