How Does Commercial Finance Work?

Commercial finance is simply funding provided to a business rather than an individual. The market is far larger and more varied than most business owners realise, and understanding how it fits together makes it much easier to get the right result.

Who the lenders are

Beyond the high-street banks sit challenger banks, specialist asset finance companies, invoice finance providers, peer-to-peer platforms, private bridging lenders and development funders. DNA Finance has access to more than 165 of them. Each has its own appetite for sector, deal size, trading history and risk. A business that one lender declines may be exactly what another is looking for.

The main product families

• Term loans: a lump sum repaid over a fixed period, secured or unsecured.
• Asset finance: funding for vehicles, machinery and equipment, with the asset as security.
• Invoice and trade finance: working capital released against invoices or purchase orders.
• Property finance: commercial mortgages, buy-to-let, bridging and development funding.
• Cash-flow products: merchant cash advances and revolving credit facilities.

How an application actually flows

You provide information about the business and the requirement. The lender's underwriter assesses affordability, security and risk. An offer is issued with terms and conditions. Documents are signed, any security is put in place, and funds are released. For unsecured lending this can take days; for property finance, weeks.

Where a broker fits in

A broker sits between you and the market. A good one will understand your requirement, identify the product and lenders most likely to approve it, structure and present the application, negotiate terms, and manage the process to completion. In most cases the lender pays the broker a commission on completion, so there is no upfront cost to you. Where a fee applies, it is disclosed and agreed in advance.

What "whole of market" means

Some brokers work with a handful of lenders. DNA Finance compares across the whole market, which means the recommendation is driven by what suits your business rather than by who we happen to have a relationship with.

Start with a conversation

Commercial finance works best when it is planned rather than rushed. Tell us what you are trying to achieve and we will map out the options, the likely costs and the realistic timescales before you commit to anything.