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All You Need to Know About Business to Business (B2B) Loans
Release Date:
2017-04-02
Description:
 
"Small- and medium-sized businesses need access to a diverse range of finance options, including non-bank lending. These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market." – Vince Cable

Are you the owner or financial manager of a business? Do you need to apply for a loan to cover an issue that you are currently facing, or are you perhaps planning to extend your business? It does not matter what size your business is, or what your reasons are for needing a cash injection into your business. The salient point is that you need to apply for a business loan.

What is a B2B loan?

According to Wikipedia, a business loan is a loan specifically intended for business purposes. As with all loans, it involves the creation of a debt, which will be repaid with added interest." We tend to think that banks are the only institutions or companies who are entitled to FCI authorisation. In other words, banks are the only companies who are, according to legislation, allowed to lend money to both business and private individuals. However, this statement is no longer true. Companies such as insurance houses and private companies can lend money as long as they are authorised to do so by FCI.

The term B2B or Business To Business describes a type of transaction that exists between companies, "such as one involving a manufacturer and wholesaler, or a wholesaler and a retailer."Thus, a B2B loan is a loan that is sourced from another company or business by an existing company or business.

For example, let’s say that you are an eCommerce Retailer, and you would like to increase your turnover and your sales figures. To purchase the additional stock, you need to find extra money to pay for the stock. There are several ways to source this funding:

  • You can apply for a business loan from your bank.
  • If you are a public company and are listed on any one of the global stock exchanges, you can issue another round of company shares to raise the funds to purchase the additional stock.
  • There are a number of private companies who make it their business to lend money to other businesses for capital acquisitions and business expansions etc. Therefore, you can apply for a loan from one of these companies.
  • Ask your customers to pay a deposit upfront when they order your products.


We can see that some of the above suggestions are easy to implement, while others will take the time to apply. Some of the above ideas are good, while others are not so good. For example, unless you sell very high-value products, it is probably not a good idea to ask your clients to pay a deposit when they place an order. I would say that the best idea is to take out a loan either from your bank or a private financial company.
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