This is part of our commitment to do as much as we can for the communities we serve. Other sources sometimes take on riskier propositions, albeit at a higher interest rate and possibly with a stake in the company. They may also be able to offer more flexible payback arrangements or alternative revolving loans that regular banks cannot. Commercial finance companies typically offer revolving loans with a credit line based on accounts receivable and inventory. This is a flexible loan that allows the borrower to repay or borrow money daily, depending on the company's cash flow needs.
Interest rates are usually one to four percent higher than on bank loans.
However, because the borrower can pay on the loan as soon as a payment is received, interest is only charged on money actually used. Evolving from a past reputation for granting only conservative loans, insurance companies have now moved into all areas of lending except short-term revolving debt. Many insurance companies are also interested in buying into growing firms to offset inflation worries on their fixed-return investments. Venture capital firms may be able to provide growth money for companies in a period of expansion. Although traditionally focusing on larger enterprises, venture capital firms have been increasingly willing to finance smaller start-up companies.