The distinction between these types of finance comes down to the purpose for which the finance will be used. The purpose will dictate how the terms of the finance need to be structured to ensure the finance supports, rather than hinders, the borrower’s business objectives.
Real estate finance supports commercial real estate activities like purchasing land, development, construction, and holding developed property. Its users are typically property developers and investors. Security under a real estate finance facility is typically a real property mortgage over the land, as well as all-asset security over the rest of the borrower’s property.
Corporate finance assists with general business operations, including operating expenses (working capital for cashflow) and capital expenditure (acquiring, maintaining or upgrading fixed assets like property, plant and equipment). Security under a corporate finance facility is typically all-asset security over all of the borrower’s property.
Asset and equipment finance is used to acquire specific assets or equipment for commercial use. Security under this type of facility is typically over the financed asset itself (as a purchase money security interest, or PMSI), and general all-asset security over the rest of the borrower’s property.