What Are the Different Types of Commercial Finance Available?

Whether you’re launching a new venture or scaling up an established business, one thing’s for certain: access to the right funding can make all the difference. But with so many options out there, it can be hard to know where to start.

In this blog, we’re breaking down some of the most common types of business finance: what they are, how they work, and when they might be right for you.

Let’s start with the basics. Commercial finance is a broad term that covers a range of funding options designed specifically for businesses. It might be used for anything from covering cash flow gaps to funding growth or investing in new equipment.

1. Development Finance

Whether you’re an experienced property developer or tackling your first project, the right finance can be the difference between a great idea and a successful build. Whether you’re building from the ground up or converting an existing building, this type of finance gives you access to funds in stages as the project progresses.

It’s typically repaid once the project is complete, usually through the sale of the property or by refinancing onto a longer-term loan.

2. Asset Finance

Need new machinery, vehicles, or equipment but don’t want to use up all your working capital? Asset finance could help.

There are two main types:

• Hire Purchase – you spread the cost of the asset over time and own it outright at the end.
• Leasing – you pay to use the asset for a set period but don’t own it at the end (although some agreements include a purchase option).

It’s a great way to invest in the things your business needs without taking a big hit to your cash reserves.

When speaking with an independent company such as MCB for your asset finance, you gain access to the most comprehensive portfolio of funders operating within the asset finance market. You instantly benefit from an unprecedented choice of funding sources, including specialist funders who operate exclusively within niche market sectors. What’s more, through the relationship of mutual respect that we have forged with all our funders, we can bring you the most attractive and highly competitive rates in the asset finance market.

The UK asset finance market is a substantial sector, supporting a significant portion of business investment in equipment and machinery. In 2025, the Finance and Leasing Association said that the asset finance market supported the real economy by financing a third of UK investment in vehicles, machinery, and equipment in 2024. 

3. Commercial Mortgages 

A commercial mortgage is a loan used to purchase or refinance property that’s used for business purposes. This could be anything from buying your first office space, expanding into new premises, or investing in a commercial property to rent out.

There’s no one-size-fits-all when it comes to commercial mortgages. The terms you’re offered will depend on several factors, including the size of your deposit, the type of property, the industry sector, the strength of the tenant, the length of the lease, and your experience as a business or investor. Lenders assess the risk involved, so a strong lease agreement or established trading history can help secure better rates.

It’s worth noting that commercial mortgages are different from residential ones; they tend to have higher interest rates, shorter terms, and often require a larger deposit. There are also more variables to consider, and the process can be more complex and time-consuming.

That’s why many businesses choose to work with a broker or adviser who understands the commercial lending market. With access to a wide range of lenders, they can help match you with the most suitable options and support you through the application process.

Whether you’re purchasing a property for your own use or as an investment, taking the time to explore your options and understand what lenders are looking for can help you make a more informed decision and potentially save money in the long run.

Which One Is Right for You?

The answer depends on your business goals, cash flow, industry, and what you’re funding. At MCB, we take the time to understand your business, talk through the options, and match you with a finance solution that makes sense.

Whether you’re just starting out or planning your next move, we’re here to help you find the funding that fits. Want to talk it through? Get in touch – we’re always happy to chat.