1. Commercial credit and its types
COMMERCIAL CREDIT
Refers to the financing provided by lenders to businesses for their operational or investment
needs. It allows businesses to access funds to support their growth, manage cash flow, purchase
inventory, expand operations, or invest in new equipment.
2. TYPES OF COMMERCIAL CREDIT
1. Business Line of Credit
A flexible credit arrangement that allows businesses to borrow funds up to a predetermined limit.
Interest is paid only on the amount used, making it suitable for managing short-term cash flow
fluctuations.
2. Term Loan
A fixed amount of money borrowed for a specific purpose, such as purchasing equipment or expanding
facilities. Repayment is made in regular installments over a predetermined period, typically with a fixed
interest rate.
3. Commercial Mortgage
A loan secured by a commercial property, such as an office building or retail space. It provides long-
term financing for purchasing or refinancing commercial properties.
3. 4. Trade Credit
When suppliers allow businesses to purchase goods or services on credit, usually with payment due
within a specified period, it is known as trade credit. This type of credit helps businesses manage
inventory and pay suppliers without immediate cash outflow.
5. Equipment Financing
Specifically designed to fund the acquisition of equipment, this type of credit allows businesses to
purchase machinery, vehicles, or other assets required for their operations. The equipment itself
serves as collateral for the loan.
6. Invoice Financing
Also known as accounts receivable financing, this type of credit allows businesses to borrow against
their outstanding invoices. Lenders provide funds based on the value of the invoices, enabling
businesses to access cash before customers have paid their invoices.
CONCLUSION
The availability and terms of commercial credit can vary based on factors such as the business's
creditworthiness, industry, and the lender's requirements. It is advisable to consult with financial
professionals to determine the most suitable commercial credit options for specific business needs.
4. GROUP MEMBERS
1. PRECIOUS MOYO MO3106
2. DANIEL SOKOSA SO0070
3. CLIFFORD KONDOWE KO3049
4. ABIHAIL NGALAWA NG3203
5. ABDUL ASSAM AS3011
6. BRIAN CHAGWELUKA CH4721
7. HAJI SAIDI SA3201
