Business Loans
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If you are looking to purchase new equipment, restructure business finance or expand your business, the good news there are several ways to get the money you need – consider looking at business loans. Business finance comes in various forms so you More....
| Loan | APR | Min Loan | Max Loan | |
|---|---|---|---|---|
| Moneyback Bank Loan | 7.2% | £7500 | £15000 |  |
| Barclaycard Personal Loan | 7.3% | £4000 | £25000 | |
| Alliance & Leicester Personal Loan | 7.7% | £7500 | £15000 | |
| Halifax Personal Loan (Semi-exclusive) | 7.8% | £7000 | £13000 | |
| Bank of Scotland Personal Loan (Semi-exclusive) | 7.8% | £7000 | £13000 | |
| Loan | APR | Min Loan | Max Loan | |
|---|---|---|---|---|
| FirstPlus Exclusive Rate | 6.6% | 8.1% | £10000 | |
| Ocean Finance | 9.5% | 14.9 | £10000 | |
| Loans.co.uk | 11.3% | 14.9% | £10000 | |
| Loan | APR | Min Loan | Max Loan | |
|---|---|---|---|---|
| Creditplus Car Finance | 17.9% | £2500 | £25000 | |
can be confident there will be one to suit you. Or perhaps you are starting a business and want to know what financial packages are available to business start-ups.
This guide will lay out the various types of finance packages available to businesses across most sectors: secured business finance,invoice finance, business overdrafts, asset purchase agreements and personal loans. A business loans should not be a daunting prospect providing you understand what each finance solution entails – and this guide is designed to help you do just that. So, let’s get down to business.
Applying for a Business Loan
The basis on which you will be offered a loan will come down to three components:
1. Credit rating
2. Profitability
3. Company history
Based on your credit history a lender will decide how much of a risk you are for a loan. This is especially the case for sole traders and partnerships. If your history includes late payments or bankruptcies, you should include a letter with your application explaining the circumstances and how they have changed.
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Never try to conceal poor credit history; it is never worth it. Instead offer a clear explanation, preferably in writing. It may not significantly reduce the risk but it will lend credibility to your loan application.
The company’s profitability will be assessed as well as the history of the company. The lender will want to consider how long the business has been established and review its financial track record.
Business Loan Repayment
Clearly demonstrate how you will be repaying the loan. Show the lender a history of your earnings and a projection of future earnings. You may want to visit your accountant who should be able to provide a clear presentation of Profit and Loss (P&L) and future projections, which you can then take to the lender. In addition to this, don’t forget to convince the lender how personally committed you are to the overall success of the business. It is better to be more “hands-on” than “hands-off”.
Small Business Personal Loan
Thinking of small business loans? For smaller businesses (and self-employed) it is worth considering a secured or unsecured personal loan to help your raise capital for your business. However, when taking out a personal loan for use in a business it is advisable to take out payment protection insurance.
Unsecured business loans and other funding
You may also be eligible for small business grants, visit www.businesslink.gov.uk for details.
Business start-ups
Bank lending is now more likely to be decided on the basis of ability to repay rather than the security that a business can offer. If you are planning to buy a piece of equipment for example, UK small business loans for start-ups could be the ideal way of raising the finance. A secured business finance loan is the best way to make costly purchases and avoid having to repay an overdraft at a moment’s notice.
Banks prefer small business loans. It enables them to be more consistent lenders, rather than having to reclaim money if the economy takes a dive. Banks also tend to prefer regular payments that they receive from a business loan. From a lenders perspective, as a small start-up business, you can run up large overdrafts that can soon spiral out of control. For this reason a small business loan makes you less of a risk.
Note: Interest rates can be high for new business loans.
Loan Interest Rates
When applying for a business loan you must decide whether to take a variable or fixed interest rate. A floating rate varies as the base rate of interest moves while a fixed rate is specified for the term of the loan.
Fixed Interest Rate
With a fixed interest rate on your loan you will pay a set amount each month. As it is fixed, the rate will not increase or decrease with the market rate, allowing you to predict how much you will be paying on the loan each month.
On the downside, you will not benefit when the market rate drops below the level set against your borrowing.
Variable Interest Rate
With a variable interest rate, your interest rates will fluctuate with changes to the bank’s base rate (or LIBOR). As a result your interest rate will be the current market rate plus the predetermined premium for the amount you borrowed. While you may benefit from a drop in interest rates, you could just as easily be subjected to a hike in interest rates.
Note: The longer you take to repay your loan premium, the higher the total level of interest will become.
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