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Secured business finance is where an asset is offered as security for the loan. The guaranteed asset can be either property or equipment. Low cost business secured loans provide access to a lump sum payment, which can be paid back on a monthly basis More...
at an agreed rate of interest. The biggest advantage of secured business finance in the UK is that the loan can be used across a range of business purposes. Note: Some form of payment protection insurance should be taken on this kind of loan due to the severe consequences if you are unable to make repayments.
Unpaid invoices can prove particularly crippling for a business and seriously affect cash flow. Invoice finance is a business loan that involves ‘selling’ unpaid invoices to a loan provider who then supplies a cash advance of equal value to the sold invoices. The lender acquires the services of a collection company to retrieve monies unpaid on the invoices. Invoice financing is the best way to keep your business moving forward undeterred by the burden of unpaid invoices. As unpaid invoices are the thorn in the side of most small business, it is unsurprising to find that invoice finance loans, tend to cater to businesses on a small scale. An invoice finance loan may offer you the extra capital you need to make that expansion or order that new equipment.
Asset purchase agreements – or asset and invoice finance solutions – offer businesses finance for equipment they would otherwise be unable to afford. If you are buying some equipment for the business, a business start-up loan can be tied to the lifetime of the asset that you are purchasing. With regular payments the amount can be gradually reduced over the repayment period.
Small business can be adversely affected by any fluctuation in cash flow. Unpaid invoices, seasonal custom or just a sticky patch, can see cash levels dip too low. For this reason, most small businesses have business overdrafts with their bank, and advantages include: 1. Quick access to funds 2. Borrow money when needed 3. Use for any purpose 4. Repay when funds become available (up to 12 months). Note: Interest rates may vary in line with the bank’s base rate and the limit will be agreed with your bank’s business advisor.
Disadvantages of a business overdraft include: 1. The amount borrowed can be called in at any time. 2. It is nly suitable for day-to-day expenses (not start-up costs etc). 3. Can prove expensive if overdraft limit is exceeded. It is interesting to note a decline in business overdrafts since the recession of the early 1990s. The downside of business overdrafts was all to evident in the economic slump which followed the recession. All business overdrafts were called in depriving many businesses of available credit. Return to Debts homepage.
