What is a business loan?
It’s a form of commercial finance which used to be exclusively provided by your bank. Today, however, there are also many specialist lenders who offer swift and very flexible deals.
You can usually borrow anything from £500 up to £1 million – possibly even more in certain circumstances.
These are unsecured loans which might be used to pay a big bill, help ease cashflow difficulties, or buy new equipment.
They can be a fast and effective way of freeing up the money which a business needs to expand – and with so many lenders to choose from, including peer-to-peer lenders, competition can drive down the price.
However, it can also make the job of working out the best deal for you very time-consuming and tricky.
A very thorough check of the market is needed to ensure you get the lowest possible rates.
What’s the difference between lenders?
High street banks, specialist independent commercial lenders, peer-to-peer lenders and so-called ‘challenger banks’ all have different ways of working.
They also have different algorithms for deciding upon the suitability of an applicant.
Usually, though, you’ll be expected to provide information about yourself and your business, three months of bank statements, two years of audited accounts, and credit references.
The lender will use this information to assess your ability to maintain payments, and will usually make a decision quickly.
Some lenders specialise in speed, offering fast loans but at higher interest rates. Others could take longer to process an application but will offer a more competitive rate.
How do I apply?
Our experts can handle the whole process, all the way from the initial form-filling exercise to the drawing down of the funds.
The hard work isn’t done when the application form has been submitted – you’ll be grateful for the expert support to guide you along the way, and make sure you are getting the best possible deal.
Speak to us, and we can give you an idea of how much you may be entitled to borrow, once we know your circumstances.
Pros and cons
There are a number of advantages and disadvantages to consider before taking out a business loan.
Advantages include:
- Competition is driving down costs: There are some low interest rates available as specialist lenders battle for market share
- You’ll get a swift decision: Most lenders have websites which will access your suitability up front, and loans are usually completed in under a week
Disadvantages include:
- If you’re starting a new business, there are lot of difficult hoops to jump through. Be prepared to have to spend a lot of time answering questions and providing supplementary information
- Lenders usually require a personal guarantee, which means that you will personally be liable if the business can’t keep up the payments