If you need to borrow money for your business secured loans are an option, however if possible you should consider all your options.
This is because when borrowing money to develop your business you want your debt to be as flexible as possible so that you are not tied into anything that could hold your business back. Business secured loans can be extremely inflexible; they can be costly and can take time and a great deal of paperwork to arrange.
The good news is that if you want to borrow money, you don’t have to turn to business secured loans, there are plenty of other options available to you.
Using your sales ledger as security
Instead of using a physical asset as security, you can use your sales ledger instead, by borrowing against the value of your sales ledger.
Invoice finance is an unsecured business loan, which doesn’t require you to pay a high rate of interest.
With invoice discounting and factoring, you borrow the money that is owed to your by your customers, therefore for lenders this is a relatively risk free form of lending, in which you don’t have to offer up any physical assets as security.
Businesses that are profitable and growing can face cash flow problems because they are unable to bridge that gap between paying their suppliers and receiving payments from their customers. Businesses can find this very frustrating because they are owed money but are still facing cash flow problems.
Invoice finance can solve this problem and can also act as a great alternative to business secured loans.
How does invoice finance work?
Invoice finance unlocks the money in your sales ledger, by paying you the money that your customers owe you. When your customers finally pay, your loan is cleared. Here are some more details of how invoice finance works:
- You invoice your customers for the goods or services they require
- The lender pays you up to 95% of the invoice value within 24 hours of your raising the invoice
- The customer pays between 30-90 days later
- Your loan is repaid, with a small charge
The charges and exact processes vary from lender to lender, but the basic principle is the same. You get paid what you are owed quicker!
For further advice regarding business loans please contact us on 0800 597 4757 or apply online using the form opposite.
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