Do you need a medium term business loan?

Do you need a medium term business loan?

If your business is looking to borrow money that is repayable over a term of 1 to 3 years, then your business needs a medium term business loan.

Medium term business loans are very popular in business, and they are often used to fund business development. The money can be used in a variety of ways to help grow a business. But businesses often use the loans to fund the following growth initiatives:

  • To open new premises
  • To purchase new equipment
  • To develop or market a new product or services
  • To purchase new stock

However just because you are looking for a business finance option that is repayable over a term of 1 to 3 years, it doesn’t mean you are restricted to just one finance option, and it definitely doesn’t mean that the solution is the best one for your business.

Other options to medium term business options

When your business grows and develops, your turnover and profitability will grow, but this doesn’t mean that you will have lots of available cash. At times you may still find that you have a cash flow shortage due to the gap between needing to pay your suppliers and your customers paying you.

Whilst when you were planning your growth you felt that you needed a business development loan, you may find that as you actually grow, your loan does not grow with you and making those monthly repayments can become a real burden.

If you think you need a medium term business loan it is a good idea to consider all the available options before committing to a loan.

The alternative options include:

  • Asset based finance
  • Asset lending
  • An agreed business overdraft
  • Commercial mortgage
  • Invoice Finance- Factoring and Discounting

Invoice factoring

A great alternative to a medium term business loan is invoice factoring. Factoring is different to a medium term business loan because factoring releases the money that is tied up in your sales ledger, so in effect it’s not really a loan as you have already earned the money.

The lender will pay you up to 95% of the value of your invoices often with 24 hours of you raising the invoices. This will provide you with an almost immediate cash injection that could equal the value of the loan you were considering taking out.

For further advice regarding business loans please contact us on 0800 597 4757 or apply online using the form opposite.