Starting a business loan

Starting a business loan

Because of the wide variety of loan options available, it is often not clear which is the right option for your business. This can make starting a business loan, daunting and confusing.
The different loan options for businesses include:

  • An agreed business overdraft
  • A fixed rate loan- where the interest rate stays the same over the loan period
  • A variable loan- where the rate of interest changes with the base rate
  • A capped loan- where the interest rate stays the same for a set period
  • Asset finance
  • A commercial mortgage
  • Invoice Finance- Discounting or Factoring

How to start a business loan

When you are considering starting a business loan, you will need to know the answers to the following questions:

  • How much money do you need?
  • How flexible do you want the repayment terms to be?
  • Would you like a fixed, variable or capped interest rate?
  • Would you be willing to or are you able to have the loan secured on property?
  • What will you do if the business cannot repay the loan?

You will need to answer these questions in order to determine which type of loan to consider, and the possible lenders will also require most of this information too. Not all loan options may be suitable for you business, for example certain options will not be suitable if you don’t have property to use as security.

Flexible finance options

Flexibility and control over finance is very important for businesses, there is nothing worse than getting tied into a finance option that is costly and not suitable for your businesses long term growth.

Whilst bank loans seems like the obvious solution to finance needs, there are other finance solutions that are flexible and do not need to be secured, like Invoice Discounting for example.

Invoice Discounting

Invoice discounting is similar to factoring, in the way that it releases cash tied up in unpaid invoices, often within 24 hours of raising the invoice. However Invoice Discounting requires you to collect the payments yourself.

Invoice discounting improves cash flow and gives you the ability to get greater amounts of finance as the more you invoice the more you can borrow.

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