Variable rate business loan

Variable rate business loan

When you want to borrow money for your business, you need a loan that is as flexible as possible. Business environments can change quickly and you need a finance solution that is flexible enough to change with you rather than constraining you.

The benefits of a variable rate business loan are that as the rate of interest fluctuates in line with the bank of England base rate, you can benefit from the low interest rates. Therefore low interest can help to stimulate business by the loan costing you less money.

However one of the disadvantages of a variable rate business loan is that they often have fixed repayment terms and you are locked into the set repayment schedule. This can put a strain on your cash flow if you end up in a situation where your customers aren’t paying you as quickly as you need them to.

Alternative solutions to variable rate business loans

There are some innovative ways to borrow money that don’t involved you taking out a fixed or variable rate business loan from a bank or other lenders.

These options include:

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

If you are looking for a business finance solution, the last thing your business needs is a product that provides you with the immediate cash injection that you need but its restrains you and holds back your business in the long term.

Whilst loans seems like the obvious solution to cash flow problems, the monthly repayments can become a burden that add to your day to day cash flow problems.

Invoice Finance

Invoice finance, which includes factoring and discounting is a perfect finance solution and is becoming increasingly popular in the business world.

Invoice finance, links lending with cash flow so you borrow money in a more effective way, because you are only borrowing money that you are owed by your customers, but you are receiving it between 30 and 90 days quicker than if you waited for your customers to pay you.

Invoice finance is like a revolving loan, because you can keep borrowing against new invoices, whilst paying off the loan when your customers do actually pay you.
Invoice factoring and discounting are very similar, however the main difference is that with factoring, your credit control is also out-sourced and is taken care of by the lender, so you save time and money that you can invest in developing your business.

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