Business Loans

A guide to business loans

It's an unfortunate fact that new businesses often fail within their first year. More often than not this is because of a lack of viable funding and not because of a poor product or unfeasible business plan. New ventures take time to get off the ground but during these initial weeks, months or even years the business still needs capital to proceed through the early stages of company life. Small business loans generate this initial injection of cash but are often ignored because they are considered too difficult to obtain or a company would rather survive on its own two feet.

How to get a business loan

This is actually a surprisingly easy topic to cover. It is more complicated than simply completing an application form and submitting it to your bank manager, but it needn't be as complicated as a lot of new business owners believe it to be. New businesses need a convincing and compelling business plan, whereas an established company should present detailed financial records going back three years. As well as this it will also be necessary to detail the loan itself including the amount you wish to borrow, the period you wish to borrow it for, how much you will repay and any collateral you will be using.

Loans for start-ups are the most common form of credit. The money can be used to purchase equipment, pay for sales visits and even hire staff but you must detail exactly how, when and where you intend to spend the money. Unsecured business loans are more difficult to get because banks would rather you had some collateral in the event that you were unable to repay the loan. These and other factors will, eventually determine your business loan rates, as well as your application success or failure.

Using business loan brokers

Business loan brokers have access to many deals from various companies and can often help you to achieve the best possible business loan rates for your circumstances. Brokers also have regular access to companies that are offering a special on business loans in the uk and can even help you obtain a business loan with bad credit. There are other options available to financially aid any business.

Other funding possibilities: Government loans

Government business loans are generally more difficult to obtain than a small business loan but they do offer preferential rates and repayment terms if you are successful. Applying through a small business association means that if you are successful in your application, the association acts as a guarantor to your loan.

Other funding possibilities: Venture Capital

If you are lucky you may be able to find a venture capitalist willing to invest in your company for a relatively short period of time (usually up to ten years) in the hope of making five or ten times their investment back in that space of time. The "application" for venture capital isn't as rigorous and steadfast as with a bank loan but venture capital is only usually available to relatively young companies with a sound business plan.