There are a broad range of available options in terms of business loans, with both secured and unsecured facilities for the smallest businesses through to well established large corporates. There is an equally broad range of lenders, and that is where we can help and provide guidance and formal submissions. Here are some of the available options:-
Unsecured Business Loans
• Unsecured loans do not need any security and are generally based on your business track record.
• Start-up Loan facilities from £500 to £25,000 are available for businesses with less than 2 years trading history at a competitive rate of interest.
• Whether a start-up or established company, a business plan and forecasts are important, as is the recent trading history if you are already operational
• Unsecured loans can be fast to arrange as no asset valuation is required.
• Repayment terms vary and range from 6 months to 5 years.
• Unsecured loans can be more expensive than secured loans because the lender’s risk is higher.
• Given the lack of additional security, it may be necessary to provide a Personal Guarantee.
Secured Business Loans
• Such loans will typically be secured against some or all of the assets within your business. This could be property or other fixed assets such as vehicles, equipment, machinery and plant.
• Should the business be in a position whereby the loan can’t be repaid in full, proceeds from the sale of the security are used to pay off the remaining debt.
• Typically the lender will seek a formal valuation against the assets being used to secure the loan.
• Repayment periods are often governed by the security and its future value, but can range from 6 months to 5 years. In the case of property this could be much longer.
• As the loan is backed by asset security, rates would generally be lower than for an unsecured facility.
Corporate Business Loans
• Larger corporate loans can often be used to assist with transactions such as management buyouts (MBO’s), leveraged corporate buyouts (LBO’s) or similar.
• Such facilities are also available to growing businesses with strong cashflow.
• In such cases detailed business plans and forecasts will be required to support the facility application.
• Repayment terms will vary, generally from 2 to 5 years, longer in some instances.
• Interest rates will also vary dependent upon the strength of the proposal and availability of any security.
General Points
Business Loans can be used for a wide variety of purposes from helping short term working capital, to acquiring business assets or another business, to helping fund growth. When a lender is viewing an application there is no set formula, but here are a few of factors that most lenders look at when assessing a loan:-
• Turnover and profit
• Bank statements
• Filed accounts
• Loan amount vs. turnover
• Trading history
• Any adverse payment history or CCJs
• Lenders will generally advance up to a maximum of 10-20% of your annual turnover.
• They will need to see sufficient revenue to demonstrate affordability.
For help and advice please call or email.