UK Business Loans
Business loans can be used for any number of reasons. For example you may be a strong established company looking to expand into new markets which require investment. Or alternatively, you are a start up which is looking for business finance to fund your first premises.
Whatever your reason for needing a business loan, we will have a tailored solution for you ranging from start up business loans, to secured and unsecured business loans and anything in between.
Business Loan Terms
Our loans are tailored to each individual businesses needs so there is no one solution for all. However key terms which are available for each loan includes the following:
- Repayments can be made over a period of 10 years which can rise to 30 years for loans over £100,000
- Repayment holidays are available at the start of each loan which allow you to devote free capital straight to your business (please note interest will continue to accrue during the payment holiday)
- Interest rates can be fixed so you know exactly what your monthly repayments are or variable if you would prefer to have the opportunity to benefit from interest rate falls
Advantages of Business Loans
Business loans have a number of advantages compared to the other forms of debt including
- Being easy to arrange – a small business loan can be available within two working days while a large business loan can be available within a week provided all the necessary paperwork has been completed
- Cheaper – business loans are typically set at a margin above the current base rate or LIBOR in the case of variable rate loans. This margin is calculated based on the perceived risk of the loan but it typically smaller than that of an overdraft or asset based finance.
- Can be matched to cash flow – loans are usually used to purchase long term assets of the business as such repayments are matched to the returns being made by those assets.
Alternatives to business loans
If on examination we believe there are better financing options available we will immediately let you know. The main alternative to traditional business loans are asset based finance. This can take a number of forms including factoring and invoice discounting, which both provide finance which is secured against the outstanding debtors balance, and asset based lending can be secured against a variety of assets including stock and plant and machinery. The differences between each of these are as follows:
Factoring
With factoring the lender takes over the running of your sales ledger and collects debts themselves as and when they fall due. Factoring can be either with or without recourse. With recourse you remain responsible for bad debts, so if someone doesn’t pay an outstanding invoice the factor will ask you for the money instead. With non recourse factoring, usually a credit check has been carried out by the factor who approves the customer. In these instances the factor is responsible for any bad debts which arise due to non payment. Factoring is a popular choice for start ups, SME’s and small companies looking for short term loans to fund their business growth.
Invoice Discounting
When using invoice discounting you continue to run our own sales ledger and collect your debts. As a result, customer don’t need to know that you are using a third party in this way. As with factoring, invoice discounting can be either recourse or non recourse. Like factoring, invoice discounting is popular with start ups and smaller companies.
Asset Based Lending
Asset Based Lending (‘ABL’) is probably the closest alternative to a traditional business loan. The main difference is that the loan can be secured against shorter term assets than a bank loan such as inventory. Usually, ABL would be used by a more mature business which has a number of years trading.
