A business loan is a loan for business purposes. The type of business loan you apply for is likely to depend on your business circumstances and why you need the money. You can apply for a start-up loan to help get your business off the ground, a short-term loan to help ease cash flow issues or a long-term loan to fund the expansion of your business.
A business loan could be the answer. So whatever your next goal is, just tell us how we can help when you apply.
Insight Loan Services
There are several decisions you need to make when you’re looking for a business loan and several things that you need to understand when you’re comparing loans. These are some of the key points.
Fixed rate vs. variable business loan
If you have a loan with a variable interest rate, the rate can go up and down, whereas a loan with a fixed rate means your repayments tend to be predictable. Most small business loans are fixed rate loans.
Unsecured vs. secured business loan
A secured loan is backed by an asset (property, machinery or a vehicle, for example), which means the lender can claim ownership of the asset if the loan isn’t repaid. An unsecured business loan isn’t backed by an asset, but the lender may ask for a ‘director’s guarantee’ instead, which means they may pursue the director for repayment if the loan isn’t paid off.
Whether you’re offered a secured or an unsecured loan may depend on how much money you want to borrow. Large loan amounts will usually need to be secured, whereas lower amounts are often unsecured. Unsecured loans may have higher interest rates, as they’re riskier for the lender.
Long term vs. short term business loan
You’ll also need to make a decision about your loan term, which is the length of time that you have the loan for. This is likely to depend on what you need the loan for, and how quickly you think you’ll be able to repay it. Different lenders have different minimum and maximum loan terms, and the term you’re offered may depend on your circumstances.
It can be tricky to get approval for a business loan, and the lender will ask for lots of paperwork as part of the application process, including business plans and accounts.
Bear in mind that, as well as the eligibility criteria mentioned for specific loans below, most business loans require that you’re at least 18 years old, and you’re not bankrupt or in a debt management scheme.
Whether a business loan is right for you depends on your circumstances. Remember that interest rates can be high and there are penalties for missed payments, so make sure you can afford the loan before you take it out.
Government-backed Start Up Loan
Interest rate: Fixed rate of 4.6% a year.
Loan term: One to four years.
Fees: No application fee and no early repayment fee.
Eligibility: You need to be planning to start a business, or have a business that has been trading for less than three years.
Later on, in the application process, you’ll need to provide documents like a business plan and a cashflow forecast, but you’ll be given help to get these together.
Can I get a business loan?
Whether or not you can get a loan will depend on your own financial situation and that of your business. As with any other borrowing, a bank or other loan provider will look into your credit history, but in addition, they may also want to see a business plan or accounts, depending on whether you’re a start-up or already running a business.
Taking out a business loan with your current bank may seem quick and easy, but any bank will ask whether or not you can manage the interest and repay the loan in the time set, so it’s always a good idea to shop around and keep your options open. Before applying, make sure your finances are in order and that you’re as prepared as possible.
A secured business loan can be secured against a number of different things and depends on the value of the loan and its purpose.
Security may include a personal guarantee, security over whatever’s being purchased with the loan or over assets in the business. It may even be possible to put your own home up as security.
Remember that your home will be at risk if the business fails to keep up repayments, so think carefully about this option. Secured loans allow businesses to borrow larger sums of money than unsecured loans.
We have a long tradition of financing trade. In addition to standard trade finance products, the teams provide sophisticated and innovative structured solutions to a wide variety of risk mitigation and financing needs for corporate customers.
What are the risks
As international trade takes place across borders, with companies that are unlikely to be familiar with one another, there are various risks to deal with. These include:
Will the exporter be paid in full and on time? Will the importer get the goods they wanted?
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