Business Loans

There are a number of types of financial credit available. Primary amongst these are business loans, which are available for both those experiencing a shortfall in their business’s working capital and those just starting a new venture.

What are Business Loans?

A business loan can be taken out secured or unsecured. Unlike with standard secured loans and unsecured loans however, these products can be borrowed for larger amounts of money, even hundreds of thousands of pounds. The best business loans are those offered by more established business loan lenders (such as banks and other specialised lenders to business) which give much more flexibility and can be used to borrow more substantial amounts of money. They will also ideally have low loan charges.

Unsecured business loans provide funding that must be repaid in monthly instalments along with a business loan rate of interest. Secured business loans, on the other hand, require some sort of security against the debt so the lender is in no danger of losing its money. A secured business loan is generally taken out for a larger amount than with an unsecured business loan – perhaps to fund new machinery, vehicles or to move the business to a new location.

Business Startup Loans

Business startup loans are for those just beginning at the bottom of the business ladder, who may want to stick with borrowing smaller amounts of money. As long as the applicant has a viable business plan, they will be eligible for a new business loan of at least £1,000. These small business loans can go some way towards funding minor refurbishments or general working capital.

Due to popular demand, the UK government is currently offering business startup loan schemes to fund new business initiatives. Government business loans are specifically designed for young entrepreneurs for amounts of up to a few thousand pounds. Unlike traditional business loans, a government business loan can be taken out by the unemployed or those who have never had a financial product before, though all money must be repaid within five years with interest.

Short Term Business Loans

Most new business loans have repayment periods up to one decade, but more are being offered as short term loans. Short term business loans can really help owners through a temporary hitch in the running of their business. Borrowers can get an invaluable cash injection into their bank accounts with such quick business loans, though they must ensure they repay the entire quick business loan amount after a number of months.  Business overdrafts can also function as a flexible type of short term business loan.

Peer to Peer Business Loans

Recently, peer to peer lenders have started offering loans to businesses. These peer to peer loans are useful as they bypass financial institutions, allowing businesses greater access to credit.

Business Loans with Bad Credit

For financial emergencies, specialist bad credit loans are available. Business loans with bad credit are unsurprising as most commercial borrowers will face financial difficulties as their business gets off the ground and they have not yet built up a credit rating for their business. Securing a bad credit business loan can be challenging, but some non-traditional money lenders (for instance online lenders and specialist bad credit loans companies) may be willing to offer their services if the business in question is making some profits. Business loan rates for this sort of financial aid can be quite high due to the risks involved so customers are advised to consider other ways of financing their business first if they have a poor credit rating. A first step is to take advice of some of the free debt advice available aimed at businesses, from charities and government bodies.

Compare Business Loans

Because deciding whether to take out even a small business loan can be a tough decision, business owners are encouraged to compare business loans to see what type of finance would be more suitable for their small, medium or large business ventures.