Business Bank Loans
What is a Business Bank Loan?
A business bank loan is an unsecured or secured sum which is borrowed from a bank in order to support a business or provide it with a financial boost. This could be to refurbish the property, start a new project or expand.
They can be at a fixed rate or variable rate of interest and will normally be paid over a period of 1-10 years.
It’s important to find a loan to suit your needs. Check our comparison tables for a range of funding options.
What Types of Business Bank Loan are there?
- Unsecured Business Loan – This type of loan does not use any of your assets as security and therefore, there isn’t the danger of losing your home, business or car if you cannot make repayments, the lender would find it very difficult to take possession of these. However, because the loan is not secured, you may find that your borrowing will be limited as bigger loans will often require some form of security. The limit is usually up to £25,000. To gain your loan, yours and your business’s credit history will be taken in to account and the amount you can borrow and the interest rate will be set accordingly.
- Secured Business Loan – A secured business loan will use your assets as a guarantee for your loan. If you cannot make repayments then these items could be at risk. Due to this security you will be more likely to be able to borrow a much higher amount.
- Startup Loan – This type of loan is most suited to people starting out. Extra support may be provided as well as a startup package which can include a bank acocunt credit card, insurance and access to advice.
How to Apply for a Business Loan?
One of the most important aspects of applying for a business loan is comparing the market in order to find the right provider for you. You don’t necessarily have to take out a loan with the same provider that you bank with and many people lose out on great rates by not shopping around.
Here are some other tips when applying for a business loan:
- Know what you want - By knowing, you can be sure you’re not taking out a loan which is unsuitable for you or for your business.
- Make sure you borrow enough - You need to make sure your loan is covering the costs of your business. Calculating exactly what money you need can be very helpful so that you’re not left with a shortfall as applying for more loans on top can become expensive.
- What works best for me? - You also need to consider terms, what kind of repayment term is going to suit you best and what kind of interest rate will work for you?
- Be Ready- Have your business strategy ready to show the bank. They’ll need to know what you plan to use the money for, your proposed repayment plan and how you plan to do so.