What is a new business loan?
A new business loan can support a company with some of the costs of getting started. The money borrowed can normally be used for a variety of startup expenses, including renting premises, purchasing stock and equipment and paying for staff.
New business finance can generally be offered either as an unsecured business loan or as a secured business loan, depending on how much you need to borrow, how long for and other considerations. The amount and type of loan you can access may depend on factors such as your level of business experience and the value of any assets you own, such as property.
Business finance can usually be accessed by sole traders, partnerships and limited companies, although the structure of your business and how many people are involved may affect how much you are able to borrow.
Before taking out a new business loan, it is recommended to discuss your borrowing needs with an independent financial advisor. They will be able to guide you towards finding the most appropriate types of funding for your business needs and personal circumstances.
How to get a new business loan
Having the correct information available when you apply for a business loan can help speed up the process and boost your chances for success.
Lenders will commonly wish to know:
- What you plan to use the loan for
- How much would you like to borrow
- Over what period you want to repay the loan
- The nature of your business
- Who the owners and directors are
- Your plans for the business over the short and longer term
Types of business loans for new businesses
When considering what kind of business finance you might be able to access, there are two main issues to consider – whether you want the loan to be unsecured or secured. This will likely affect how much you can borrow, the interest rate you will pay and other terms and conditions of the loan.
Unsecured business loans
An unsecured business loan may offer:
- Borrowing up to around £25,000
- Repayment terms of up to 10 years
- Fixed repayment rates
- Borrowing for most business purposes except buying property
Secured business loans
A secured business loan may offer:
- Borrowing in excess of £25,000
- Repayment terms up to 25 years
- Fixed or variable repayment rates
- Borrowing for most business purposes including buying property
Compare new business loan rates
When borrowing money for business purposes, it is essential to get the very best deal you can on your interest rates and other features of the loan. This can help to keep your future costs down by keeping your repayments low, meaning your business will be more profitable.
Our free business loan calculator make it easy to find the best deals on business finance. All you need to do is select the amount you need to borrow, how long for and a few other key details and the calculator will show you leading deals on new business loans from across the market. Head to the top of the page to try it out.