A Business loan is borrowed capital which is used to fund business expenses such as start-ups and growth. These types of loans are tailored to the needs of the business.
As with any other type of loan this is dependent on yours and your businesses current financial situation. The loan provider will assess your personal credit history and will also want to review your business plan or accounts depending on if you are a start-up or already trading.
The amount of interest charged for a business loan will depend on your business’ circumstances, the lender will likely want to review your past accounts and future financial forecasts.
This type of loan is taken out from a bank, usually up to a maximum of £25,000, bigger amounts usually require some kind of collateral.
This type of loan is secured against an asset. If you fail to repay the debt the lender can sell the asset to pay off the remainder of the debt, enabling you to borrow a larger sum.
Government-backed start up loans
If you are just starting up your business, then you should consider government backed schemes.
The Start Up Loans are available to individuals looking to start their own business, you can borrow from £500 up to £25,000 unsecured with a fixed rate of interest. However, you have to repay the loan within 5 years.
They also provide more support than typical lenders as they are set up specifically to help your business start-up and thrive. As part of this businesses are provided with a mentor for 12 months.
This is a lending platform allowing individuals to lend money directly to borrowers. It removes the banks and building societies from the equation therefore borrowers may have access to lower interest rates and the lender may be able to get higher interest rates than those available with their savings account.
Be aware that whilst there is potential for better returns there is also more risk, returns are not guaranteed and you may potentially lose the capital.