What do I need to look out for with a business loan?
-Business loans come in all shapes and sizes, small business loans allow you to borrow smaller amounts and then larger loans that allow you to lend over a million pounds. The loan you are offered is depends on several factors, such as the loan provider, the amount you want to borrow and your business’s finances. The lenders view of financial risk within your businesses and sector, as well as other risk factors, will have an impact on the interest rate of your business loan, as well as the amount they may be willing to offer as a loan.
How much you want to borrow can make a difference to the type of loan you are offered - whether unsecured or secured. There are different lending and options, including direct from a bank, a specialist lender, or even a peer-to-peer loan service.
Who can apply for a business loan?
+Whether you are accepted will depend on several factors and requirements. Some lenders require your business to have been trading for a minimum number of years; the business may need a minimal level of revenue, strong trading figures and revenue. Other lenders may look for potential assets as security and how you intend to use the funds they provide.
It's very likely your (and other business partners') financial details will also be reviewed, including your credit score, credit history, current debt and more.
Who can apply for a government start up loan?
+You can apply for a government start up loan if you are 18 or older, live in the UK, have yet to start trading (or started trading less than 24 months ago), and will be selling in the UK.
How long do I need to wait for my business loan approval?
+This depends on the lender, and your unique circumstances. A lender will perform a thorough check of the business and your personal finances, which will take time to complete - having your financials and documentation, such as bank statements and tax returns, can speed up the decision process. Once approved, the loan money can be in the account in days.
What document will I need to provide to get a business loan?
+The document request for your business to be approved will vary and include business bank statements, revenue statements, business tax returns and business plans. They will also want to view personal financial details such as personal tax returns, credit history, other investments you may have and outstanding debt.
You may also be required to stand as a guarantee or have a form of life insurance in place. An asset that you can provide as collateral may also be required should the business fail to make repayments.