Compare Business Loans With Money Pug
Why Might I Need A Business Loan?
- Found your company – financing of this type has allowed many entrepreneurs to get started.
- Get ready for a launch date. A business loan can help expedite matters and can help you need a business deadline or a particular business goal in a more timely fashion.
- Help your business expand. Getting a business loan can also often help an existing company to move onto their next phase of growth.
Can I Get a Business Loan?
Whether you are able to get a business loan will, of course, depend on the financial situation of your business and your own financial standing. As with any other sort of borrowing, a bank or other loan provider will check your credit history. In addition, however, in the case of a business loan, they may also wish to see a business plan or accounts, depending on whether you are planning a start up or are already up and running. Any bank will ask whether you can manage the interest on the borrowing and whether you are going to be able to repay the loan in a timely fashion. It is important to always be realistic in your ambition and goals, and be able to provide sensible documents to back up your claims. To stand the best chance of success, you should always make sure that your finances are in order and that you are as prepared as possible and can provide all the relevant information that is required.
Should I Get a Business Loan?
Whether you can get a business loan is one question, but whether you should get one is quite another. Borrowing is always a serious endeavour and such agreements should not be entered into lightly. Consider carefully before you commit to getting a business loan. If you are on the fence about whether a business loan is the right option for you, here are some of the pros and cons of getting a business loan to help you make your decision:
Pros of Business Loans
- Business loans offer a certain level of flexibility, while also providing a fledgling or expanding business with certainty and stability over the years ahead.
- Most business loans are fixed rate, so you can budget easily and know up front exactly what you will have to pay each month.
- Some business loan providers may give you the option of a repayment holiday, so you will be able to take a few months off repaying your loan if you have a cash flow problem or are waiting for an unpaid invoice to be paid.
- You will keep control over your own business as you will not have outside investors to whom you and your business will be accountable. However, you may find in future that investors will be necessary in order to take your business to the major leagues.
Cons of Business Loans
- As with other forms of borrowing, if you take out a loan from a bank or another mainstream provider, you will have to agree to the terms and conditions that they stipulate. This could include having to give regular updates, and being subject to financial checks throughout the term of the loan.
- If you want to repay the loan early, you may find that you will have to pay an early repayment charge, so think carefully about the length of time you would like the loan to run as well as the amount that you would like to borrow.
What Sort of Interest Rate With I Pay on a Business Loan?
The sort of interest rates that you will see on a business loan will very much depend on the situation of you and your business, your needs and financial position, how much you want to borrow and how long you want to take to pay it back. The lender will probably ask you for details of your past accounts and future forecasts and you will be given a quote based on the answers you have given.
What Types of Business Loan Could I Get?
Unsecured Business Loans
An unsecured loan can be taken out from a bank, building society or peer-to-peer lender. With this sort of loan, the amount you can borrow and the interest rate will depend on the financial position of you and your company and how credit worthy you are. With these loans, a home or business does not stand as security against the loan, so the lender will find it hard to take possession of them should you default on the debt.
Secured Business Loans
A secured business loan is secured against a property or business holding. With a secured loan, you can lose whatever has been offered as security if you default on the loan, but secured loans do allow businesses to borrow more money than unsecured loans.
Peer-to-Peer Business Loans
A peer to peer business loan is one offered through a peer-to-peer lending platform. This could be another way to finance your business, but access to lending will depend on the platform your choose. Some, for example, are only available for sole traders.
Government Backed Start-Up Loans
Before deciding on a loan, you should check whether you could apply for a government backed loan or grant. These loans are often low cost and have a fixed rate, but must usually be repaid within five years.