How can my business secure a business loan and what if I fail to meet business growth targets and can no longer afford to pay the interest owed?
Loan and debt finance is offered by many
lenders, including banks, community finance institutions and a raft of
alternative providers, to startups and small businesses. Terms will vary
depending on business trading record, intended use, term, security and company
balance sheet. Loans are typically used for startup capital or for purchasing
equipment, where loans are linked to the useful life of equipment or assets.
Loans have an interest element, which is typically
paid monthly, and capital repayment, which can be repaid over the duration of
the loan or at its term. Loans can either be secured against company or
personal assets, or unsecured for typically smaller amounts. The interest rate
charged will vary depending if it’s a fixed rate for the
length of the loan or variable rate linked to the bank of England base rate.
Loans are typically inflexible and if you fail to make repayments (the interest rate may have risen if your loan has variable rates, or your income or costs are not in line with forecasts) you could lose your loan security, including personal property or company assets. With debt finance, entrepreneurs retain ownership of your company and profits, although profits are reduced by interest payments. Control is also retained, subject to keeping up interest payments.
Key: paid for service registration required official
WHEN: You have been unable to access mainstream finance.
WHY: You need to find a specialist loan provider that can fund your business.
WHAT: Government backed loans for small businesses less that are less than two years-old. £500-£25,000 loans are available at a fixed interest rate of 6% pa (currently).
