Business loans uk

A business loan is a form of financing that you can use to support and grow your business. How with personal loans, you borrow a sum of money and pay it back with interest.
One of the biggest differences between personal loans and business loans is that with a personal loan, you are personally responsible for paying back the amount borrowed.
With a business loan, as long as the right business structure is in place, that responsibility lies with the company instead. However, this is not the case if you are a sole proprietor or if you have secured your business loan with a personal guarantee. A business loan also typically allows you to borrow more, while interest payments on your business loan can be tax-deductible, unlike payments on a personal loan.

How to get a business loan

Decide how much you want to borrow and for how long. Once you’ve decided that a business loan is a good option for you, it’s important to consider the balance between what you can afford and what you need to support your business.
Compare commercial lenders to find the best fit for your business. By looking around, you can get a business loan that best suits your needs. You can use our comparison table to browse available business loans and find the right one for your business.
Submit your application and all relevant documents. This can include how long you’ve been trading, details of your finances and why you want the money.
Wait for an answer. Depending on your financial situation and the lender involved, it may take anywhere from a few hours to a few weeks to receive a response to your business loan request.

Eligible for a business loan?

Individual traders, small and medium-sized enterprises (SMEs) and large companies may be eligible to apply for a UK business loan. However, lenders will set their own criteria based on information such as

• the age of your company
• where your company is based
• your annual turnover
• Your professional and personal creditworthiness

Is creditworthiness required for a business loan?

There is no permanent staff business credit score You need to apply for a business loan. However, good credit could increase your chances of success and potentially give you access to lower interest rates, although that’s not the only factor lenders will consider.
For example, Experian’s commercial credit score ranges from 0 to 100. The closer your score is to 100, the less likely you are to be considered by lenders and the better your chance of winning a deal. ready.

Pros and cons of business loans

It’s important to weigh the pros and cons of getting a business loan before applying.

Advantages

Listed below are a few advantages of a company loan:

• It can help businesses access funds for ongoing operations and business growth.
• Some lenders offer flexible repayment terms.
• You keep the entire capital of your company.

The inconveniences

But there are a few downsides to consider with business loans:

• Missing or late repayments can negatively impact your company’s creditworthiness.
• Business loan repayments can impact your cash flow and the long-term growth of your business.
• You may be required to pay attorney and appraisal fees when applying for a secured loan.

Are business loans regulated?

Most forms of business credit are unregulated. However, if the business loan is for a value of £25,000 or less and relates to certain types of business such as B. Sole proprietorship, it can be regulated by the Financial Regulator (CAF).
You should research the form of business financing you are interested in and the lenders involved to see if they are regulated before applying.

Types of Business Loans

There are different types of business loans:

Secured business loans

Secured business loans require you to post an asset such as real estate as collateral. Because they present less risk to the lender, secured loans frequently have lower interest rates than unsecured loans. They can also give you access to a larger amount of credit over a longer period of time. However, secured loans come with the added risk of losing your assets if you miss payments.

Unsecured Business Loans

Unsecured business loans are a form of financing that does not require collateral. These types of loans tend to have higher interest rates because there is a greater risk that the lender will lose money if you are unable to repay your debt. Unsecured business loans also require a good financial history and good credit as proof that the company will be able to repay the loan.

Government loans for companies

There may be government-guaranteed business loans that you can access. Examples include the Recovery Loan Scheme which was introduced to deal with financial strains caused by the Covid-19 pandemic and has now been extended.
Available programs may vary depending on government policies and changing economic circumstances across the country. It can therefore be useful to contact the Department for Business, Energy & Industrial Strategy regularly to research tools for advice on business loan programs available in your area.

Start business loans

The Start-Up Loan Scheme is a government-backed fund currently offering personal loans of up to £25,000 to UK business owners who have been in full-time business for less than 36 or those trying to launch a business.
You can apply for free and there are no upfront fees. If your application is successful, you will also benefit from up to 12 months of free support.

Small Business Loans

Small business loans are for startups and small businesses to access finance. They can be used for a variety of purposes, from hiring new employees to managing cash flow. Like all loans, small business loans are repaid with interest over an agreed period of time.