If you are thinking of starting a business or maybe just wanting to fund the next stage of your growth, then you may need to consider a loan.
Getting a business loan may depend on your own personal financial situation as well as your business.
Applying for a loan
Before you apply for a business loan, make sure your finances are in order and have a business plan prepared.
If it is a new business then have realistic forecasts and projections for the business including costs, whereas for an existing business, a loan provider will most likely want to see your up to date accounts.
Business loan types
Unsecured loans
Lenders will typically lend a smaller amount on these types of loan, as the money lent is not secured against any asset, leaving the lender exposed, should you be unable to repay the loan.
Secured loans
For larger amounts, lenders will usually insist that the loan is secured. This may be against any business assets, your home or even a personal guarantee.
Peer to peer lending
There are many online peer to peer lending sites which may be suitable depending on the nature of your business.
Government loans
For a new start up it is worth looking into government backed schemes, some of which may provide you with a mentor together with the funding for your business idea.
Business loan alternatives
Crowd funding
Another type of online lending similar to peer to peer is crowdfunding, whereas the difference being, there is no money to repay, but instead you are giving away equity in your business.
Invoice factoring
Invoice factoring allows businesses to borrow money against existing invoices, freeing up their cash flow, while waiting for those invoices to be paid.
Logbook loans
As a type of secured finance, a logbook loan can be an ideal alternative for a business needing a short term loan quickly.
Credit cards
Although not ideal, used smartly they can bring benefits like cashbacks and points. Only use if you can afford to pay back the balance in full each month.
Always consult with an independent financial adviser to find the right loan to finance your business.
