What are business loans?
A business loan is similar to a personal loan, but is specifically designed for business use.
With a business loan, you are lent a certain sum of money over a period of years, and the interest rate and monthly payments are fixed over the term.
Some business loan providers offer access to short-term finance and may, for example, offer sums of up to £30,000 for up to a year. Others will allow you to borrow larger sums over a longer period.
In addition, some providers specialise in small business loans, while others focus on start-up business loans for new businesses.
What are the benefits of having a business loan?
Business loans can help with cashflow, and help to tide you over when times are tough by offering access to short-term finance.
Other loans can help you borrow over a longer period – if, for example, you need to pay for one-off business expenses, or to fund expansion plans.
Start-up loans can offer a big loan when you first set out running your own business, while small business loans can prove vital when managing the demands of employees, clients and cashflow for a smaller business.
With some lenders – known as “peer-to-peer” lenders, you can borrow from people, rather than from a bank. With this type of loan, you may be able to choose from a secured loan, an unsecured loan, or an asset finance loan.
With some types of business loans, you can set out how much you want
to borrow and for how long. Some offer flexible repayment options, while others come with no early repayment fees.
Who can apply for a business loan?
Any firm can apply for a business loan, no matter how big or how small, although some providers will only lend to limited companies, so you need to check this.
Business loans can help with cashflow, and help to tide you over when times are tough
Crucially, what you need to realise is that in the uncertain economic climate, it has grown a lot harder for almost any business to get accepted for credit. To apply for a business loan, your business will usually need to be VAT registered; there may also be a minimum monthly turnover.
Some providers may also stipulate that you have at least two years of filed accounts, although certain lenders are happy to lend to businesses with less than two years’ trading history.
Why apply through MoneySupermarket?
If you are looking for a business loan, you need to spend time carrying out a little research, as there are different types of loan on offer from a host of providers.
The easiest way to compare all the loans available in once place is by using a price comparison tool such as MoneySupermarket.com.
With just a few clicks on the free and independent tool, you can see details of the rates and features of the business loans on offer to help you find the best business loan for your needs.Source: www.moneysupermarket.com