Whether it’s to help with working capital or to purchase a new piece of machinery or equipment, there will come a time where you may need a cash flow injection for your business,
However, it can be quite complex without the help of a broker.
There are a huge number of loan products available on the market, with a large number of lenders that offer them and the terms of these loans can vary in size, length and turnaround time.
Using a broker that has access to a wide variety of these types of facilities, along with access to high street banks, challenger banks and specialist lenders, we will do utmost to ensure that you have the opportunity to get the product that is most-suited to your business.
What types of business loans are there?
Secured Business Loan
If you’re looking for a cash injection and don’t want to offer a personal guarantee, you could apply for a secured business loan.
All you need is to already own assets like any commercial properties, work vehicles or any machinery and equipment to offer as security to the lender, though it should be noted that the amount you can borrow using a secured business loan depends on the value of the asset(s) you offer.
Please be aware that a secured business loan carries the risk of the asset being used as a security could be repossessed in the event of default.
Unsecured Business Loan
If you don’t have any assets to offer as security, or if you need finance quickly, you could opt for an unsecured business loan.
This type of business loan can be perfect for your business if the assets that your company uses are intangible, for example computer software, or if the office that you’re in is rented rather than owned, meaning you don’t physically have any assets to offer.
Revolving credit facilities
This type of finance is different to a fixed business loan and can be described more as a rolling agreement.
In the same way that you would if you had a business credit card or overdraft, when using a revolving credit facility, you will usually be given specific payment terms that detail how long you have to pay it back over.
The ‘revolving’ part of the facility comes from the fact that, once you have repaid a pre-determined amount of money, you will be able to withdraw more.
Business cash advances
Based on your business’s future revenue, a business cash advance comes in many forms, such as merchant cash advances, and will often be called a revenue or turnover loan.
These differ from normal business loans, and most of the other forms of finance, as the amount of interest you pay will be decided upon at the start of the agreement and applied to each transaction that your customers pay you.
For example, if you borrow £20,000 and have a monthly repayment charge of 20%, every time a customer buys from you, you will keep 80% whilst 20% of their transaction will go towards repaying the loan.
As the amount you repay is proportionate to the transactions, a benefit of this sort of finance is that, if you were to have a slow month, your monthly repayments would drop proportionately.
What if I only want to borrow over a short period of time?
Short term business loans are readily available, including bridging loans, with agreements ranging between three months and two years. Any longer than this and you’ll be looking at a longer-term loan.
If you’re looking for a loan for the immediate short-term, then a revolving credit facility or business overdraft may be the best option for your business.
To find out more about what types of business loans are available to you and your business, contact our experts on 0333 444 0221 or email firstname.lastname@example.org.