Business Loans
Getting a business loan used to mean a visit to a high street bank and a lengthy application process. That was your only option.
Now the market is full of lenders offering a diverse range of products, rates and loan terms. On the one hand this means there are a lot of options to sift through (that’s where we come in). But it also means there is a much higher chance of getting the right type of funding approved for your business.
Secured vs unsecured business loans
Unsecured loans are offered without asking you to secure it against any of your assets, goods or property. This means if you default on the repayments, the lender cannot recover the debt through those assets.
This is a great option for businesses with little assets or do not own their property, however a personal guarantee is often required.
As the risk is higher for the lender, these are typically short-term loans with a higher annualised interest rate. That said, depending on your circumstances they can still be a great option.
With secured loans the lender takes security over an asset or property. Should you default on the loan repayments the lender can recover costs through the asset or property. Secured loans often have lower interest rates and longer repayment terms.
To be eligible for a secured business loan you’ll need to have the assets to secure against and likely to have been trading for some time.
Long term business loans
If you’re an established business with a good credit score and solid business plan, then this is generally the go-to loan option.
- Typically a 5-year loan term
- Lower interest rates and monthly repayments
- Less stress on cashflow
- Great for lower-risk businesses
- Lender may ask for security against the loan
The security you need to provide can vary between lenders, but the loan is secured against a business asset, or over the company in the form of a charge or debenture.
Short term business loans
If you’re a fairly new business, need to bridge a cashflow gap or have a last-minute opportunity, short term loans could be a good option.
- Up to 24 months loan term
- Quick turnaround from application to funding
- Business debt is for a shorter time
- More likely to get approval if high credit risk
- Interest rates generally higher than long-term loans