When it comes to finding funding for your business, knowing which loan might be the best for your business is no mean feat. In fact, navigating a saturated market to seek the best deals is often seen as pretty much impossible. Without taking the time to compare business loans, you’re unlikely to find the right type, rates or even the right lender to suit you, but where do you begin? That’s where we come in. We’re taking you through our guide to finding the best business loans for your company, below.
How Much Do You Need?
The amount that you need for your business will ultimately determine which loans you’ll not only need, but that you’ll be eligible for. If you’re only looking for a cash injection to help tide you over until the next round of income for your business, a working capital loan can be a great way to borrow credit when you need it most and pay it back when you have the money available to do so. For larger amounts of £25,000 and more intended for the purchase of property, a commercial loan could be an ideal alternative.
How Long Will You Need The Money For?
The length of time you have available to borrow can also determine which loans you are able to take out. Bank loans typically have a minimum repayment period from which you cannot drop below and for this reason, more and more lenders are cropping up and offering shorter term alternatives. For companies looking for a bit of help until an invoice is put through or to ensure workers are paid before the next round of finance comes in, these shorter term loans could be ideal. However, for a company looking for money for a longer-term investment, opting for a repayment period of 6-12 months or more could be more appropriate.
Do You Have A Security To Offer?
Securities essentially refer to anything you put up as collateral when taking out a loan to secure the money for the bank or lender. This essentially means that, were you to miss payments or fail to repay what was owed, they could claim your asset as a form of payment for this instead. Some loans will require an asset, while others won’t, but this can effect what you will and won’t be able to borrow. For unsecured loans, you’ll often have lower borrowed amounts, shorter repayment periods and a higher interest rate, while secured loans are more likely to have higher potential amounts, more balanced interest rates, but will require a form of asset as a security.
How Likely Is Your Business To Continue Succeeding?
If you’re thinking about an unsecured loan, it’s vital that your business has a promising future ahead of it, at least in terms of retaining and maintaining its current state. All banks and lenders will run a form of affordability check on you, meaning that you’ll have to pass it in order to be eligible for the loan. This can also help you determine whether you need the money and how much you’ll need to borrow. For example, loans taken out with the intention of expanding and developing your business need to come with a clearly mapped out future that’s not only feasible, but realistic given your current state.
Business loans aren’t easy to navigate and will take some time, thought and a comparison to determine which is right for your business. Hopefully this guide has given you a good starting point. Just remember not to rush into any decisions!