As any small business owner will tell you, business health is never assured. One month you can be flying, the next counting your petty cash to make ends meet.
Fact is, even if you have a pretty good handle of your finances, something can always come up that’ll put you on yellow alert. An unpaid customer invoice, an unforeseen expense, a higher tax bill than you expected – you know the kind of stuff; the nuts and bolts of running a business that can always come up a cropper.
Being aware of these issues is no sound way to avoid them. Plenty of issues can’t be avoided, such as customers not paying you on time. But you can take care of them when they happen, and you’ll find a loan will help with that especially if your issue is a lack of cash in the business for one reason or another.
Types of small business loans
If your business is struggling to operate because it’s cash poor, you can inject cash quickly by taking out a small business loan.
A business loan is the fastest way to raise working capital. You can borrow from £10,000 to £500,000 with us, and there’s are a few different types of loan available to suit your circumstances and the amount you wish to borrow.
Secured business loan
Secured funding is relevant if you need access to a higher borrowing limit, typically over £50,000 and up to £500,000. With a secured loan, the total loan amount is secured against business or director-owned assets such as real estate.
Unsecured business loan
Unsecured funding is most relevant to you if you wish to borrow less than £50,000 for your business. You don’t offer collateral with this type of loan. Instead, it is offered to you based on yours and your business’s creditworthiness.
The cost of a small business loan
The cost of a small business loan is split into two parts:
- The amount you borrow
- The amount of interest you pay on that borrowed
You’ll pay back your loan in monthly instalments typically over 1 to 5 years (12 to 60 months). You’ll pay back the amount you borrow in full plus interest over the term, so the cost of your loan is always determined by the interest rate.
The lower the interest rate, the better. Interest rates vary between lenders and there isn’t a cap on what a lender can charge. However, with this being such a competitive industry business lenders are kept honest.
A good loan rate is 3 to 4% over 12 to 60 months. High street banks rarely offer such low rates. One leading bank, for example, charges 7.4%. Another 5.3%. For the best rates, you’ll want to approach independent lenders such as ourselves.
Whichever way you go, make sure your interest rate is fixed. A fixed interest rate means you’ll pay back the same amount each month. Lastly, query early repayment charges with your lender before you take out a loan because you may want to pay yours back early. High repayment charges can make this a false economy.