A business loan is one of the most common forms of finance. It is a commercial agreement that offers excellent flexibility and can be deployed for a multitude of uses. Transactionally it works in the same way as a personal loan where the amount of funding is identified, research completed for the best options and an application is submitted.
Of course, there are always a number of questions asked in relation to business loans so here we are sharing some of our most common ones:
What are the basic eligibility parameters for a business loan?
The business must be registered in the UK and have been trading for a minimum of 24 months (2-years). However, you will only need to present accounts for 1 business year.
Are there different types of business loan?
Yes, there are several options available, these can include company loans, loans for self-employed professionals and asset finance loans.
How do I choose the right business loan?
Calculate how much money is required along with a repayment structure which will not cause issues to a business’s cashflow. When this is established approach a suitable lender and select the one which best suits your requirements. Compare the monthly repayment figure – not just the ‘headline’ rate.
Do I have to give a guarantee?
Typically, an application will require a secondary form of security such as a business asset which is used as collateral for the debt.
Will I lose my house if the business fails to pay the debt?
No – but we suggest you speak to our team if you have concerns about this.
Are any business sectors excluded?
No, a business loan can be used across all industry sectors. There will be some funding options more suitable for specific industries which is why it is so important to speak with a broker as they will take a whole of market approach and find the best deal for the sector.
Can you overpay or settle early without penalties?
Yes, overpayments are always welcome. For certain business loans there may be early repayment fees, so it is important to check on the agreed contractual terms.
What fees will I have to pay?
Any fees are always included in the loan deal, there should not be any additional fees that need to be considered.
Can I have more than one business loan?
Yes, as long as the business can demonstrate that they are in a strong position to meet the repayment needs then they are welcome to have more than one business loan. There are also some excellent refinancing solutions available.
If you have a question we have not yet answered or would like to know more about business loans, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.
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