If you’re thinking of starting a new business or you have an existing business that needs a boost, then good news! There’s an abundance of financial help out there in the form of grants, funds, discounted services etc. though the most popular option is still taking out a loan.
Getting a loan for a business whether it’s a startup or an established business can be a long and tiresome process, often it’s not the actual application stage that’s time consuming, its finding a lender that meets our needs at the same time you meet their criteria. If you need help with getting a business loan, a mortgage broker like Blutin Finance can help you.
To start off with you’ll need to know how much you realistically need to borrow. Having a figure in mind can really reduce the amount of lenders to research as most lenders offer very specific amounts, for example if you know that you need to borrow $50,000 then you can quickly rule out all lenders that don’t offer loans of that value. Be prepared to explain your figures to any potential lenders.
Spend some time looking into all the available loan options. For example, currently the UK government funds Start Up loans for businesses under 2 years old, these loans are personal loans for businesses purposes, the debt would be in your name rather than in the name of the business. Bear in mind this scheme is a bit of an outlier though as most lenders won’t entertain personal loans for business purposes so keep that in mind if you’re shopping around personal loans for better interest rates. If your business is already established you can look into secured loans, as the loan is tied to an asset you’ll often find the interest rates are better but obviously your asset is at risk if you aren’t able to keep up with the repayments. If the asset you’ve used is absolutely integral to your business, its repossession could be nearly impossible to come back from so tread carefully.
Consider how long you want to borrow the loan for, if you think you’ll be able to repay the loan in under a year you might want to consider a business overdraft instead, if you have a business account provider they may be able to give you more information on business overdrafts and the associated fees. ,
Before you commit to taking out a business loan, it’s worth spending a few days researching any local grant funds that may be available to you as well as any large organisations that may offer help such as The Princes Trust. As well as grants to help start or expand your business you may be able to find incentives to take on an apprentice. Another avenue to explore is crowdfunding which has become very popular over the last few years, though crowdfunding is probably best for very small financial boosts as there’s no way to guarantee that enough people will both see it and donate to it.
Check your credit file! If you’re taking out a personal Start Up loan, your credit file will be scrutinised, it’s best to have a look yourself and make sure there are no surprises or mistakes, it’s worth keeping in mind that if there are mistakes on your credit file it can take a few months to correct. For established businesses, the business will have its own credit file that will be checked but some lenders may insist on checking the personal credit file of any and all directors. If you or the business has had a rough time in the past, you might still be able to get a loan, some lenders market themselves as ‘bad credit lenders’ the interest rates will reflect the perceived risk.
Once you’ve found which loan product and lender you’d like to move forward with, find out what documents they’ll need and compile them so the application process is as smooth as possible, some lenders may have brokers that help facilitate the application and can help you with any queries you may have. Keep in mind that overdrafts, unsecured loans and secured loans all have different timescales, if you need the money quickly an overdraft is usually the fastest option and secured loans are often the slowest but try not to rush into signing anything without proper research and a firm understanding of the terms and conditions.