1 October 2018

Your guide to business loans


Business loans typically have a fixed interest rate and are paid back through fixed monthly payments over a fixed period. A typical short-term business loan might be for an amount of up to £30,000 over a period of one year, whereas larger amounts tend to repaid over a longer period. Loans can be specialised; for example, they can be tailored with startups in mind.

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Why a business loan?

Business loans are taken out for a variety of reasons; for example, a short-term loan may be all that is needed to help with cash flow during a difficult period. An established business looking to expand may need a larger, longer-term loan to help cover planned outlays.

Types of lender

There are more types of lender to choose from than just the high street banks. One example is peer-to-peer lenders, whereby the loan comes from individuals rather than institutions. These may offer unsecured loans, secured or asset finance loans.

There are also firms that specialise in lending to specific businesses, such as Commercial Loans Northern Ireland https://www.assetfinanceni.com/Commercial-Loans.

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Who qualifies to apply for a business loan?

Approximately £5.3bn of new loans were approved to support SMEs in the first quarter of 2017, with 80 per cent of applications approved.

While technically any company, whatever its size or type, can apply for a business loan, lenders will typically be looking for a minimum monthly turnover, VAT registration, and – in some cases – whether it is a limited company before they will accept the application. Some lenders may also request that the business has filed at least two years’ worth of accounts, although this requirement would not apply to startups.

Where to start

Generally, business loans tend to have fixed interest rates and repayments; however, some lenders offer flexible repayment options. With the choice of loans available, it is tempting to compare and choose from off-the-shelf loans using comparison websites. While you might find a loan and a provider quickly in this way, it is always worth exploring some of the more independent firms that offer commercial loans Northern Ireland.

Often with access to a wider range of lenders, these firms are in a better position to negotiate a solution specifically tailored to a business’s needs. In these uncertain times, this could provide the strongest financial solution.