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Even the greatest business ideas need money to get off the ground. Many of us might not be fortunate enough to have that spare cash lying around, but don’t give up hope just yet. A business loan can be a great way of getting your brilliant business ideas up and running.
Applying for a business loan might seem daunting, with so many things to consider – so the experts at comparison site moneyguru.com have pulled out exactly what you need to know.
A business loan is similar to a personal loan, but is designed for businesses to fund expenses such as start-up and growth. You’ll be lent a certain amount of money and have to pay it back over a period of time, with a set interest rate and monthly payments.
As with all loans, there are a number of criteria that the lender will look at before accepting your application. Your personal credit history and current financial situation will be assessed and if you aren’t a start-up, your business plan and accounts. Best check that credit rating at moneyguru.com.
Cold, hard cash. However small or large a business is, you can get into situations where you’re short of cash. For a start up, this could be getting your brilliant new idea off the ground, or employing your first members of staff.
For larger companies, a business loan can help you to grow – for example, if you need to pay for a large, one-off expense, or expansion into bigger premises.
Government-backed start-up loans – ideal if you’re starting up a business, and you’ll also get more support from your lender. Individuals can borrow from £500 up to £25,000, with a fixed interest rate. The only down side is that you may have to repay the loan within five years.
Secured – with a secured loan you’ll take out the loan against an asset, such as a house. If you fail to make the repayments, the lender can sell off the asset. Make sure you think carefully about this, as you could end up without a business and a home.
Unsecured – if you don’t have any assets you’ll have to take out an unsecured loan but you won’t be able to borrow anywhere near as much.
Starting a business from scratch can seem daunting, but sometimes a loan can be a great way to get yourself off the ground. If you need some guidance in your quest, visit moneyguru.com’s Wisdom Section for some straightforward advice.