A Guide to UK Business Loans
A business loan is a finance facility that a business may opt for when they are looking to grow and expand or faced with cashflow pressures. As a business loans broker, we can arrange business loans for businesses across the UK.
Unsecured and Secured Business Loans: What’s the difference?
Business loans are available in two different ways: Unsecured and Secured.
A secured loan is when the loan is protected against an asset that you own such as your home, car, stock, bonds or commercial property. What this means is that the lender has some security if the loan isn’t repaid, they will be able to repossess the asset and sell the asset to cover what you owe.
An unsecured loan is when you don’t provide any collateral as security for the lender. Therefore, as there is no security, this will be as seen as a higher risk for the lender. Due to the higher risk for the lender, this type of business loan may have higher interest rates, or the credit checks will be stricter.
If you’re turned down for an unsecured loan, you still may be able to obtain a secured loan.
Who are able to apply for a business loan?
As a broker, we can arrange business loans for businesses based in England, Scotland, Wales and Northern Ireland. Business loans are available for Sole Traders, Limited Companies, Partnerships, LLPs and PLC’s.
What documents do you need for a business loan application?
Depending on the size and age of the company, we will need the following documents as a minimum:
- Company and director details
- Latest Company Accounts (latest tax return if you’re a sole trader or cashflow forecast if you’re a new start)
- 6 months business bank statements
- Loan purpose
However this varies from lender to lender and some may request additional information.
What size business loans are available?
Business loans for small businesses such as sole traders and small partnerships (less 4 partners), we can arrange business loans from £25,000. Whilst for limited companies, we can arrange business loans from as little as £1,000 to over £10million.
We work with a panel of lenders from high street banks to lenders who specialise in specific industries. Therefore, we will find you the most competitive rate from our panel.
What terms are available for a Business Loan?
Depending on the type of loan, business loans are available from as little as 1 month to 15 years. For example, you can take a short term cashflow loan to help your business with rising energy bills to a 15 year secured loan for business growth.
Managing cash flow pressures
A business loan can be used to manage any cash flow pressures. With the expected increased energy bills coming in Autumn 2022, cash flow may be tighter for you this year. Especially if you’re business is more seasonal or you’re waiting for invoices to be paid.
An injection of working capital will allow a business to manage uncertainties, meet payroll and revenue gaps, or help your business sustain a healthy cash flow.
Can you use a Business Loan for Property?
You’re unable to use a business loan to buy a property. In order to purchase property depending on your situation, you would either need a mortgage or a bridging loan. These are property specific finance products where the lenders take security by a way of a legal charge over the property.
If you’re looking for a finance solution to purchase a property, Amplo Commercial Finance are able to arrange property finance such as bridging loans and commercial mortgages
Business loan to buy a business
If you’re looking to raise capital to purchase another business, a business loan could be the answer. You could apply for a business loan for the amount that you need to purchase the business and then pay the loan back over a specific amount of time with monthly instalments.
Can a business loan be used to consolidate existing debt?
If you have multiple loans from different or the same provider, there is an option to combine all your debt into one single debt – making it easier to manage.
Consolidating debt can mean lower monthly repayments, the opportunity to decrease the costs by finding lower interest rates and having one monthly repayment which will help manage cash flow.
Contact Amplo Commercial about a Business Loan
If you’re looking to apply for a business loan or would like to find out more information, don’t hesitate to get in touch with our specialists – we’re happy to have a no-obligation discussion about your business plans.
Call us on 01270 443510 or complete our enquiry form and we’ll be in touch as soon as possible. If you’re looking for a different finance solution such as bridging loan, mezzanine finance or asset finance, as we’re a brokerage, we can arrange a full suite of finance solutions.