Business loan, a financial help provided for commercial interests, is a great support to help you shape up your dream of being a successful entrepreneur. Businesses often need external financial help; and, most of time this requirement comes across surprisingly. Getting business loan in the UK for short-term is no more a complex task because of fast growth of direct lending industry that has reduced dependency upon the regular banks and financial institutions that often follow the rigorous process to scale the borrowing credibility. You might not be a good borrower on the documents but that doesn’t stop you from making financial growth through business plan. However, success with borrowed money depends upon readiness for borrowing.   

Business Loan Dependency – The Changing Scenario in 2019:  

UK businesses of all sizes significantly increased the borrowing in January; the trend is seen driven by the growth of mergers and acquisition activities. It may be the Brexit effect because it is still under the turmoil stage. Businesses in the UK have become more cautious about the possible changes in commerce. Increased borrowing is being seen as the approach to invest Govt’ funds and keep the earned money in saving account for financial safe future. 

Small Business Finance Markets 2018/19 report states that small businesses, because of prevailing uncertainty, are either trying external finance to go ahead with plans or these are reducing or delaying the finance requirements. 

Are You Strategically Ready For Borrowing a Business Loan?

Almost 29% of smaller businesses expect the negative impact upon their growth prospects after settlement of Brexit. The 34% businesses expect the borrowing tend to be more difficult post Brexit. In a survey conducted at the end of 2018, 7 in 10 firms said that they would prefer to forgo their growth than to take external finance. So, if you are determined to march ahead with your growth plans, you need to strategically ready. Guiding forces are: 

  • How much funds do you want?
  • What will you spend the loan amount?
  • How much will you earn? 
  • How will you repay it? 

Are You Ready To Approach A Lender For Commercial Loan? 

The UK’s private lending industry is known as the best lending industry in the world that is regularized by FCA. The online working module has simplified the borrowing process but the lenders take every step to secure the credited money. On the other side, too frequent and too many loan applications drop your credit ranking; each denial delivers a setback to your credibility. Are you ready to initiate the business loan process? 

  • Personal Information- Address; personal financial statement; and, personal budget showing your living expenses
  • Credit reports – Details of personal and business credit score (both are different)     
  • Collateral – Funds you have for down payment
  • Capital – Business assets to be pledged 

 Types of Business Loans for Short Term: 

Personalization of products has become the success mantra of each service industry; lending industry is also not an exception. Direct lending agencies offer wide range of business loans to suit your credibility and purpose- 

  1. Term loans – Good to borrow high amount  
  2. Small Business Administration loans (SBA) – Long repayment period at the lowest interest rate  
  3. Business lines of credit – The best flexible borrowing 
  4. Equipment loans – Helps you buy equipment and built equity in it  
  5. Invoice factoring loans – Easier approval
  6. Invoice financing – Your customers don’t know about the invoice financing
  7. Merchant cash advances – Unsecured financing; Fast cash
  8. Personal loan for business purpose –  Small amount personal loan that can be used commercial purpose 
  9. Business credit cards – No collateral is required; you get reward points on purchases
  10. Microloans – Offered by mission-oriented lenders and nonprofit organizations 

Concluding Note

The UK’s lending market is full of lenders offering rich variety of secured and unsecured short-term business loans. Your business plan, borrowing approach, utilization of funds, profit ratio, repayment commitment like factors contribute to your borrowing experience. Therefore, whenever you experience the need of borrowing for smooth scaling of current business or to initiate a start-up business, plan ahead giving yourself enough time to review your decisions.           

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