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Which Loans Are Right For Your Business?



Whether you are a new business owner, an experienced business owner, a small business owner or even a big business owner, knowing which loans are right for your company is essential. However, with there being such a variety of different loans available, it may difficult to know which loan, or even loans, are right for your business. Therefore, we have made this brief guide, in order to help you decide which loan is the right one for your business, while we compare business loans.

Government Start-Up Loans

This is a common loan particularly for small businesses, as they can help to get your business up and running. These loans are generally for entrepreneurs that only have a small initial fund and need financial assistance, in addition to a flexible loan programme. In order to apply for this type of loan, your business does need to be older than two years, government start up loans allow you to borrow between £500 and £25,000.

Business Loans

A business loan is particularly beneficial if you are having financial difficulties and you need some money to help tide the business over for a short period of time. With this loan being on a short-term basis it means that you can pay off any business expenses and not get in too much financial debt. It doesn’t matter whether your business is big or small, you can still apply for a business loan, however some providers may not lend to some companies. In order to apply, your business must be VAT registered. It may be necessary, for some providers, to have two years of filed accounts, so check with your preferred provider before applying.

How To Know Which Loan Is Right For Your Business

Although we have previously touched on types of loans that may be right for your business, before you know which loan is the best one, you need to take these points into consideration:

1.      Money

You need to think about how much money you actually need, as there is no point taking out a loan for more or less than the amount you actually require. How much money you need for your business, will lead you towards the type of loan to be looking at, due to each loan lending a different range of money. Furthermore, you need to take into consideration the payback period and if it is going to be feasible for you to pay the sum of money that you loaned back and on time.

2.      Interest

In addition to the previous point, you will need to look at the interest rate on the loan you want to take out, as this will add more money onto your original loan, meaning you will essentially need to payback more than you actually borrowed. When looking at the interest rate, you need to be realistic as to whether your business can pay it back.

3.      Time Period

You will want to consider how soon you actually need the money for your business. If you need money quickly, then it will cost you more, as lenders will increase their rates, to protect themselves from potential loss. If you need the money immediately due to an emergency financial situation occurring, then just be prepared to pay more for you loan.

So next time you’re intent on applying for a loan, consider these points found in our guide and we’re sure you’ll find the perfect one for you.
DB

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