Thursday 28th Mar 2019
Relatively few small businesses manage to start up or indeed operate without some outside injection of cash. While some are lucky enough to have their own saved capital to begin with, or excellent cash flow allowing them to invest where they see fit, this isn’t the case for the majority of small businesses. Fortunately, the market has a wide range of products available, ranging from those offered by the big banks, to more specialist products, and of course initiatives backed by government bodies and other authorities. Let’s take a look at some of the major options available.
Naturally, all of the major banks offer small business loans, and this is one of the most common methods that a small business will first look to. They’re easy to find, and easy to apply for. However, many larger banks have fairly strict lending criteria, or are almost entirely computer based when it comes to making a decision, which means that they’re not always able to lend to small businesses. They’re a good starting point, but any good business owners should thoroughly investigate the whole market.
Start Up Loans
Start Up Loans is in fact the name of a government-backed initiative designed to help new companies the money they need to find their feet. Funded by the British Business Bank, the scheme has already provided 55000 companies and individuals with more than £400m in funding. Interest rates are fixed, the application process is fairly straightforward, and there’s also additional support available in the form of advice.
Also backed by the British Business Bank, Funding Circle is a government initiative that’s aimed towards more established businesses, but the products are available to most small businesses. This is a fairly flexible loan initiative, with varying interest rates and loan amounts. £10k-£500k unsecured loans are available, with terms from 6 months to 5 years, making this a good choice for small businesses, whatever they need the money for. The website boasts that a business is approved for a loan every 5 minutes.
Many small businesses are unaware that many local authorities do in fact have their own initiatives for small businesses looking for loans and even grants. These are often for specific industries, and they should always be investigated as a potential option. Gov.uk can provide you with a comprehensive list of the loans available up and down the country. Some are available only to businesses situated in those locations, and others are more tailored towards industry.
By considering only big banks and major schemes, small businesses will be seriously limiting their choice. When the right finance product can make such a large difference to your bottom line in the long run, it’s always worth scouring the market for all the options available to you. With this in mind, remember to consider loan providers that aren’t major banks or large government backed schemes. They may be able to offer you better terms.