Business Loans

some of the different types of business loans we offer.

Start up loans

Coming up with the idea for a new business is relatively easy funding it well that can be a harder matter to resolve.
First before you can ask a bank or lender for money you need to decide how much money you need how much you can afford to repay and over how long a period.
Do you have premises do you have need a mortgage or will you rent? Will you need equipment will you be able to source this second hand or buy it new. How will advertise your new business? Will you need staff if so how many and what skills? Will they be full time or part time? Will you be entitled to any grants? Do you have a business plan?
If you intend going to a bank make sure you do your homework first .banks like to see plans set out neatly they don’t like to take risks. So you need to remember to make an appointment and turn up at least ten minutes early. The silly thing about banks is the more you look like you need the money the less keen they are to loan it to you
These days most high-street banks provide free business start-up packs and even CDs to help you work through your business plan and cash flow statement. Use them. Not only will it impress your bank that you have taken the trouble to present your case in the suggested manner, it might also prove a useful exercise. Don’t get flustered remember you will need to keep a calm head.
Banks like to know you are risking something to and would expect you to be putting some of your own money into your new business. It is in the past that banks funded 100% start up costs. You may need to put up your house as an asset for security.
You will need to show you have researched your market that you can back up your figures know your completion and explain why customers will use you. Be prepared for some tough questions you will have to show you are able to market and sell yourself as a business person. It may seem a bit intimidating but it will be worth it to get your start up loan and be your own boss.
Remember this is as much about you interviewing the bank as the bank interviewing you. If it does not feel right try another bank.

Asset based loans

A secured loan is a loan where you will be required to use your property or other assets, as security against the loan, so the lender is able to balance the risk of lending to you. The amount that can be borrowed differs from lender to lender and your individual circumstances. The amount that can be borrowed, the term available and the Annual Percentage Rate (APR) will depend on:
The value of your property.
Your ability to repay the loan.
Your personal circumstances.
You need to think very carefully about how you manage a secured loan. If you default on the loan you risk losing your home.
So what this means in simple terms is;
In the simplest meaning, asset-based lending is any kind of lending secured by an asset. This means, if the debt is not repaid, the asset is taken.
Asset-based loans are typically for companies with less-than-perfect credit.
Interest rates and fees on these types of loans have fallen in recent years due to intense competition, but generally they are higher than traditional bank loans. As with all commercial lending, rates are negotiable, the higher the risk usually the higher the rate of interest the lender will require. Where assets are also involved the value of asset being used as security will have an impact on the interest rate the lender will require. The Lenders will look at your credit record, how long you've been in business and whether your assets are liquid. Your business plan which will summarise sales, expenditure planned profitability. They will also look at your potential bad debt from your customers as this would possibly have an impact on your repayment capabilities as far as they are concerned.
The main advantage of asset-based financing is that small companies can usually get more cash more quickly than they could from a traditional bank loan.
The drawback of asset-based loans and factoring is the expense. The reason this is the case is because if you default on your arrangement the creditor has to seize your asset then it has to realise the value by selling this asset at the market value. This all takes time and money therefore they factor this into the initial costing to take this into account. You need to weigh your situation carefully and determine whether this type of financing is necessary to expand your company or keep it afloat.

Commercial mortgage

Common applications of commercial mortgage loans include acquiring land or commercial properties, expanding existing facilities or refinancing existing debt.
Commercial premises are purchased for many reasons. One may require bigger premises to cope with expansion, or you may be buying property, whereby the property is directly linked to a business e.g. a hotel. Commercial Mortgages are usually for over 15 years, and may be much longer than this. The Property itself is at risk if payments are not made on time.
Commercial Mortgages are often used for a variety of purposes:
To purchase the premises of the business.
For the extension of existing premises.
Residential and commercial investment.
Developing the property in other manners.
Interest rates for commercial mortgages are usually higher than those for residential mortgages because of the risks associated with the start up of a business and the cost of selling such property if the business fails. A commercial mortgage can cover the expense of other things as well as property. It can help pay for equipment needed. It can finance cars light commercial vehicles heavy good vehicles all forms of business plant and machinery. Another way to buy such is by the use of hire purchase this works if you don’t want to commit large amounts of cash and can use the income generated from these business assets to repay the loan over one to five years.
If you are considering becoming a commercial landlord there are banks that deal with just this that have loans tailored for the buy to let or commercial owner occupier mortgage or maybe you are looking for help for a commercial investment mortgage all these things can be catered for by lenders that are well aware of all the risks. Some offer free ongoing day to day banking for the first two years to help you get up and running.
They can also help with bridging loans whilst you move sell one property or whilst you are transferring from one business premises to another. Sometimes you need to keep your old premises up and running whilst setting up your new bigger premises with all the problems this entails.
commercial owner occupier mortgages and commercial investment mortgages on a self cert basis for start up businesses or where the business does not yet have profitable accounts in the UK can be organised.
where there is an adverse credit history, no proof of income, defaults, IVA or previous bankruptcy it is not impossible to get a mortgage even in these cases without high broker fees.

Business Credit lines

What is a credit line well the definition of credit line is an arrangement in which a bank extends a specified amount of unsecured credit to a specified borrower for a specified period of time this is often referred to as a line of credit .
For businesses this is an operating line of credit is used to provide liquidity during the operating cycle of the business.
The level of control is determined by the perceived credit risk and the line limit. For smaller lines to companies with good credit, there may be no active controls on line of credit usage; that is, the customer can take advances and repay advances at will. Typically, line usage is only analyzed yearly, or at an agreed renewal date. If the line did not properly "revolve" during the year, the line of credit would generally be converted to a fully amortizing term loan and the line of credit closed out.
For larger lines of credit, and for companies deemed to be a higher credit risk, the line may be more closely monitored The loan agreement for a fully controlled line of credit often states what type of receivables are acceptable as collateral (and may specify a period of time when the company is to be "out of debt" as to use of the line. Many other controls are possible. A line of credit may also be used to support an import/export letter of credit often used with international transactions.
An operating line of credit is an important component of a company's finances and many businesses could not survive without this basic banking product.
In fact if you remove a company’s line of credit you can make it impossible for them to continue to trade as often it is the line of credit that allows them to pay everyday expenditure like wages utility bills buys stock and other every day running costs. It is because companies have a line of credit they in turn are often able to extend credit to their customers allowing a time frame for loyal customers to pay is thought to extract loyalty and further custom and therefore increase expenditure. So withdrawing lines of credit sometimes has a knock on effect to other companies trading within this circle.
So expansion of a company can be only possible in some cases because of the amount of credit a company can resource to at a competitive rate.