Things to watch out for when dealing with Small Business Finance
Although there are many ways in which to grow and sustain a business, you often need access to enough capital in order to make it happen. Yet, as a developing SME business working around an already-squeezed budget, achieving that can often prove challenging. However, if you’re wanting to expand your business, you could consider applying for Small Business Finance. Small Business Finance is a package which contains a wide range of business finance solutions that allow you to complete all manner of goals and projects. But, in order to source the suitable finance agreement, you need to be fully aware of what’s on offer and how each product may affect your business. So before applying for Small Business Finance, some of the aspects you need to be aware of include:
- Additional costs and fees
Will I need to provide collateral?
A common question regarding business finance is "Will I need to provide collateral with my agreement?" Security is simply offering the lender an asset, whether it is equipment, property, or something else, to the lender so if you should default on your payment terms, they can simply remove this and sell it to recoup their losses. Although secured products require you to present security, Small Business Finance also contains a variety of unsecured solutions which don’t. But if you intend to apply for a secured agreement, you will be asked to provide collateral in the form of equipment, machinery or property. This gives lenders more confidence to provide you with an agreement and offer a lower interest rate. However, should your business fall behind in the repayment process or default, the lender will gain the right to repossess and remove these assets. But if you’d rather not risk your assets or currently aren’t asset rich, then perhaps an unsecured solution may be more suitable? However, it's worth noting that some lenders request a written or verbal Personal Guarantee before offering you an agreement.
Is your business in need of more equipment or vehicles? Or are you looking to acquire a cash injection ready for an upcoming project? Apply for Small Business Finance or learn more about how your business could benefit.
What else do I need to qualify for Small Business Finance?
As well as deciding whether to offer collateral and what documents to provide, you should also consider what other requirements you need to meet when applying for Small Business Finance. Although it’s not always used against you, lenders will usually ask to review your business’ credit profile. In order to measure the strength of your profile, lenders will incorporate into their checks whether you have any CCJs, arrears, Accelerated Payment Notices, unpaid debts and whether you have a reliable history of paying off debt. If you possess a weak credit score, lenders will perceive your business as having a higher risk of default, which may lead to you either being rejected or being offered a higher interest rate. So if you’re worried about your business’ credit profile and how it may affect the overall cost of finance, you can read more on the topic here.
Are there are any additional costs and fees I need to be aware of?
Another aspect to be aware of when applying for Small Business Finance is whether there are any other costs and fees involved. These can include set-up fees, administration fees, legal fees and late payment penalties to exit fees. Therefore, it’s essential that you read all the documents provided by the lender to ensure that you fully understand what charges may apply and how they will affect the overall cost of your agreement. If you’re unsure, you can request to have a face-to-face meeting with the lender in order to explain how these charges work. Plus, you should also review what other lenders may be charging for the same type of agreement, since this may help you to reduce or negate some of these costs during negotiations.
Could your business benefit from applying for Small Business Finance?
Whether you’re looking to expand into new areas or improve the quality of your services, the main obstacle you need to overcome usually involves the matter of cash. Although it can be tempting to simply draw funds from your own accounts, this can be a risky strategy that may lead to further problems later in your development. Instead, why not apply for Small Business Finance? Containing a diverse range of business finance products, Small Business Finance could offer the funds and tools necessary to achieve your goals in total confidence. All you need to do now is figure out where to look. Lucky for you, we’ve already done the hard work. So whether you're looking for to bring in more equipment, resolved uneven cash flow or gain a cash injection, apply for Small Business Finance or find out more with Rangewell.