Small Business Loans: Funding your potential

Traditionally, Business Loans were provided by banks, but since the credit crisis, a variety of new lenders have joined the market. They can often provide easier applications and faster decision making.

There are also two main types of loans.

Getting the right type for your business, and getting it from the right supplier, is essential to keep costs under control.

Reducing the cost

Lenders make decisions based on the risk that they might not get their money back. The higher the risk, the higher the rate they charge, and if the risk is too high they won’t lend at all.

A good credit history suggests that you will make repayments and reduces the risk.

Another way to reduce risk is to offer security.

What is security?

If you want to borrow a large sum of money, from £50,000 or more, you will probably need a Secured Loan.

They are ‘secured’ because the lender will require something as security in case you cannot pay the loan back. They’ll have the legal authority to take the asset and sell it if you can’t make the agreed repayments.

Low cost secured business loans are less risky for lenders, which is why they can have lower rates of interest than Unsecured Loans.

Buildings, machines and tools are often used, but it may also be possible to put your own home up as security.

Repayment terms can be more flexible with Secured loans, making it easier for you to arrange repayments around your business needs.

The advantages of Secured Loans

Having security reduces the risk to the lender. This can allow them to offer a better deal than they might with Unsecured lending.

You can have longer to repay, and enjoy a lower interest rate, meaning monthly repayments can be lower and easier to fit in with your cash flow.

Lenders may prefer Secured Loans for borrowers with an imperfect credit history.

Unsecured Loans

Unsecured Loans may be suitable for smaller sums. The lender will make the decision whether or not to lend based on a number of factors, including the credit rating of your business.

Nothing is required as collateral or security. This means if something goes wrong, and you’re unable to keep up repayments on your loan, the lender is not able to seize any of your assets. However, the lender will expect a Personal Guarantee from you and your partners and co-directors, which will mean that you would be required to make the repayments if your business could not.

Flexible lending

Unsecured Loan repayments can usually be arranged over 1 to 60 months, depending on the sums involved. Interest rates may vary according to the length of your loan and, with some lenders, you may be able to repay early, reducing the amount you pay overall.

Unsecured loans mean more risk for lenders. Because of this they usually include higher interest rates than secured business loans, which means your business will pay more over the life of the loan than it might have done for a Secured loan.

Getting unbiased expert advice can help you ensure that an Unsecured Loan really is best for your needs.

Why you need Rangewell to arrange the funds your small business needs

To get the loan that's right for your business you may need expert support.

At Rangewell we work across the entire lending market, and our service is unbiased as well as free. That means we will first help you decide whether you need a Secured or Unsecured Loan, then work with you to find the most appropriate lender and the most competitive rate.

We can also help you decide on the most suitable form of security to offer.

Why you need Rangewell to arrange a loan

Finding the right lender is essential to minimise the costs of borrowing.

So if you want to arrange a loan, or simply want to look at what the most appropriate kind of loan might be and what it would cost, call us. Remember, if you are unsure about what kind of funding you need, or the best way to apply, our experts are ready to help, from new business loans to quick business loans, and everything in between.