Shropshire businesses looking to secure a loan have been urged to be as well-prepared as possible before they apply.
That’s the advice from our Business Advisory Specialist, Sarah Hartshorn.
“With hundreds of lenders in the UK offering a wide range of products, navigating the business loan landscape can be daunting. So it’s important to arm yourself with as much information before you begin the application process.”
Sarah said there were many types of business loan, all offering a unique set of advantages that can be suitable for different business needs.
Sarah explained some of the most common types of business loan:
“Term loans are conventional lending arrangements with fixed terms, interest rates and regular monthly payments.
“They are ideal for projects, purchasing equipment, or business expansions, and the length of the loan term can vary ranging from long-term options with up to five years for repayment, to short-term with up to two years for repayment.”
Sarah said lines of credit were a flexible source of funds that businesses can access when they need them, and they were invaluable for managing cash flow and resolving short-term financial situations.
“If your business has outstanding invoices, you can use them as collateral to secure a loan through invoice finance. This allows a business to access funds swiftly and helps with working capital management.
“You could also use asset finance to acquire assets like equipment, machinery or new vehicles without having to pay a substantial upfront cost.”
Sarah said depending on the lender and the type of loan, the specific requirements and eligibility criteria would vary.
“Usually a business will need to have a type of collateral or security if you opt for a secured loan – this is often in the form of a property or a high value asset, or assets on your balance sheet. There are unsecured loans available that do not require collateral, but you may have to provide a personal guarantee.
“And for almost every type of business loan, you will need a good business credit score. You will also need to apply for a loan amount that is affordable for your business – putting together a cash flow projection will help you calculate how much you would be able to afford in monthly repayments.”
Sarah said the DY team had access to over 100 lenders offering a wide range of products, and businesses who wanted to know more should get in touch.
For further information please contact Sarah at firstname.lastname@example.org.