If you’re a small business owner, you know how important working capital is for taking advantage of opportunities that come up in order to boost your profits and grow your business. Sometimes, you don’t have capital available to purchase equipment or make other investments that you need to make to keep your company running at its full potential. That’s when you need a business loan from a reliable lender that will give you fair rates and a straightforward loan agreement with no surprises.
Who can take out a business loan?
Eligibility for a business loan will depend on a variety of factors specified by the lender. In general, a business will have to have been in operation for a certain period of time – usually around six months minimum, before being approved for a business loan. Businesses also often need to meet certain minimum revenue requirements. If your business doesn’t yet have a reliable revenue stream, it will be difficult to be approved. However, if your business has an established track record of turning over profits every month, you have a good chance of being approved.
How much can a business owner borrow?
Business loan amounts vary widely by lender and by business. How much you can borrow will be limited by how much money you’re making. Your credit score and history will also be factored into decisions on how much money you’ll be approved to borrow for your business. A typical business loan could range from as little as £1,000 to over £150,000. Before you’re approved for a loan, a business loan lender will assess how much your company can afford to borrow. Loan terms also vary significantly, but companies always tend to pay more in interest when they take out loan funds over a longer loan term. A short term business loan could range from only a month or two to over a year.
What can I use loan funds for?
Usually, business owners approved for a business loan enjoy a great deal of freedom when it comes to what they’re using their loan funds for. Whether you need to purchase some new equipment or hire more workers to complete a big project, you can use loan money as you see fit. In many cases, you might even be able to use your business loan money for personal expenses that will help you keep your business running.
How much will a business loan cost me?
Any business loan will come with interest charges. Your interest rate will typically be around 2% to 6% per month over the life of the loan. Business loan interest is sometimes calculated according to daily accrual. If you have a business loan accruing daily with a 3% interest rate, you’ll pay £1 every day in interest for each £1,000 increment of your loan amount. When you take out a business loan, you should look for a loan provider that adds on as few fees as possible. Ideally, you shouldn’t have to pay any origination, early repayment, or arrangement fees.