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Should I Apply for a Business Loan?

Applying for a business loan is a difficult decision. However, many business owners don’t have a choice if they want to keep their businesses up and running. Business loans provide vital funding to help manage cash flow when times are hard, or to give owners the opportunity to expand and increase income over a period of time.image of approved loan
There are many types of business loans, and the different terms are incredibly significant. If you decide to apply for a business loan, you should be sure that you are happy with the terms and be confident that you’ll be able to pay the money back in the time specified. Here are some reasons why companies need a loan:

  • To start up a business from scratch – a business loan could secure a premises, help with marketing costs and buy stock
  • To expand – businesses need upfront cash for expansion plans
  • One-off business expenses – a company could have to replace large machinery or get hit with a significant fine or tax bill they are unprepared for
  • To pay employees – some months businesses might not have enough income to pay staff wages
  • To manage cash flow – if bills and invoices are piling up, a small business loan can help bridge the gaps

If you are struggling with the day to day running finances, then it could be time to apply for a business loan. However, once you’ve decided you need to apply, actually being approved for the business loan is a different matter.

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Getting a business loan from a bank is notoriously difficult. In these uncertain economic times, banks are reducing their lending which is bad news for companies trying to keep afloat. To be accepted for a bank loan, you may need a minimum monthly turnover and have at least two years’ trading history and filed accounts. This isn’t feasible for many modern businesses who are in need of a loan.

Peer to Peer Lending

Pioneers in finance have come up with a solution – peer to peer business loans. This type of lending is almost identical to a bank loan, except you are borrowing off individuals rather than banks. They are equally as flexible in terms of the amount you need to borrow and the period to pay back, but they are much easier to secure.

Whether you need an unsecured business loan or a peer to peer lending agreement, our finance experts can help.