Business Finance
Compare a range of business financing options to find the best solution for your business
What is business finance?
Business financing is the process of raising funding for commercial purposes in the form of credit lines, business loans, or invested capital. The most suitable financing option depends on various factors, such as how much funding you need, what stage your business is at, and whether you are willing to sell a percentage of your business in exchange for investment.
What is a business loan?
Business loans are a common method of commercial finance where a lender provides an amount of money to a business that the borrower repays back, with interest, over an agreed period.
Traditionally, business loans involved paying a fixed amount back to the lender in monthly instalments over a pre-determined period at a fixed rate of interest, however, many lenders now offer various forms of business loans with more flexible terms, better suited to the business.
What are the different types of business loans?
Below is a brief description of some different types of business loans. Click on each to find out more.
Unsecured Business Loan
An unsecured business loan is a type of funding which requires no business asset as collateral. It typically involves raising a lump sum, paid back in monthly instalments over 1-5 years with interest. These loans require the borrower to show an excellent financial history, good credit rating and cash-flow forecast. Find out moreSecured Business Loan
A secured business loan enables you to access finance by offering a form of collateral, such as property, machinery or equipment as security against the amount you need. The security is used to lower the level of risk to the lender, however in the event your business is unable to repay the loan, the asset(s) could be used to recover the funds. Find out moreCommercial Mortgage
Commercial mortgages, often referred to as business mortgages, are a form of secured borrowing, usually for business owners looking to purchase a property for commercial use. Find out moreMerchant cash Advance
A Merchant Cash Advance (MCA), sometimes known as a PDQ loan, is a short-term funding method that involves using a percentage of future card payments to repay the advance. Find out moreAsset Finance
Asset finance is a form of business funding that enables a business to buy, or lease assets without compromising cash-flow, by spreading the cost of a purchase. It can be advantageous for tax purposes, too. Find out moreBridging Loan
Commercial bridging loans are a short-term type of secured funding, typically used to ‘bridge’ the gap between a payment falling due and either the main source of finance being available, or funds being received from another source such as the sale of an asset. Find out moreInvoice Finance
Invoice financing is a general term to describe a variety of asset-based financing facilities, where businesses sell their invoices/accounts receivables to a third party for a percentage of the invoice value. Find out moreDevelopment Finance
Development finance is used to fund the development or conversion of commercial or residential buildings. The finance is usually set up as a short-term solution, only to be used during the build, with the loan repaid once works are completed. Find out moreWho can apply for a business finance?
Private Limited companies, Limited Liability Partnerships (LLPs) and Sole Traders can all apply for business finance, however this doesn’t mean all applications will be accepted. Different lenders have different criteria, so it’s a good idea to check that you meet the lenders application criteria before proceeding with a full application.
What are the eligibility criteria?
Each lender has their own minimum eligibility criterion, but may also consider a multitude of other factors when assessing an application. This is why lenders often display their basic criteria for a finance application, but still need to conduct further checks to decide the outcome.
Despite this, there are some good practices that can help with an application, including:
- Having business finance documentation at the ready, including end of year accounts, up to date balance sheet, bank statements & any other relevant financial statements.
- Having a clear written description of your current business financial position, and the reason(s) for requiring the funding.
- Having a clear understanding of your business credit score, and ensuring everything on your business credit report is correct and up to date.
- Having any documentation ready that may add strength to your application, such as letters of intent, signed contracts, confirmed orders and more.
- Having details of personal guarantors, or other security ready if applying for secured funding.
- Having quotes, valuations and details of equipment ready if applying for asset finance.
How much can I borrow?
Business loans typically range from £1,000 to £5 million, however the amount, and terms, of finance available to your business depend on how much risk the business poses to the lender. The lower the perceived level of risk, the more funding a business is likely to be eligible for. A selection of key metrics lenders consider include the following:
- Turnover
- Profit
- Length of time trading
- Credit score
- Purpose of funding
- Level of security
To find out how much your business is eligible for, get a business loan quote now.
How long does it take to get approved?
Business finance can be available as quick as the same day as application; however, each scenario depends on a number of factors. To keep the process as quick as possible it’s best to have everything ready when applying to ensure there are no delays in the process.
What information do I need to get a quote?
The information lenders require to consider an application vary depending on a number of factors such as amount, loan purpose, business credit history and more. There are however some basic details that most lenders will require, including:
- Business turnover and profit (or projected turnover & profit if trading less than 1 year)
- Details of previous and outstanding business debt, including historical record of repayments, if applicable
- Details of directors and persons with significant control, including copies of ID
- Reason for requiring the funding and intent of use
- Details of security that can be offered as collateral, if applicable
