What is a small business loan?
When starting a business, commonly the first form of commercial finance owners think of is a business loan. This is because it’s the most popular form of business finance. But how do you go about securing a small business loan? A finance broker is a great place to start as they have the whole of the market available to them. Here at Pinnacle, we have over 70 different financiers on our panel.
Since 2008 a wealth of alternative finance providers has developed in the market. All having a unique and individual finance offering. Start-up businesses can look for grants, angel investment, or private equity but, this can be extremely time-consuming. A case of ‘’not what you know but who you know’’. Therefore, many doors can be closed before even getting started. Having a clear business plan, cash flow projection for 12 -24months in crucial. It will remove the stress from starting the business. Keep you focused on your monthly goals. In addition, doing a thorough SWOT (Strength, Weakness, Opportunities, Threats) is vital. That could be doing test trading of the market you are looking to enter before you commit. It gives you a clear indication of the challenges you will face and how to overcome these. Once you have this in place and are ready to look for a start-up business loan then have these documents ready. It allows the commercial finance broker to quickly access the lender’s criteria and gather quotes for you.
How do small business loans work?
There are 2 forms of business loans. A secured loan often allows for a higher funding amount, above £300,000. Or an un-secured loan of between £500-£300,000 for non-homeowners. Due to the nature of it being un-secured, this will commonly carry a higher interest rate but lower risk to the business borrowing. The term of the loan can again fluctuate between 1 month up to 5 years depending on the circumstance. A revolving credit facility offers a line of credit whereby you can borrow as much or little as you like. Limiting the risk for the financier and the business borrowing a loan. As you can start to see, times have changed. No longer does a start-up business looking for a loan have to commit for a lengthy-term with rigid guidelines. Once you have a loan provider who agrees to lend the required amount, a monthly interest rate will be applied. Some loan providers will charge this on a daily rate making it easy to manage. Others and more commonly on a monthly basis. Having the flexibility of no early repayments, being able to borrow more when you require should be considerations. This is where a finance expert at Pinnacle Business Finance will explain to you how the business loan will work for you. Saving you time and money!
How do you qualify for a business loan?
When applying for a business loan the first critical step is to make sure you have the information previously mentioned in order. This includes a business plan, cash-flow forecast for a minimum of 12 months, a business bank account set up, and any statements if you have started to trade. Finally, a solid structure of where you are taking the business over the next 12 months. This will demonstrate to the financier that you are serious about growing your business. You have a clear vision of what you are looking to achieve, and you have taken the first necessary steps. If you have a finance broker, they can help you gather this information, approach the relevant financiers and obtain the quotes for you. Leave this to the finance experts as you can go down the wrong avenue if you are not careful. It can be a fast finance options and set up in as little as 24 hours. Making a business loan quick and efficient.
How much can you borrow for a small or start-up business loan?
This is a question that gets raised a lot to us at Pinnacle. This is for a good reason. You want to know how much you can borrow from a loan and how long will it take to get set up. The answer is for a new start business up to £25,000 in one lump sum is the most frequent amount. You will be able to access further funding in the future as the business grows and cash flow improves. Again, if you look at the secured loan option then yes, the funding amount can be much larger. You have to decide whether the risk against the reward is sufficient. If the answer is yes and you have the required information, then there are finance options available to you. The term of the loan can be up to 5 years but commonly 12 months is sufficient. You have to work out how much business finance do I need now? Then once you have put this into your business plan and cash flow forecast approach a finance broker such as Pinnacle Business Finance.
How Can Pinnacle Business Finance Secure A Start-Up Loan For You?
Our funding experts will sit down with you and obtain the funding for you. You can carry on working on other areas of the business and we will take the stress away for you. The first step is to fill out an enquiry form on the website or simply give us a call. One of the team will talk through the next steps to securing a business loan for you. You can manage the process through your online login which gives you access to your own account. It will prompt you when you need to upload information. Allowing you to check on how your loan application is progressing. This is one of the many unique areas the Pinnacle team has. If you would like to start your funding journey then get in touch today.