Looking to get a bank loan for your business?

There are a number of considerations to make when looking to finance a new business. These options may seem endless, but this means that there will be an option that will perfectly suit your specific needs.

Choosing either Debt Finance or Non-Debt Finance will depend on the type or size of your business and a combination of financing may also be appropriate for you.

Debt Finance allows money to be borrowed with the agreement that it will be paid back at a later date, usually with interest.

Non-Debt Finance requires investment through the sale of shares or other equity so that investors will see a profit as the business grows and becomes equitable.

Unsecured Loans:

With an unsecured loan, you don't provide any assets as security. This means less risk for you, but more risk for the lender, so you may have to pay more for borrowing. However, there are limits on the amount you can borrow (usually around £250,000).

Secured Loans:

A secured loan requires an asset that you agree the lender can take if you don't keep up repayments. You give the lender a 'charge' over your security. This means they'll have legal authority to take the asset if you can't make the agreed repayments.

Having this agreement reduces their risk, so they will be more likely to agree and provide the funding you need. It also means that they can charge a lower rate of interest.

Secured loans are often used to borrow large sums of money, i.e. more than £250,000.