Small Business Loans: All You Need To Know

Business loans are designed to suit the needs of a business, rather than an individual. If your business needs money to help with cashflow or to help with growth, a business loan could help. Business loans are a way to borrow a set amount of money, which you pay back to the lender with interest.

A business loan can be unsecured or secured.

Unsecured business loans are when you borrow money for the business, without using its assets as security.

A secured business loan is when you borrow money for the business using one of its assets as security for the lender. This could be property, stock, or machinery. It is important to remember that if you do not pay back the loan, the lender can sell the secured assets to get their money back.

Sometimes, lenders offer an unsecured business loan where the company director has to give a personal guarantee. That means they personally agree to pay the loan back if the business cannot.

Some lenders only offer business loans to specific types of businesses. That is why you might see small business loans, start-up business loans and quick business loans, for example.

Some business loans are just for businesses that meet certain criteria, such as those with a turnover of at least £75,000.

Like all loans, business loans are given based on affordability and a credit check. Lenders will look at your business's credit rating to decide what interest rates to offer you. The business loan rates you are offered will affect how much your loan costs to repay.