Raising capital for your business can be a stressful and challenging process. To secure the right loan for your specific requirements, you need to speak to industry experts who can help you select the most appropriate financing options and streamline the application process.
In the UK, any business is eligible to apply for a loan. However, different lenders may require you to fulfil specific criteria to secure a commercial loan, and the more money you need, the more tricky it can be to get favourable rates.
A business loan refers to money lent to a commercial organisation instead of a person. Business loans can vary drastically, from £1,000 into the millions of pounds, so repayment terms can vary between a few days to 15 years.
Many business loan financing options are available, depending on your short-term and long-term goals. While factors like your business loan requirements, business loan purpose and desired terms will influence the most appropriate type of finance package. Additionally, the size of the organisation, how long it has been trading and its financial situation and credit score will also impact your ability to secure a business loan and the rates you’ll be offered.
As the name suggests, Business loans are specifically intended for Business purposes – there are many financing options available, depending on your short-term and long-term goals.
It’s worth noting that factors like your requirements, loan purpose and desired loan terms will influence the type of business loan that is best for you.
Business loans can help companies of all sizes to grow, improve their product offering or operations and free up cash flow. They are commonly used to purchase new equipment, finance an expansion or fund a new venture.
One of the most common reasons for a business loan is to invest in the organisation’s growth potential and keep pace with market developments. A short-term loan can help to build equity, purchase equipment that keeps the business running smoothly or purchase inventory that helps to meet demand from customers.
A wide range of business loans are available and choosing the right one, which offers favourable interest rates and repayment terms, is crucial. Various business loans also come with different consequences if repayment terms aren’t met, so it’s vital to be aware of the risks before entering any agreement with a lender.
The most common forms of business loans include:
Secured business loans: A secured business loan is backed by assets that act as collateral in case a borrower defaults on their payments. Assets typically include high-value items like a property or a vehicle, which provides lenders with an option to seize assets in exchange for the loan they offered. However, a secured business loan approach can help you borrow more significant sums of money and secure lower interest rates due to the lower level of risk for the lender.
Unsecured business loans: An unsecured business loan means you don’t need to put up any assets to act as collateral. The lack of assets used as security means interest rates tend to be higher than with secured loans. However, unsecured business loans are typically quick to process and can be preferable to organisations that don’t own significant properties or already use assets to finance other activities. Unsecured business loans are commonly used to expand and grow an organisation, put down a deposit on a commercial mortgage, carry out refurbishments, make tax payments and refinance existing loans.
Short-term and long-term loans: Short-term business loans provide your company with a quick injection of capital for activities like hiring new employees, purchasing inventory or filling in cash flow gaps. In most cases, short-term business loans come with a repayment tenure of one to five years, depending on your circumstances. While a long-term business loan is usually paid back over several years, which allows you to have lower monthly repayments and build the long-term potential of your business.
Working capital loans: Businesses needing help to cover day-to-day costs can do so with a working capital loan. These short-term loan options enable a company to cover its daily operations, such as paying employee wages and accounts payable. This option is particularly useful to seasonal companies that may not have regular operations throughout the year and require access to capital until business picks up again.
Equity finance: Equity finance involves raising capital by selling off a stake in your business or company shares. This business loan option enables companies to pay off a short-term requirement like an outstanding bill or to invest in future growth. By selling shares, the company sells off ownership of the organisation in return for cash. That means the business loan investor may own shares in the company, make money through dividends and, depending on the agreement, want to provide input into how it’s run. Equity financing can come from several sources, including the entrepreneur’s friends and family, selling shares to an investor or through an initial public offering (IPO), which enables companies to raise billions in capital.
Asset financing: Also known as an asset-backed loan, asset financing involves a business utilising its balance sheet assets to raise additional capital. Balance sheet assets include accounts receivable, inventory and short-term investments, which a company can use to borrow money or take out a loan. This approach differs from traditional finance options as the company offers its assets in exchange for a quick cash loan. Some companies may prefer this as the loan decision is based on their assets rather than how creditworthy a lender perceives them to be.
When it comes to Business loans, Hectocorn has seen it all. With extensive experience in brokering international business loans, we are here to guide you every step of the way, understanding and taking your circumstances into consideration to create a bespoke solution built around you.
Hectocorn will work alongside you, navigating you through the entire process – we have devoted our time into building trusted relationships with world-leading lenders, allowing us to secure the very best deals possible.
Raising capital for your business can often be a stressful and challenging process – which is why our leading industry experts will help you find the right financing options to streamline your loan application process, saving you valuable time so you can focus on running your business.
Business Loans are commonly used to purchase the latest equipment, finance an expansion or enter a new market – this is particularly important as your lender will want to see a solid financial ground and a prospective future.
Let’s look at the most common types of Business loans:
- Unsecured Business Loans: With unsecured business loans, you don’t need to put up any kind of assets to act as collateral – since there is no security in most cases interest rates tend to be higher than on secured loans.
- Secured Business Loans: A secured business loan is backed by collateral – this can typically be property or other high-value assets and movables such as equipment or a vehicle.
- Short term loans and long-term loans: Short-term business loans provide your business with a quick injection of capital – this could be for hiring new employees, purchasing inventory or filling in cash flow gaps. In most cases short-term business come with a repayment tenure of 1-5 years – depending on your circumstances. On the other hand, a long-term business loan is usually paid back over many years, this allows you to have lower monthly repayments and look at the long-term potential of your business.
- Working capital loans: Businesses that need help with covering day-to-day costs might need a working capital loan – these short-term loans can work for seasonal businesses that need access to capital until revenue picks up again.
- Equity finance: Equity finance involves selling a stake in your business, in exchange for cash – in this case the investor will own shares in the company and make money through dividends. Depending on the agreement, the investor might want input into how your business is run and/or voting rights.
- Asset financing: Also known as an asset backed loan, asset-based lending is when a business utilises certain assets to raise additional capital.
Hectocorn has extensive experience in brokering international business loans for ultra-high-net-worth individuals all over the world. We take the time to understand the specific circumstances for your company’s loan and will navigate you through the entire process.
Our business loan expertise and established relationships with specialist lenders ensure you get the best rates and terms for your requirements. Our industry experts help you secure the most appropriate financing options and provide a streamlined loan application process. This enables you to save time and money on securing a business loan, allowing you to focus on running your company.