Advertisement

Talk to our preferred broker, B2B finance, for commercial finance and bridging loans. If you want to know more about business finance read our other business guides.

Advertisement

Search the market for the best bridging loan

  • Rates from 1% to 1.5% per month
  • Up to 70% Loan to Value
  • Minimum loan £100K, max £5 million
Provided by
b2b finance logo
Get a quote with B2B Finance

Contact us now to search the market for the best deal

Moneyfacts.co.uk has chosen B2B finance to offer a bridging loans brokerage service. Any legal or contractual relationship will be with B2B finance.

 

Full members of the National Association of Commercial Finance Brokers

NACFB Logo

Business loans

nigel woollsey

Nigel Woollsey

Online Writer
Published: 13/03/2019

At a glance

  • Business loans provide additional funds for commercial organisations to grow or expand their operations – especially if they do not have the funds readily available to take a business opportunity when it arises.
  • Unlike personal loans, business loans are often secured – meaning you will need to put something up as collateral.

Bank business loans - things to consider

Whether you need to finance a business start-up, an asset purchase, or to make refurbishments to your premises, a business loan is often your first port of call.

Business loan basics

Business loans will usually be individually priced and have negotiable terms and conditions. The provider will want to take a detailed look at your past accounts and current balance sheet as well as your future forecasts and plans. They will then determine the credit risk that your business presents, and price the interest rate accordingly.

Some providers will offer a fixed rate option, so your business can budget for the loan repayments, though many business loans have a variable rate, which means the rate (and therefore your repayments) could change. Providers can also be very flexible on the loan term – business loans can be offered for far longer terms than personal loans, but remember that while a longer term means lower payments, it also means more interest to pay over the term of the loan.

For some business loans a lender may ask you to put up collateral as security should you not be able to make the repayments on your loan. If your business is new, or doesn’t have assets to put up as security, you may be asked to put up your personal property as security instead. There may be a fee to pay to arrange the loan as well, which is often negotiable.

Pros and cons of business loans

  • The interest on business loans is tax deductible.
  • Interest rates tend be a better than borrowing from alternative sources (such as credit cards).
  • The lender has no say in what you use the loan for (although they will expect to see a copy of your business plan and will ask what you need the loan for).
  • Many business loans will require some collateral (or security) against the sum you intend to borrow.
  • If you fail to keep up with repayments you may lose your business premises or any other property owned by your business which has been put up as security.

Moneyfacts tip

Moneyfacts tip nigel woollsey

Just as with any kind of loan, you are best advised to shop around to find the best deal for the sum you require and the period that the loan is to be taken over.

Disclaimer

ANY PROPERTY GIVEN AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR OTHER DEBTS SECURED ON IT. A CREDIT ASSESSMENT WILL BE REQUIRED. YOU SHOULD NOT APPLY FOR AN AMOUNT THAT YOU CANNOT AFFORD TO REPAY NOW AND IN THE FUTURE.

businesswomen in a meeting

At a glance

  • Business loans provide additional funds for commercial organisations to grow or expand their operations – especially if they do not have the funds readily available to take a business opportunity when it arises.
  • Unlike personal loans, business loans are often secured – meaning you will need to put something up as collateral.

Still not sure?

Read all our business guides
guide icon
Commercial mortgages

Our guide to commercial mortgages.

Read More
guide icon
Take out a commercial property mortgage or rent?

Should you take out a commercial property mortgage or rent instead?

Read More
guide icon
Business loans

Find out more about business loans.

Read More
guide icon
Property development finance

Our guide to property development finance and how it differs from a commercial mortgage.

Read More

Get our weekly newsletter

Weekend Moneyfacts is available free by email to all Moneyfacts.co.uk users.

Please send me Weekend Moneyfacts, Savers Friend and selected third-party offers.

How Moneyfacts works

  • blue money scales

    BALANCED. Moneyfacts.co.uk is entirely independent and authorised by the Financial Conduct Authority.

  • free label

    FREE. There is no cost to you. Our service is entirely free and you don't need to share any personal data to access our comparison tables.

  • drawing of pound sign and arrow

    TRANSPARENT. We only receive payment from product providers and intermediaries for quick/direct links and adverts through to their websites.

  • blue binoculars

    COMPREHENSIVE. We research the whole market and scour the small print so you can find the best products for your needs.

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy