More businesses fail than succeed. In fact, some reports suggest that up to 90% of business start-ups fail. While capital isn’t always the determining factor, it is certainly to blame for many failed enterprises. It doesn’t have to be this way; whatever your business dream is, don’t let it die because of a lack of funding. You have options and the most obvious are secured and unsecured business loans.
There are many uncertainties surrounding the business environment which means your business needs capital for growth; your competition is growing, technology is changing, supply chains are lost, market forces push up the cost of raw materials, or your overheads are rising.
You may be looking for a certain type of funding, be it cash advance or looking for alternative funding option, but if you are wary about allowing a third party to access your financial data or don’t want to risk giving away a stakeholding in your business then you will be left with two options, either a secured or an unsecured business loan.
Secured or unsecured business loans?
A business loan is categorized into either a secured loan or an unsecured loan.
The secured loan requires the applicant to put up collateral or assets which are secured against the loan in the event of non-payment. The most likely business to take advantage of secured loans are small to medium-sized businesses and are usually taken out against buy-to-let properties, commercial premises or the business owner’s land.
If you are a homeowner running your own business or your business owns assets you might have thought about taking out a secured loan to help fund growth and opportunities in your business. A secured loan has been one of the mainstays of business funding since the economic downturn and throughout its recovery.
The unsecured loan requires putting up no assets to secure the loan amount which is usually (but not always) balanced with a higher interest rate. As a business owner, having an unsecured loan means being safe in the knowledge that your own home isn’t being risked by your business.
The important consideration is that business loans are based on strict terms and conditions relating to fixed monthly repayments and over a set time period, which makes business planning easier to account for.
How can secured & unsecured business loans grow your business?
Of all the finance options available, business loans are by far the easiest to obtain. They offer your company a fixed cash injection which can help manage your short-term goals and achieve long-term profits. A business loan is also arguably the best way of getting your hands on the capital you need to grow your business and we have many success stories that testify to this.
It doesn’t matter what your reason for the growth is, whether you are at the start of your business journey or ready for the next step, a loan is there for your needs:
Low cash reserves – cover dips in sales or for setting up without risking personal savings.
Asset purchasing – new machinery, a new employee, vehicles, office equipment, setting up a new product line.
Working capital – paying employees, buying stock, starting a business, cash flow protection, establishing supplier credit lines, testing new products.
Business expansion – relocating your business, buying new premises, office refurbishment, rebranding, investing in research and development.
Why other types of funding are not as flexible as business loans:
Equity investment – investors put money into the business and in return take shares in the company, waiting for profits but having an active stake-holding in the company and knowing they can always sell their shares later on. If you don’t mind giving up part of your business and autonomy this is fine, especially if you are looking for a large amount of capital.
Asset finance – a finance company will buy an expensive asset that your company cannot afford and then loan it back to you at an agreed affordable rate. A good option if you need to invest in expensive machinery and plant, but not if you need funding for multiple avenues of growth.
Invoice finance– this effectively sells your invoice debts to a third party who chases them, allows you to borrow against up to 90% of the invoice and charges you an interest fee for doing so. This is a great option if you have slow payers, but not if you need a cash injection.
Seeking more information on business loans can help in more ways than just financial assistance, it can identify and overcome obstacles to growth that a lack of funding knowledge can be a precursor to.
To learn more about how business loans or our finance packages can help grow your business call us today on 03330 069 141 or request a call back via our contact page.
