buisness loans

[Bev.v.w]

I am starting a new business and need to access a business loan however I am confused with the process. Can you get a business loan and have for example 8months before you start to pay the loan back? or is it an instant re pay system for all loans?

 

[Mark T Jones]

I am starting a new business and need to access a business loan however I am confused with the process. Can you get a business loan and have for example 8months before you start to pay the loan back? or is it an instant re pay system for all loans?

Look for Start Up Loans. In exceptional circumstances they will give a break before repayments start - possibly 3 months.

 

[suitontherun]

Three questions: Firstly what do you require the funds for? Secondly, When do expect your first pound of revenue? Finally, are you the sole director and sole shareholder?

Unless you can demonstrate either recoverable business assets or a pipeline of business (for instance you are leaving a company to continue working with existing clients) then unlikely a start-up loan will be a 'business loan'. Startup loans tend to have have personal recourse and are in effect personal loans- you are on the line if business fails and are in arrears/default! You may wish to explore other more efficient, cheaper forms of finance...

 

[Mark T Jones]

Three questions: Firstly what do you require the funds for? Secondly, When do expect your first pound of revenue? Finally, are you the sole director and sole shareholder?

Unless you can demonstrate either recoverable business assets or a pipeline of business (for instance you are leaving a company to continue working with existing clients) then unlikely a start-up loan will be a 'business loan'. Startup loans tend to have have personal recourse and are in effect personal loans- you are on the line if business fails and are in arrears/default! You may wish to explore other more efficient, cheaper forms of finance...

Are you seriously expecting the op to believe they will get funding without a pg and at a rate below 6%? Because I would say the chances are pretty much zero

 

[suitontherun]

Hi Mark.

Can OP obtain unsecured business financing without PG below 6%? No.
My whole point though, is that they may not necessarily benefit from going down that route.

Firstly asset finance may be a cheaper option if they require the finance for a business asset.

Secondly, considering start up loans leave them personally on the hook, they may look at other options. I have a friend who financed a start up with personal equity by remortgaging at circa 3%. Another good friend of mine has built up a very well established software company on the basis of a short term loan he sourced from a member of his basketball club. It was repaid late with additional interest (flexibility KEY for start ups) and while the lender had a first lien on the business he did not have recourse to the individual. Much better than a 'start up' loan.

If the start up loan didn't have personal recourse then fine.. at 6% not too bad. but its a bloody personal loan that isn't v flexible and rather painful to apply for.

Examine all your options Bev.v.w but remember to think outside the box and please prioritise flexibility. The start-up route is windy with lots of unexpected hills!

 

[Mark T Jones]

Hi Mark.

Can OP obtain unsecured business financing without PG below 6%? No.
My whole point though, is that they may not necessarily benefit from going down that route.

Firstly asset finance may be a cheaper option if they require the finance for a business asset.

Secondly, considering start up loans leave them personally on the hook, they may look at other options. I have a friend who financed a start up with personal equity by remortgaging at circa 3%. Another good friend of mine has built up a very well established software company on the basis of a short term loan he sourced from a member of his basketball club. It was repaid late with additional interest (flexibility KEY for start ups) and while the lender had a first lien on the business he did not have recourse to the individual. Much better than a 'start up' loan.

If the start up loan didn't have personal recourse then fine.. at 6% not too bad. but its a bloody personal loan that isn't v flexible and rather painful to apply for.

Examine all your options Bev.v.w but remember to think outside the box and please prioritise flexibility. The start-up route is windy with lots of unexpected hills!

Accepting that there are a number of unknown variables, I suggested start up loan rather than promoting asset finance because I am 100% certain (if approved) it will work out both cheaper and more flexible. Yes, it is a tad admin heavy (it's a government scheme) but hardly onerous and the application process should actually help with the business

Friends family and fools is nearly always cheaper and less onerous assuming you have that resource and are comfortable with the social repercussions if you can't repay

Remortgaging obviously depends on property ownership, plus being able to meet equity and affordability parameters - plus the op would probably need to commit minor fraud in applying

Whilst the APR is lower, whether or not it is cheaper will depend on admin / set up fees and how long the op actually needs money for (that's the risk of fixating on rate). Plus, your home is at risk etc etc.