Most small businesses will need a loan at some point – and shopping around can help you get the best deal. Our buyer’s guide tells you what to look out for when you choose a business loan.
Whether you’re just starting up your business, need money for expansion or are planning to invest in new equipment, a small business loan can help.
Many small business owners assume they have to get a business loan from their bank, but that’s not necessarily the case. All kinds of organisations can provide business loans; the trick is to find the one that can provide you with the best deal.
Business loans: a buyer’s checklist
Business loan providers will want some figures from you before they consider your loan. Take a few minutes to get a better idea of what you need.
- Know how much you want to borrow and for how long. Make sure you ask for a business loan for the right amount. If you find you borrowed too little and get into financial difficulties, the lender may impose higher charges for changing the business loan agreement.
- Prepare a business plan showing exactly what the money will be used for and how you will repay the business loan.
- Be bold. If you know other lenders are offering flexible business loans that allow you to make lower payments in the first year, say so. Lenders are more likely to give you a better offer if they know you have other offers.
- Negotiate your business loan. As well as interest rates, check the business loan terms and set-up fees and always read the small print (or ask your solicitor to do so).
- Choose the security you offer with care. Banks will insist that you nominate assets that can be sold to pay off the business loan if things go badly wrong. Where possible, avoid putting your home up as security.
How uSwitch for business can help
Read our guide to business bank accounts