When you own a small business in the UK taking out a business loan is one of the most difficult decisions you will make. It is also a decision that is becoming more and more essential to all companies, great and small, in order to be competitive and ensure growth or even to keep heads above water in the early days.
Taking out a business loan should not be a rushed decision. There are important things to consider and vital questions you need to ask yourself before you decide to take the plunge:
How much funding do I require?
If you have investment ideas in mind, it is important that you calculate exactly how much you need to achieve your goal. You don’t want to take out too little and risk needing to go through the application process again for more money, but you also don’t want to over calculate and take out way more than you require. As the size of the loan increases, so too do the interest payments; taking out a larger loan than you can afford may make repayment unaffordable.
What is my timeframe?
Your investment timeframe should include how fast you need the loan in the first place as well as factoring how long it will take to pay back. The more urgent your need for a loan, the worst your options will be so it is always advisable to plan ahead of time and not leave it until the last minute.
Obviously this cannot always be achieved as some investment opportunities may arise quickly. By giving yourself time, however, you can improve your credit score and compare the market for the best options, ultimately securing the best possible loan option.
What are my alternative business loan options?
A traditional bank loan is no longer the only option available to UK business to secure funding. These can be more difficult to secure in today’s market as they are more competitive. There are also highly risky alternatives that businesses should steer well clear of. A number of independent lenders provide unique lending opportunities such as merchant cash advances as well as loan options with more flexible repayment schemes.
You can use Quote Goat to compare merchant cash advances and other forms of loans in order to see your options laid out clearly.