What are Business Loans?
The lender provides money to the borrower that they are responsible for paying back with interest over a certain period. This type of loan is specially designed for commercial organisations.
Please note It is always important to read the terms and conditions of your loan before paying it off early. Some lenders may charge an early repayment fee if you pay your loan amount off early.
What are the criteria for business loans?
These can vary depending on the lender and the product you choose and whether you are starting up a business or you are looking to expand. However, there are some typical requirements that the lenders will ask you:
- You must be 18 years old or older.
- Lenders will run a credit check on you as an individual and on your business, the criteria must be met and therefore demonstrate you can afford the loan and that you will be able to pay it back.
- You must have a business or you are planning to start one and it must be eligible.
- You must have the right to live and work in the UK.
FAQ
Yes, you can get a business loan if your business has bad credit. Traditional lenders may lend less money due to risk, but finance is available from alternative sources such as credit brokers. The loan will likely include high interest, less money, and a shorter repayment period.
If you cannot repay your business bank loan, the next course of action the bank will take is to enforce late payment fees, interest and in some cases, administration costs for each payment that you miss. Depending on the provider, if you miss between three to six payments, you will default on the business loan.
Many lenders require a minimum annual revenue, which can range anywhere from £25,000 to £150,000. If your revenue isn't high enough, consider looking into short-term business loans, SBA microloans, angel investors, crowdfunding or even equipment financing.