Whether you’re funding a start-up, expanding or trying to inject much needed cashflow, borrowing for business purposes is not an easy task. To confirm this, the Bank of England reported in March this year that many banks have an aversion to lending to small businesses.

Despite the introduction of the government’s National Loan Guarantee Scheme (NLGS), it seems that strict lending criteria has not been relaxed. This has been confirmed by participants in the scheme RBS, Santander and Barclays.
The good news is that there are other options when it comes to financing your business through loans. To make sure that you choose the right finance option for your needs, consider all of the following:

Bank Business Loans

Taking a bank business loan means that you can control how much you borrow and how long you pay it back over. You’ll have fixed repayments (easier to budget for) and you won’t be giving away an interest in your business.

The difficulty is in bank’s willingness to lend to small businesses. Remember that repeated applications to lenders can damage your credit rating, so if you’re turned down once, try to find out why. A copy of your Experian credit report can be useful.

Before you approach a bank for a business loan, first check out the best products available at comparison websites moneysupermarket and compare the market.

Business Credit Card or Overdraft

When it’s a short term solution that’s required, consider using a business credit card or overdraft. These are usually high interest options however so should only be used in the very short term.

Invoice Financing

Many businesses have cashflow issues whereby invoices that are owed to them take time to be paid. If you want to free up some funds a new wave of invoice financing products are available on the market.

Some big banks, including RBS, are offering invoice finance and, although you will pay a fee for using the service, it can be worthwhile if you need to free up cash fast.

Other options for funding your business include government grants, borrowing from family or friends or finding an angel investor – all of which have their individual pros and cons.

Weigh up your options carefully when you need to borrow for your business and make sure that you choose the best business loans for you.

And don’t forget to save cash on your essential office supplies at Office Allsorts!

Most businesses will need additional funding from time to time, whether it’s money needed to cover start up costs, cash to see the business through tough times or funds needed to expand.

It is normal however to be apprehensive about borrowing to fund your business, and it’s certainly not a decision to be taken lightly.

If you’ve decided that a business loan is necessary then it’s well worth taking some time to ensure that you understand the commitment fully, and are aware of all your options.

Head to the High Street

For many, the local high street banks are a good first port of call – particularly a financial institution that you already hold an account with, be it personal or business. But don’t be afraid to shop around in order to get your required credit as cheaply as possible. Small differences in APR can add up to a considerable amount over a five or ten year term, so don’t discount other banks out of a sense of loyalty.

As well as big name banks, many supermarkets such as Sainsbury’s are now well-respected finance providers that regularly top the best buy charts such as money supermarket and money.co.uk.

Interest-ed?

You’ll have to decide whether a fixed or variable rate loan will suit your circumstances best – and there are pros and cons to both. Fixed rate loans are great for those who prefer to be able to predict their repayments – perhaps businesses on a strict budget. While a cheap variable rate may seem appealing while interest rates are low, it’s important to weigh up the possibility of the Bank of England increasing their base rate during the term of your loan.

It’s certainly worthwhile comparing the rates and deals offered on personal and business loans from different providers, in order to find the best loan for you. Once your business finance is in place, make sure that you use your cash flow wisely on the best value business supplies from Office AllSorts. Keeping overheads and outgoings low will increase your profit and subsequently increase the chances of your business venture being an exciting success.