If you are looking to grow your business, give your cash flow a boost or need to pay off immediate debts, a business loan may be the answer. Most high-street banks (as well as some specialist business loan lenders) offer a range of business loans with repayment options to suit your business requirements. You can typically borrow between £1,000 and £25,000 (an arrangement fee may apply), and, depending on the amount you wish to borrow, you can choose a repayment period of anything from one year up to twenty years. An existing personal relationship with a bank can mean that you are offered a competitive rate on your business loan, because your personal credit history and credit rating will be assessed as well as the success of the company. However, you should look around for other deals to make sure that you are getting the best deal for your business.
If your business is still in the early stages, or if the cash flow is irregular, you may find that variable repayment makes the most sense, giving you the freedom to take payment holidays where necessary and the ability to overpay when you have a large cash injection. This is particularly suited to work carried out on a freelance basis. Alternatively, if your cash flow is steady throughout the year, you may be able to get a more competitive interest rate by choosing fixed repayments on a business loan. You should expect to show your business' financial projections for the coming years and to be able to prove the company's solvency. If you take out insurance to protect your loan payments, do remember that you are under no obligation to take this out through the same provider as the loan itself, so shop around for the best rate.