How to find the right business loan

How to select a business loan

There are different types of business loans to suit different stages of a business lifecycle and different business needs. Selecting the right one can speed up the application process and minimise costs.

Finance for a start-up

For a start-up company with no trading business or cash flow, it can be quite difficult to secure a business loan. An alternative is to take out an investment loan against the equity of your home or property. It provides flexibility and you’re more likely to secure approval.

Finance for quick cash flow

Like a line of credit, a business overdraft can be drawn down to a certain limit but is specified as a commercial loan that is priced accordingly and more favourably for the business. This is a great option for those unspecified cash flow requirements that go with owning a business, and it provides the flexibility of accessing funds without too much complication.

Finance for expansion or investment

When aiming to fund long-term investments, term loans are ideal for business expansion. They’re fully drawn advances for a fixed length of time with scheduled repayments. Normally secured against an asset, term loans are commonly used for purchasing new equipment or moving to larger premises.

There is also the option of lease finance for those who require equipment upgrades however, don’t need to own equipment. Lease finance is often used for office equipment, photocopiers, furniture or IT, that you don’t need to own because it quickly gets superseded or has a short shelf life.

Regardless of what kind of business you are financing, it’s always important to have a good business plan. Having an accurate cash flow forecast and a good exit strategy shows lenders that you have contingencies in place if you have to change your plan.


If you have any finance related queries