What are BUSINESS loans?
A business loan is money lent to you that you pay back over an agreed amount of time. You will normally have to pay interest on top of the amount you have borrowed. Banks, loan companies, building societies and friends and family can provide them with varying rates of interest. Banks, building societies and loan companies would normally want some security against the loan. This could be your home for example. The cost of a loan will depend on how much money you need and the amount of time that you require to repay it. Most people refer to these as ‘traditional loans’.
Why would I want ONE?
A loan can be used for asset purchase, for stockholding or to supplement cash-flow, although an overdraft facility might be better if your need is only temporary.
How does it work?
Once approved by the financier the money would be paid into your account. It is then up to you how you spend it. There would then be monthly payments that had been calculated at the beginning taken from your account by direct debit.
What are the benefits?
The loan will have a set period, which can be from 2 to 10 years, to pay it back. You can also get a fixed rate of interest so that you know exactly what it will cost you each month. The interest is the only charge made for the loan.
What are the pitfalls?
If your loan is secured with a personal asset and you don’t keep up with the payments you could lose your home. Most business loans will need to be secured or have a separate guarantor. If you want to repay the loan early you will likely have to pay extra charges. Variable rate loans can be hard to budget for in the event of a sharp interest rate rise
BUsINESS LOAN PARTNERS
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