Cash flow can affect any business regardless of whether they’re just starting out or are already a well-established brand in their industry. As a result, funding for businesses is a huge market in and of itself and navigating the various products available to help you and your business can feel like a maze. To help you compare business loans that might be right for you, we’re looking at which products are available on the market to help you get started.
Working Capital Loans
Working capital loans work in a similar way to an overdraft and can provide SMEs in particular with cash flow when they need it most. If your business operates well during certain seasons or has a business cycle that leaves you with limited cash flow during certain periods, working capital loans offer you flexible borrowing so you can get the money you need when you need it and only have to pay for what you’ve actually borrowed, not the full loan limit. These kinds of loans are ideal for wages, accounts payable, general business activity and similar.
Asset Based Lending
Asset-based lending is a type of loan that allows businesses to secure funding for the purchase of assets or machinery. This is essentially a secured loan in which the lender will determine how much is needed and use the asset as collateral for the given amount. This type of loan also includes the refinancing of an asset, not just the purchase of a new one. Lenders tend to specialise in an industry, however, so make sure you do your research to save yourself time and potentially money too.
Unsecured Business Loans
Unsecured business loans are perfect for companies that might not have many assets to their names, or who may be unwilling to risk their business or personal premises or belongings in order to gain finance. In these cases, the lender’s decision would be based on your credit history, your turnover and in most cases, the projection for future income. These loans ultimately make the lender foot the risk, so they may charge interest amounts to counteract this.
Bridging loans are designed to do exactly what the name suggests – bridge a gap in finances. These are typically used for property projects or developments and can either bridge a financial gap before income so a company can utilise investment opportunities or can cover other business activity too. These loans are typically paid back on a short-term basis and so interest will be determined on a monthly basis.
Commercial mortgages are a longer-term loan that provides funding to businesses looking to either purchase premises for their own business or invest in property that they intend to rent out to other businesses. These are typically for larger amounts and can, therefore, take longer to process but may still prove faster than a traditional bank mortgage or loan.
Card Machine Cash Advance
If you use a card machine in your business, you may be able to get a card machine cash advance in the form of a loan. This will essentially take your monthly turnover and offer you up to 100% of the overall amount as a loan. Essentially, the card machine and turnover becomes your asset but the lender will still take credit into account when deciding on your loan. Repayments are usually made via a percentage of your overall card machine revenue each month, making a quick, simple and often efficient method of securing funding for retail or hospitality business.
Business loans can be used for a number of different things depending on your industry, but for SMEs in need of extra funding or a cash injection to help you through tougher times, the short-term, fast-funding options on this list could be ideal for you. Decide which loan may be best for you, and get comparing – you could secure a business loan in no time.