RUNNING BUSINESS SMARTLY? BE SMART TOO WHEN LOOKING TO FUND YOUR BUSINESS
Businesses often require loans for expansion, debt clearing, product creation, and many other purposes. However, there are many types of business loans in the UK. These include secured, unsecured, short-term, peer-to-peer, etc.
Besides loans, businesses have the option of invoice financing, cash advance, government fund for a startup, and other funding options. A few of these financial choices include credit cards, overdraft, crowdfunding, and government overdraft.
However, applying for loans UK 15 min includes an easy process. It requires learning about financing options, checking finances, lender profiling, documentation, and checking both personal and business credits.
Fast Loan Application Process in the UK
● Learning About Financing Options
Researching financing options for an organization is the most crucial step. It requires getting a deep understanding of the type of available market loans so that business owners can make judgment calls.
Business owners can decide the best type of loan because they can offer assets for security or confirm their repayments in case of unsecured loans. Moreover, the type of loans for startups exceeds well-established organizations.
But, large establishments may face no issues while acquiring loans without a guarantor, whereas startups might need to show more documentation. Moreover, the financing options also get limited, depending on the business credit ratings.
● Checking Finances
Organizing documents is the second most crucial step to get fast business loans in the UK. It makes a loan candidate much more desirable by the lenders. Hence, it increases the chance of availing the loan.
Arranging financial documents includes steps like collecting business bank account statements, collecting online and offline books, and separating finances. Opening a business bank account shows the seriousness of the borrower(s) to the lenders.
The second step would include collating both online and offline financial records of the company. Many online and offline companies can help startups and large organizations to gather their financial information.
It doesn’t matter to the finance management company whether your company has a series of simple or complicated issues. They also help to save time spent on such efforts because they have a team for such tasks. Managing these finances would give a clear standing for the loan application result.
The third step involves separating business finance from personal expenditures or investments. Habits like funding your family savings with business profits or paying business expenses with individual credit cards can prove harmful. Therefore, keeping a boundary between the business and personal finances would be helpful to getting a loan for an organization.
● Lender Profiling
Business loans don’t get regulated as much as consumer loans that remain under the direct monitoring of the FCA regulations. Small businesses often receive loan options from self-regulated lenders.
While such lenders can provide more options for terms and products, they may even lead to borrower beware situations. Ultimately, it’s upto the business loan lender’s best interest for its customers. Moreover, different lenders may come up with a wide range of quality and option terms.
Therefore, reviewing lender background both online and offline would help before availing of a loan. Checking the lender background on online websites, search engines, and portals can prove very useful for an organization. It can also help to learn about similar types of loans from the same lender.
Finding the right lender in the UK would require a few steps. These include having a solid business plan, checking loyalty rewards from the lender, asking all the right questions, and figuring the borrowing amount.
Whether a lender asks for a business plan or not, shouldn’t worry about a business loan borrower. Having a solid business plan would prove useful in clarifying success and growth strategies. It would also help in calculating the accurate borrowing sum for managing cash flow and expenses.
Lenders treat their customers just like an organization. They offer rewards like better terms and low-interest rates to organizations that want to build a strong and potentially long duration relationship. Therefore, first-time loan takers shouldn’t feel hesitant to ask about the terms and rates for any future or next loans.
Besides this, asking questions on the interest rate, terms, amount, repayments, etc, of the current loan would prove useful. Clarify whether the rates would remain static or have any criteria for changing. Ask the lender about penalties, securities, collaterals, APR, borrowing limitations, money usage, etc.
These steps would help to find the right borrowing amount for an organization. Apart from this, thinking about the money required during a busy season would also prove useful. Making ballpark estimates can lead to unrecoverable expense coverage or over expenditure along with high-interest rate repayments.
● Documentation
We have already covered the benefits of documents. However, businesses require a specific type of financial records while applying for an online or offline loan from a lender. These include business and trading names, owner’s driving license or passport, VAT, a company number, legal structure, and annual turnover.
VAT is only required if an organization is registered for it. Similarly, company number is needed for “limited” registered businesses. The legal structure should define the company as a sole trader, partnership, limited company, etc. Also, if a company operates under a different name than the legal, then the lenders would require it.
● Personal and Business Credit Checks
The final step to acquire a business loan is to do a personal and business credit check. A good score can improve loan application approval.
Description
Acquiring a business loan requires five steps. These include gaining knowledge about financial options, checking personal and business credits, lender profiling, documentation, and checking company finances.
