Different Types of Loans for Business

*Collaborative post

If you are the owner of a business or accountable for the business finances, you may choose to take out a level of finance. This could be to plug some short-term gaps or it could be to support a project or growth within the company. Many different finance options could be chosen, and all have their own positives and negatives and it is up to the accountable person to make an informed decision. Below we have given some details of different loan types to help with the decision-making process. 

Unsecured Loan 

You can get a business unsecured loan in places like Fintech Lending where there are very little questions asked and the process is pretty easy. Here you can normally get low amounts (maybe up to £30k) by following an online application process. Clearly, the risk of lending the company funds will be assessed. However, you are now able to send things like bank statements via a link to your bank account thus making the process simple to complete and easy for the lender to approve (or not). Unsecured loans are generally pretty easy to get if you have a good credit history and have justification as to how you can make the repayments. 

Secured Loans 

If you are looking for a larger sum of money then you may wish to consider a secure loan. The main difference between this and the unsecured loan is that you are placing some sort of asset against the loan so that if it is not paid, the asset effectively becomes the property of the lender. This could be something like your home. The risk is therefore reduced significantly to the lender and they are more likely to then give you the funds you are looking for. However, it is extremely important to keep up with all the payments when they are due otherwise you run the risk of losing these assets. You will also find that the interest rate between a secured loan and an unsecured loan is a little less (depending on the amount you are borrowing and the length of time it is over). 

Credit Cards 

A credit card may not sound like the best option however this shouldn’t be discounted. A lot of credit cards have the option of putting finance on this for a period that will be interest-free. This can be up to 24 months! There is some small print on this though as you would receive a fee for doing this transfer however this could be a lot less than the interest rate of a loan. The big risk on credit cards is that if you do not pay the full balance off by the end of the period, you will run the risk of receiving very high interest rates on the remaining balance to be paid. 

If you are thinking of applying for a loan for your business, any one of these methods might be right for you. Find out which type of loan would be best for your business today.