Business Finance
A business loan is one option if you need some extra funds to run your business. However, there is no one single type of business loan, as each business and their funding needs are different.
All business loans will need to be repaid with interest, but the exact way they work varies. Some of the different types of loans include:
Types of Business Finance
Unsecured Business Loan
With an unsecured business loan, you don’t need to put up any kind of security to act as collateral. Lenders will look at a range of factors, including your overall business finances and your business credit rating, to work out whether to offer you a loan.
Secured Business Loan
Unlike unsecured loans, these require businesses to put up an asset as security. This will typically be a property, but it could also be another high-value asset such as equipment or a vehicle.
Short-term Business Loan
These can be suitable if your business needs to cover an emergency expense or any kind of immediate cost.
Working Capital
This can be used to help cover gaps in cash flow, so you can carry on with the running of your business.
Invoice Financing
Rather than waiting for a customer to pay an invoice, if you need to access cash relatively quickly, you could ‘hand over’ the invoice to a lender. The lender will then offer a loan, up to a percentage of the value of the invoice, which you then repay later. You can typically access between 70% and 90% of an invoice’s value
Asset Financing
Asset finance is another type of secured borrowing. The finance is secured against assets, such as equipment or machinery, allowing businesses to access the tools they need, even if they can’t afford to buy the items outright.
Credit Lines
It works in much the same way as a credit card, as the lender sets a limit to say how much you can borrow. When you have this approved limit, you can then borrow money up to this limit whenever you need to. You only pay interest on the amount you use, not the whole credit limit, and repayments are typically more flexible than on term loans.
Merchant Cash Advance
A merchant cash advance is another way a business can borrow a lump sum of money. However, rather than repaying the loan in fixed instalments, it is repaid through card transactions. As a result, this option would only be suitable if your business handles a lot of card transactions.
Get in touch
Don't worry, at Boundary Finance, we understand the various types of finance and the unique needs of your business to find a funding solution that is right for you. Contact us today to get started.
Contact us today
We are always looking for new and exciting opportunities.
Contact us for more information on
01825 520105 or by email at info@boundaryfinance.co.uk