Funding through debt involves money that you can borrow from external sources, with a liability to repay the borrowed amount with interest over a set time period.
The below business finance options can help you get access to cash, while retaining full ownership of your business.
Get access to funding, up to an agreed amount, which could be useful for a short-term boost to your cashflow
Sometimes known as business loans, these are paid back over time and you can sometimes set up flexible repayment plans depending on your business' cashflows.
Invoice finance involves a provider giving you a portion of the money owed to your business by customers. It allows you to access much-needed cash quickly.
Allows a business to purchase assets without paying the full amount upfront, getting quicker access to vehicles, machinery or equipment to grow the business.
Cashflow finance helps you manage day-to-day expenses and business operations by providing quick access to money based on expected future income.
Trade finance helps businesses buy and sell goods across the globe, making international trade easier.
Lenders adopt a variety of ways to analyse a lending proposal and assess a borrowing applicant. However, a core of the following may form the basis of many lenders' criteria for getting a loan:
Customer Profile
Business
Management Profile
Lending Proposition
Financial Information
Availability of Collateral Security (if applicable)
Affordability Criteria
S.W.O.T. Analysis
Applying for finance and taking on business debt should not be undertaken lightly.
Assuming you have applied for credit through a reputable and regulated lender, by signing a debt agreement, you are entering into a contract with the lender that is enforceable by law should you be in breach of the terms and conditions of the agreement.
You should therefore exercise extreme care when presented with an offer of funding by a lender. If you are in any doubt about the implications of signing what is a legally enforceable agreement, you should immediately seek legal advice prior to signing such an agreement.
The provision of security is not always made a condition of lending by a funder, making business funding with no collateral a possibility in some circumstances. Whether a funder chooses to seek personal security, either in the form of an unsupported personal guarantee or the formal charging of personal assets, such as a domestic residence, will vary case by case.
A funder considers several factors before deciding whether to lend, and the availability of security is only one of these. The higher the perceived risk of a lend, however, the more likely it is that security, including personal security, will be made a condition of any agreement.
The consequences of a default will depend upon individual circumstances. Depending upon these, you might need to take professional advice. When faced with the prospect of defaulting on a loan, it is advisable to speak with the lender before the default happens. It might be possible to arrange with them to reschedule the repayments, even to benefit from a period of interest-only payments whilst you get back on track. It is not usually in the funder's interest to immediately opt for recovery action if there is the realistic prospect of a business trading through its cash flow problems with a little forbearance having been shown.
The lender will need to know the purpose of the loan to confirm that it’s legal or allowed by the particular fund requirements. The lender may ask for proof that the funds have been used for the confirmed purpose.
This is best discussed and agreed upon before the loan application and the agreement is signed by both parties. If circumstances change, however, it may be possible to discuss terms of repayment. For example, a business in difficulty could request a temporary loan repayment holiday in mid repayment term.
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