Monthly Archives: February 2017

5 Small Business Financing Options for Startup Entrepreneurs #business #management #software

#business financing options


5 Small Business Financing Options for Startup Entrepreneurs

Credit Cards

According to a 2012 National Federation of Independent Business (NFIB) study [click the image above for the full infographic], 79% of small business owners used credit cards to start or grow their business. That says a lot about the significance of using credit cards to capitalize a small business.

According to another study (PDF) conducted by Keybridge Research, the use of business credit cards to start or grow a small business has tremendous positive effects on the business and the economy as a whole. The study found that the expansion of credit card lending between 2003 and 2008 contributed to the creation of 1.6 million jobs and for every $1,000 of business credit card use, a $5,500 increase in revenue was experienced by the small business.

The bottom line is that about 4 out of 5 small business owners will be using credit cards.

Founders of Google, Larry Page and Sergey Brin, did it in the early days. Most other successful business owners have done it as well. It’s like anything else in that, you can use credit cards the right way or the wrong way. So plan this like you do your business.

I like what T. Boone Pickens says about planning. He said:

“A plan without action isn’t a plan. It’s a speech.”

Don’t make a speech about using credit cards, make a plan. Places like Lendio and NCH Capital help a lot of business owners learn how to use business credit cards to grow their businesses.


Microloans are small loans typically issued to borrowers who are low income earners or have less than perfect credit and do not qualify for traditional bank financing.

According to the Microfinance Information Exchange, MicroBanking Bulletin Issue #19. nearly 74 million entrepreneurs across the world have microloans that are equal to a combined total of $38 billion U.S. dollars (as of 2009). Statistics vary but most microlenders report that between 95 99% of their loans are repaid. has over a 99% repayment rate this month alone.

Repayment rates suggest that small businesses have experienced a significant level of success as a result of obtaining microloans. Furthermore, according to a recent survey (PDF) conducted by Accion U.S. Network, 42% of survey respondents said their business income increased (between 2010 2011) as a result of a microloan.

Personal Savings

This is the #1 small business financing option for most people who find that they don’t qualify for credit cards, microloans, or any other type of “traditional bank financing.”

This is a great way to get started. If you don’t quality for things like business credit cards or traditional bank financing, then you may want to take the appropriate steps to correct any credit issues that may be part of the problem. We would all like to have more financing options in the future as we grow our businesses. If you’re like millions of other business owners with less-than-perfect credit, then do something about it.

Resources like Creditera are invaluable as it is currently the only credit monitoring platform that allows business owners to monitor both business and personal credit in one place.

The 3 F’s: Family, Friends and Fools

This is a great example of how the small business financing options are different for everyone. For some people, that list of possible investors from their friends and family is a long one. For others it’s, well, a short list shall we say.

Often times it is difficult to obtain financing from family and friends because they may not fully understand the business or believe it will succeed. You will really need to do what it takes to convince them the business will be lucrative and successful to get them to invest.

Entrepreneurs are famous for over-selling their cool ideas to their Uncle Louie and then seeing things not work out. If you do accept an investment from a friend or family member, then I suggest using something like ZimpleMoney. Whatever you do, be sure to treat your friends and family no different than you would a savvy angel investor. They deserve updates, communication and to be one of the first phone calls when there is a problem.

You should treat them as the partner you allowed them to become when you accepted their check. As for the fools I’ll leave that one alone.

Retirement Accounts

This small business financing option is highly popular for entrepreneurs who want to purchase a franchise. In order to use your retirement account to fund your business, you would use the Rollover for Business Startup (ROBS) Strategy.

This strategy is slightly complicated so you’ll want to consult with an expert such as Benetrends or Tenet Financial Group. It consists of forming a C Corporation and rolling your current retirement plan over to the new corporation’s retirement plan. It’s a relatively complex strategy. So don’t try it on your own and do your due-diligence. The term ROBS actually comes from the IRS ROBS compliance project.

ROBs strategies are common but are right up there as the most risky ways to finance a business along with Home Equity Lines of Credit and using personal savings. Again, in the event that your business fails, you likely lose your nest egg or whatever portion of it you “rolled over.”

I probably side with my friend Joel Libava, The Franchise King, on this when I say that I don’t think of franchisees as “full-fledged,” 100% entrepreneurs. I also cannot negate what my other good friend, Rieva Lesonsky, says when she argues, very respectfully, that franchisees take a lot of risk in buying a franchise. Especially a less established franchise.

When franchisees “roll over” their nest egg and start a franchise they totally get my respect and they clearly are taking a risk. I guess for me, I can’t get past the part about following directions and needing to get permission from the franchisor for many business decisions that an entrepreneur would not only make, but would make quickly, and he/she would laugh at the thought of needing someone’s permission.


Successful business owners all have one thing in common. They take action. They execute.

Mistakes and failures come with the territory, so learn your options, move forward, and accept that there will be lessons to learn along your road to success. Figure out which small business financing option is best for you and your dream.

Tom Gazaway is Founder and President of LenCred. His expertise is in helping small business owners who are in the first two years of business to properly obtain business financing that separates their personal and business credit while also protecting, preserving, and improving their credit profiles. Tom blogs on the LenCred blog, The Business Finance Lounge.

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Thanks for the mention.

I m 100% okay with folks using a PORTION of their retirement savings to buy a franchise.

They need to make sure it s done right, though. The paperwork involved must be perfect. And, several other things need to line up. the right age, enough back-up money, etc.

Great article, Tom

The Franchise King®

Thanks Joel. It s great to have you clarify your position on this.

I think the part I liked the most about your comments was when you said, make sure it s done right. When a franchisee or other type of small business owner works with a qualified representative from a reputable company like the ones I mentioned (or other company that meets those criteria) and uses a ROBS strategy then it can be an excellent way to bring your dream to reality.

Thanks again Joel.

I guess most startup entrepreneurs always go with the three F s or with loans. But then again, there are always the safe players who invests their existing savings. I would like to see some unconventional ways to generate some money for startup.

Internet Business Opportunity #online #business #degree

#online business opportunity


Internet Business Opportunity

How To Find The Right Internet Business Opportunity

Many people are looking for online income opportunities. It is an attractive idea to earn an income from home, with nothing but your computer and an Internet connection. However, this also poses a big challenge for most people. Finding the right Internet business opportunity is not as easy as it seems nowadays. Many of the opportunities that can be found online are mostly scams. Yet there are still some genuine opportunities to be found.

Are you currently stuck in a job, that is not paying what you re worth? Perhaps now is a good time for you to half a look around, to see if you might find something that appeals to you. In this article, we will discuss some of the ways you can find out in the Online Internet Business Opportunity you ve found is legitimate.

There are many programs to be found online, which make big incoming claims. Some of these programs are legitimate, but many are not. So if you re looking for an income opportunity online, make sure that the claims of the program are realistic. It will not help you to be scammed by somebody. If it is a real opportunity, they will make honest claims.

Something else that can be important, is to look for reviews. Reviews can tell a lot about the program. Most reviews can be found online. Simply type in the name of the program in the search bar of any of the major search engines, and include reviews in your search phrase. You will find many sites that list a number of reviews, which you can have a look at.

Carefully read through all of the reviews and pay special attention to the negative reviews. If you for the large number of people speaking about the about program in a negative manner, then chances are that you should look for a different opportunity. Another great way to see if a program is legitimate, is to see if it is registered at the site of BBB .

Once you have found the right Top Free Internet Business Opportunity. you still need to find out if this program can work for you. There are some things you need to take into consideration here. First and foremost, it is important that you have the right feeling and motivation to do what is necessary. Are you looking for a part-time job. Or do you want to replace your entire income? How much time do you have to spend solely on your work?

If you just lost your job, you may be able to spend most of your day working on the program. However, if you have a day job. this might be much more difficult for you. Most business opportunities do require quite some time, so make sure you have the necessary time to make this work.

Also consider your strengths and weaknesses. If you have poor communication skills. it might not be the right choice for you to work on a program that requires you to talk to clients all day. The same goes for tech skills. If you don t have them, choose something else, that doesn t require you to learn complicated skills before you can start making any money.

If you pay attention to the above, and make sure that you start an online business with the right mindset, you have a much bigger chance to succeed. Of course, as with anything else you want to achieve, a Free Home Internet Business Opportunity takes time and effort to make it work. There is no magic button that can make the sales for you. But the right attitude can go a long way.

MORE INFO about Internet Business Opportunity can be found RIGHT HERE.

Business finance explained #business #startup #ideas

#business finance loan


Business finance explained

4. Loans

A loan is credit, usually in the form of cash, that you borrow and repay over an agreed length of time. Banks, community development finance institutions, other businesses and even friends and family can provide businesses with loans.

As well as repaying the amount you’ve borrowed, you normally have to pay interest on a loan. The amount will depend on:

  • how long you need the loan for
  • how much you borrow
  • whether the loan is ‘secured’ – eg if you own your home and agree to transfer ownership to the loan provider if you don’t keep up your payments
  • other factors, like the Bank of England base rate

The interest rate may be:

  • fixed, so it won’t change for the length of the loan
  • variable, so it will change with the Bank of England base rate or the bank’s cost of borrowing

Reasons for getting a loan

Loans are generally suitable for:

  • paying for assets – eg vehicles or computers
  • start-up capital
  • instances where the amount of money you need won’t change

It’s not a good idea to take out a loan for ongoing expenses – you might find it difficult to keep up repayments.


  • unlike overdrafts. loans are not repayable on demand – this means that you’re guaranteed the money for the whole term (generally 3 to 10 years)
  • loans can be tied to the lifetime of equipment or other assets you’re borrowing the money to pay for
  • you won’t have to give the lender a percentage of your profits or a share in your company


  • loans aren’t very flexible – eg you may have to pay charges if you repay early
  • you might struggle to meet monthly payments if your customers don’t pay you
  • if your loan is secured against your personal property or assets (eg your home) you could lose them if you don’t keep up the payments
  • the cost of repayments for variable rate loans can change, making it harder to plan your finances

Find funding

You can look for either:

Buy a Home Based Online Business Opportunity business for sale on #start

#online business opportunity


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Home Based and online opportunity.
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This business is not for everyone, it requires commitment and dedication.

12 month home study, accredited, personal development course
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A burning desire to achieve more and really get paid for your work.
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Local Listings #business #applications

#local business listing


Local Business Listings

Can local customers find you? Let’s find out.

If you’re not listed, you could be missing out.

Local Listings is a highly effective way to expose your small business to valuable local customers. Unlike other places you might market your business, local listings sites are being used by people in your area who are ready to buy. In fact, research shows that over half of all local searches end with a purchase!

Directories in our ever-expanding network include:

Google Bing AOL Yahoo YP

People are searching. Will they find you?

How Does Webs Local Listings work?

You provide your details.

With our easy-to-use guided tool, you can enter your relevant business information in just a few moments.

We submit everything.

We will simultaneously submit the details you provided in the first step to over 100 local search directories.

New customers find you.

Once your details are listed, potential customers will see your small business ranked in their local search results!

Get listed in just 5 Minutes!

Webs Local Listings makes it easy to get your business listed everywhere online. Simply provide us some basic information about your business and how you would like it to appear in search results. We’ll handle submitting that information to over 100 local directories online, including Google, Yahoo, and

Create a free website

With a powerful free website builder and professional website templates. Webs can help you easily create the website you’ve always wanted to promote your small business, sell something online, or simply showcase your creativity.
Ready to get started? Get helpful tips for small business websites and more in our resource center.

2016 Webs. A Vistaprint company. All Rights Reserved.

Webs makes small business marketing simple.

Explore the Webs online marketing platform below.

Better Websites Made Simple.

Social Marketing Made Simple.

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Trends in Small Business Loans – Biz Loans – Small Biz Loans

#biz loans


Trends in Small Business Loans

Small business lending is evolving and the future of getting a small business loan will never be the same. Since 2011 the 2008 economic crisis lending has hit somewhat of a standstill, both commercially and personally; and now with the rise in alternative lenders and lenders like Kabbage, creating partnerships with banks to give customers better and longer terms and more flexible products, small business loans are trending up. This means that now is the time to find the right financing option for your small business.

Small business lending has turned a corner. Traditional lenders have realized how important small businesses are to the nation’s economy and are committing to lend more and more to these types of companies. In fact, one of the biggest lenders in the nation, Wells Fargo, has promised that by the end of 2018, they will have lent out $100 billion to small businesses alone. Small businesses have more options than they ever did before when it comes to seeking loans and working capital. Small business lending approval rates rose from 18.8 percent in March to 19.4 percent in May. which is a record high since the economic downturn.

Recently a few new market trends have emerged when it comes to small business loans. These trends are initially positive for small business owners, albeit competitive. So here are six lending trends to look out for in 2014.

#1 Easier toGet an SBA Loan
Thanks to the Small Business Administration, it is now easier than ever before to get a small business loan. Don’t get confused and think that the SBA itself is lending out money or saying yes to anyone who applies. Rather, the SBA is guaranteeing a portion of small business loans, making it easier for financial institutions to lend to them. There are still a variety of qualifications you will need to pass in order to be eligible for a small business loan (size requirement, finance qualifications, and lender qualifications). There are a variety of programs backed by the SBA like the 7(a) Guaranty Loan Program, SBA Express Program, and the Micro Loan Program.

#2 Non-Bank Alternative Lenders

The biggest trend is the increase in alternative lenders in the small business loan marketplace. Traditional lenders like banks and credit unions have made it difficult in the past for small business owners to get a loan. With all the hoops they expect you to jump through plus the amount of time it takes to get your application approved, it is no wonder that alternative lenders like Kabbage have become so popular. The current trend is shifting toward more and more small businesses seeking alternative solutions to traditional lenders. This is most likely due to the current low interest rates.

Last month Wells Fargo, one of the largest traditional small business lenders, committed to lend $100 billion to small business in the United States by 2018. This is sure to be picked up my more large traditional lenders as they come to realize what a large part small businesses play in our local economies. From 2008 to 2012, access to capital from traditional lenders for small businesses came to screeching halt. In fact, traditional bank lenders like Celtic Bank have turned to alternative lenders like Kabbage to help finance more small businesses!

#4 Increase in Middle-Market SBA Loans (up to $5 Million)

Back in 2010, the SBA increased its loan size to $5 million for the 7(a) loan program, which made it even easier for medium sized businesses, which often needed larger loans, to get funding to help their business grow and thrive. Before 2010, SBA loans were more popular and more targeted at new businesses and smaller “mom and pop” businesses. Due to the increase in SBA loans, however, there has been a trend in more experienced traditional lenders who frequently give out SBA and commercial loans lending to middle market businesses, which didn’t previously benefit from any loan program on the market.
#5 Lending on the Go

Another trend in small business lending that has taken off recently is mobile lending. Because it has become so easy to access working capital, alternative lenders have taken it one step further by providing working capital on the go. Many alternative lenders offer apps for your smartphone that allow you to manage your accounts remotely. Kabbage’s mobile app was the first of its kind to actually allow you access to working capital on the go while also allowing you to qualify from your phone and receive cash in as little as seven minutes! Technology is making it easier than ever to connect with your financial institution quicker and with less hassle.

#6 Cash flow is King
This last trend has been around since the advent of small business lending. Your cash flow says a lot about your business overall. and it is one of your most valuable assets. When lenders look at your business, they will always take your FICO score and cash flow into account. If you have a good average cash flow, getting a small business loan can be a cinch. If not, you can be seriously derailed. In fact, banks are looking at their clients cash flow cycles all the time to assess their financing options. Many larger banks are looking into their middle market accounts to see where they can lend even more money than before. Having a positive cash flow will help you tremendously when it comes to financing your business.

As times change, so do market trends, especially in the financial world. This year we are seeing a dramatic boost in how small and medium sized businesses are funded. This boost is great for our local economy and small businesses around the country because it helps keep small businesses flourishing. What trends have you seen recently in the financial arena? Are they affecting the way you find funding for your small business?

Madie Hodges currently works on the Kabbage blog editorial and content management team. She has worked in content marketing and finance since graduating from the University of California, Santa Barbara in 2013. She enjoys offering small business owners tips on marketing, finance and staying connected with your customers.

Latest posts by Madie Hodges (see all )

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  • How to use the SBA for business acquisition financing – Smart Business

    #business acquisition loan


    How to use the SBA for business acquisition financing

    Most businesses have intangible assets that are difficult to value and nearly impossible to collateralize. You will hear terms like “blue sky” or “goodwill” to describe these assets.

    Due to the more flexible collateralization standards associated with U.S. Small Business Administration (SBA) loans, these assets can be financed along with the more tangible assets that are a part of the business acquisition. This is just one reason why a business owner should consider an SBA loan for a change of ownership or business acquisition, over a conventional loan.

    Smart Business spoke with Romona Davis, vice president of SBA Commercial Lending at Ridgestone Bank. about the advantages of utilizing the SBA for business acquisition financing.

    Beyond flexible collateralization standards, why else are SBA loans more attractive?

    Conventional loans for business acquisitions are based on a three- or five-year term. This can make it tough for the business to meet the debt service requirements of most lenders. Utilizing an SBA loan, the acquisition can be stretched out over seven or even 10 years. This lowers the payments and makes it easier for the borrower to hit the debt service targets of the lender.

    Stretching out the amortization of the loan also frees up additional cash flow for the new owner of the business. He or she may then use that cash flow to invest in marketing, implementation of new initiatives or adding a product line. Cash flow is king.

    In addition, long-term amortization can help with the ebbs and flows of business that inevitably arise. If you are in a downslope when a three-year conventional loan becomes due, the bank might put you in forbearance or impose monthly renewal fees. With the SBA, you have something in place long term.

    Is seller financing sometimes involved in a business acquisition?

    Yes, quite often. With SBA financing of a business acquisition, a seller’s note can be used as a portion of the required equity injection.

    Typically, lenders in a business acquisition scenario prefer a 25 percent equity injection from the borrower. This can be a tough requirement for many borrowers. If the seller agrees to hold back a note, and it is structured correctly, that note can be counted as part of the borrower’s equity injection, thus making it easier to come up with the needed equity.

    Also, the sellers are often sole proprietors or family businesses and they want to see their legacy carried forward. Keeping the seller engaged assists the buyer in making the transition and assures the bank there is a team in place that can make it longer term.

    What was the change the SBA made to its ownership rules and why?

    The SBA removed the liquidity requirement a few years back. Without that requirement, the SBA made it possible for businesses with owners who have strong liquidity to obtain financing through an SBA loan. Removing the liquidity requirement allows borrowers who may not have good liquidity to bring an equity partner who has liquidity to the table to help them get an approval.

    The reason the SBA made this change was to provide borrowers more flexibility in how they can structure their business when they seek SBA financing.

    When business owners use an SBA loan for a business acquisition, what do they need to understand about the lending process?

    Business acquisition loans are complex. Anyone who is considering utilizing bank financing for a business acquisition should engage his or her banker early in the process. Ideally, before you even start negotiating with the seller.

    Your banker can advise you on areas where you can be flexible in negotiation and areas where you need to be less flexible. He or she also can alert the buyer to some of the pitfalls to avoid.

    Since a lot of information will be needed from both parties, the sooner documents are provided, the easier the process becomes. Also, be sure there is open and honest communication from the start. Don’t leave any surprises to the end, or your financing can be delayed or compromised.

    Always make sure you are dealing with a lender who has SBA experience and a bank that is a preferred lending partner with the SBA.

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    You Might Also Like

    Ideas for Cottage Industries #cheap #business #ideas

    #cottage industry ideas


    Earn money with a Cottage Industry

    A small business, stand alone or supplementary

    In the garden
    If you have a large enough garden, it is possible to not only supply yourself with food, but make things from it to sell at good profit.

    Take tomatoes and onions. You but two packs of seeds which will cost you no more than a couple of pounds. You sow from these 20 tomato plants and 150 onions (even then you will have only used about a third of the seeds !).
    When they’re ready, rather than selling them at the gate, you make chutney and relishes from them and sell on the gate, at boot fairs or simply friends and their work colleagues.
    Look at it as; the seeds cost me £1, if I sell them ‘out the ground as they are’ they’ll bring me £20, but if I make them into chutney I’ll get £100 !

    Then there’s natures freebies such as horseradish – costs nothing, but made into sauce which is an easy and fast job, it’s 100% profit. There’s wild garlic, wild strawberries, blackberries, elderberry, all sorts of things.
    Even stinging nettles can be eaten or made into hair tonics, as can rose hips.

    A good look and read of a wild herbal recipe / medicinal / useage book is quite mind boggling.

    Or just taper off one area from your garden and grow the same thing in it and sell that, flowers even.

    The thing is that from a working point of view, the garden is mainly spring, summer and autumn work, but the actual results of your hard work are to be had all the year round.

    From Home
    The list could be endless, but if you have a skill and like doing it – use it to your profit.

    Here’s a list of some things either I’ve done or other people who I know have done.

    Build Rabbit hutches and sell in local paper and auction
    Chicken Arks
    Quilt covers
    Wood carvings
    House number and name plates
    Marmalade making
    Candle Making
    Wooden toy making
    Wood carved dowsing pendulums

    Find out the market for it and plan out how you’re going to target that market, all the financial outlays and plan accordingly. Even plan the escape route if you have to.

    More ideas – Bird Boxes, Chicken Coops, Pet Runs, Chutney and more

    Earning Extra Income

    Business Acquisition Financing #start #online #business

    #business acquisition loan


    Our Services

    Business Acquisition Financing/Leveraged Buyouts

    “It costs less to buy an existing business than to build one from the ground up,” say business experts.

    That could be why, despite credit often being elusive and economic uncertainty, there seems to be increasing leveraged buyouts and merger and acquisition activity. Motivating factors include the opportunity to get into emerging markets, new geographic territory, build brands and increase profits more quickly.

    Nearly 80% of companies recently surveyed anticipate at least one acquisition in the short term and, conversely, one-third of middle market firms are open to outside investors.

    In today’s rigid credit market, securing bank funding can be difficult for companies or transactions that don’t fit into the bankable box.

    If the target company does not have a lot of assets, positive cash flow and strong profit margins, traditional bank financing can be tough – if not impossible to find. Alternative commercial financing options are available.

    Key factors to the type and availability of funding is the structure and type of the company that is being acquired and its valuation and growth plan. Acquisitions often involve different layers of capital which could include debt financing, mezzanine financing and private equity, depending on these factors.

    Business Capital specializes in providing “out-of-the-box” capital solutions to fund any situation or acquisition.

    If a buyer or seller is not well versed in financing, it is vital to partner with a reputable firm, like Business Capital. that understands the complexities of the situation and all the available options to determine the right source and structure of financing for each specific business opportunity.

    Does your business plan include an acquisition in your future?

    When considering an acquisition (and alternatives for acquisition financing), key items to deliberate are:

    • The continued growth opportunity provided by the target company
    • The acquisition financing terms
    • The purchase price

    Many acquisitions that fail often do so because these factors are not carefully considered. Acquisition Financing is not “one size fits all.” Business Capital is expert in this type of complex transaction and will address each of these factors to structure and package the best solution with financing terms that are highly customized to each client’s needs; and also provide analysis of the purchase price to determine if it can be supported by the cash flow and assets of the acquisition, and falls within industry standards.

    Why Business Capital?

    Business Capital has been providing debt financing and restructuring services to small and middle market companies for over a decade. With a strong background in leveraged buyouts and acquisition financing, BizCap has a proven track record of successfully structuring and syndicating the optimal loan or loan combinations to quickly execute this type of transaction. We have developed solutions and are accustomed to the complexities in all areas of debt financing; we have the capacity and experience to provide, structure and coordinate event financing in all sizes, types, industries and situations. If necessary, our business debt restructuring practice can also reduce liabilities and debt to pave the way for a successful outcome.

    Click on the Links below to see our recent acquisition financing, leveraged buy-out restructuring for acquisition deals:

    Secured Business Loans – UK SME Lending #business #current #events

    #secured business loans


    Secured Business Loans: The Essentials

    Find out if a secured loan is right for your business.

    Are you about to launch a new venture? Or perhaps you’re planning ahead for a seasonal dip in income and want to boost cash flow. Maybe you’re expanding and need bigger premises, new equipment and more staff.

    Launching or growing a business inevitably involves investing money. An injection of capital can give you the stability and freedom to get things off the ground or take your enterprise to the next level. This is where small business loans come in – when you find the right lender, the funds can be a lifeline.

    Focus on alternative finance

    The options are numerous – which is great news for all smaller ventures – but identifying the loan that best suits your business is essential to securing funding in the first place, not to mention having a loan that’s affordable.

    Lenders apply their own criteria, payment terms, interest rates, and requirements for collateral as security (more about that in a moment). It’s worth focusing on lenders in the mushrooming alternative finance sector, whose terms tend to be more flexible and suited to SMEs.

    Secured or unsecured loans?

    First, let’s look at the basic differences between secured and unsecured business loans.

    You can typically borrow more with a secured loan than with an unsecured loan – some lenders offer in excess of £1 million in fact. Secured loans generally offer lower interest rates too.

    One point worth mentioning is that because you can borrow larger amounts with secured loans, lenders need to reduce their risk by asking you for security on the loan. So they’re likely to ask you to provide collateral as security against the loan. Then, if you default, the lender has a higher chance of recovering the money you owe.

    Think of it like a pawn shop: you provide an item to the lender who evaluates the asset and decides how much you can borrow based on its value. It may be a simplified comparison, but it illustrates the basic idea.

    Company collateral as security

    When businesses apply for large loans, they’re likely to be asked to pledge company collateral as security. What lenders want as assurance varies, but you should expect to pledge assets such as the following:

    • Commercial property
    • Land
    • Vehicles
    • Equipment
    • Fittings and fixtures
    • Or, instead of individual assets, some lenders request the net worth of all assets

    The value of your assets must be sufficient for a lender to justify giving you the loan.

    Personal guarantees

    As well as providing company collateral, you may be asked to give a personal guarantee as additional assurance for the lender, making individuals liable for the loan. Lenders’ requirements vary but often depend on your company status – we explain more below:

    If you’re a limited company or LLP

    • If you have a limited company or limited liability partnership (LLP), the majority of lenders will expect you to provide a personal guarantee alongside company collateral.
    • Directors or shareholders with a minimum of around 20% to 25% share in a limited company are also likely to be asked to provide a personal guarantee.

    If you’re a sole trader or partnership

    • When it comes to sole traders and partnerships with unlimited liability (not LLPs), the rules are different when it comes to any kind of loan: you’re always personally liable. and, as a result, you won’t be asked to put up any company collateral.

    Since each lender has a different approach to decision-making, always look closelyat lenders’ terms.

    Another point to highlight: if you refuse to provide a personal guarantee this could reflect badly on your application – and your intention to pay back the money. So regardless of whether you’re a sole trader, a partnership, a limited company or LLP, be prepared to provide a guarantee such as residential property or valuables such as jewellery.

    Secured loans = flexible terms

    In return for security, lenders can be more flexible with their terms, giving borrowers competitive interest rates and long repayment periods – anything between 2 and 10 years.

    On the other hand, if you’re a shoestring startup or a new business yet to build up valuable assets, you might not have enough collateral to put up for a large loan. If this sounds like you, then an unsecured loan could work better for you – but you still need to weigh up the pros and cons.

    Whatever you do, choose your small business loan wisely, and you must be confident that you can pay back the loan or you may risk losing the company and personal assets.

    Your first step on the road to funding

    Since lenders have their own criteria and meticulous assessments, it’s worth talking to them directly. In fact, a chat with one of the experienced relationship managers at Fleximize is a great place to start. As innovators in lending to SMEs, our team understands the demands of small business finance, and the significance of such a serious financial commitment. Call us on 020 7100 0110.