Fixed rate Business Loan
A fixed rate business loan from the bank is the age-old solution to commercial finance. Banks have been lending money on this basis for centuries. A subtle alternative is the variable rate business loan, but the principle remains the same. A business borrows money and repays in fixed amounts over time.
A long-term business loan is regarded as one with a term of more than three years. They can be agreed for terms of ten or even twenty years, but these will only be available to very established businesses, and backed by security.
Fixed Rate Business Loan versus Variable Rate
A fixed rate business loan has the advantage of being predictable. The repayment will be the same amount every month over the term of the loan.
A variable rate business loan adds an element of risk, as interest rates could go up. Of course, it can also bring benefits if rates go down.
Both flavours of loan will usually require some sort of security. The business will need to demonstrate it has the collateral to secure the money, along with a strong track record of commercial performance over several years. But there are other finance options available.
An Alternative Approach – Invoice Finance
Invoice finance – factoring or discounting – provides a flexible and cost-effective alternative to traditional business loans.
A fixed rate business loan provides a specific amount of money for a specific amount of time. Invoice finance allows you to borrow what you want, when you want it, and can run for a term of your choice. It has the added benefit of not being secured on any assets, and it is relatively quick and easy to set up.
The principle behind invoice finance is simple – you’re releasing money that’s tied up in your sales ledger. When you invoice a customer your lender releases up to 90% of the invoice value in cash, which gives your cash flow a boost.
Factoring means the lender also takes over management of your credit control, which is great for small businesses who are short on manpower. The factor does all the administration for you – raising statements and chasing payment.
Invoice discounting leaves you with the responsibility for credit control, and is often the preferred choice for larger businesses.
Find out how much you could release from your sales ledger instantly online >>
Touch Financial and Business Loans
The world of commercial finance is more complex than ever. As the UK’s leading online commercial finance broker we’ve got the right experience to help you through the maze of options available. We can lead you to the solution that’s right for your business, saving you time and money.
We’re independent, impartial and our service is free to you – because we’re paid our commission by the lenders.
Our years of experience have helped a wide range of organisations find the finance they need. How can we help you?
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Also in this section:
- Understanding and arranging a business loan
- Benefits of a business loan - business loans uk
- How to get a commercial business loan
- Secured business loans
- Choosing the right business loan - fixed rate business loan?
