Guide to arranging a small business loan
If you’re struggling to keep on top of your cash flow perhaps it’s time to consider taking out a small business loan.
Every business owner knows that cash is the lifeblood of business. Profits are great, but even profitable businesses can find themselves in trouble if they run out of cash.
The good news is that there are plenty of ways for a small business to borrow money, and it doesn’t have to involve handing over assets as security.
Different Types of Loan
You want to find a small business loan that’s flexible and cost-effective. The options available include:
- An agreed overdraft facility.
- A fixed or variable rate loan.
- Asset finance.
- A commercial mortgage.
- Invoice finance – discounting or factoring.
Each type of loan has its advantages. Overdrafts, for example, are very flexible but usually require some sort of security.
Business Loan Example – Invoice Factoring
A popular form of small business loan is invoice factoring. This is highly flexible and has the advantage of not needing any security. It can also be arranged quickly.
Factoring releases the cash that’s locked away in your sales ledger. Your customers may take up to 90 days to pay – wouldn’t it help your cash flow if they paid immediately? That’s what factoring offers.
Here’s how factoring works in practice:
- You supply goods or services to your customer, and invoice them.
- The lender, or factor, pays you up to 95% of the invoice, as soon as you send it.
- The factor is responsible for sending statements to the customer and pursuing payment.
- When the customer pays, the factor sends you the unpaid balance, minus their fee.
Another great benefit of factoring is that the lender takes over the administrative burden of credit control. This leaves you more time to focus on your business.
Find out how much you could release from your sales ledger instantly online >>
Touch Financial – We Help Small Businesses
You want access to money as quickly, cheaply and easily as possible. Our role, as the UK’s leading online commercial finance broker, is to do exactly that.
We work with over 20 of the leading lenders, such as Lloyds TSB Commercial Finance. We listen to your needs and then help you to decide which product will best meet them.
We’re entirely impartial and our fees are paid by the lenders – so the service is free to you.
Our team of finance experts are happy to give all the help and advice they can. We’ve served thousands of UK organisations in this way – can we now help you?
Compare factoring quotes instantly online >>
Also in this section:
- Guide to arranging a small business loan
- An alternative to small business loans
- Finding Small Business Loans UK
- Flexible Business Loan - Boost Your Working Capital
