Question 1

What is a business finance broker?

Accepted Answer

A business finance broker acts as an intermediary between your business and lenders. Rather than approaching individual banks yourself, a broker like Spark Finance compares hundreds of lenders and products to find the most suitable and competitive funding for your specific circumstances. Brokers typically have access to exclusive rates and products not available directly to the public.

Question 2

How much can I borrow for my business?

Accepted Answer

The amount you can borrow depends on several factors including your annual turnover, business age, credit history, and the type of finance required. Through Spark Finance's panel of 100+ lenders, UK businesses can typically access anywhere from £1,000 up to £25 million or more for the right opportunity. Asset finance and secured loans often allow larger amounts due to the security provided.

Question 3

How long does it take to get business finance?

Accepted Answer

The time to receive funding varies by product. Merchant cash advances and unsecured business loans can be approved and funded within 24-72 hours. Invoice finance facilities are typically set up within 1-2 weeks. Asset finance and secured loans generally take 1-3 weeks. Bridging loans can complete in 5-10 working days when properly structured. Our advisers work to secure the fastest possible completion for your circumstances.

Question 4

Do I need a good credit score for business finance?

Accepted Answer

While a strong credit history helps, many lenders on our panel specialise in businesses with imperfect credit. Secured finance (using assets or property as security) is often available regardless of credit score. Asset finance lenders focus heavily on the asset being purchased rather than credit history alone. We work with specialist lenders who look beyond credit scores to assess your overall business viability.

Question 5

Is Spark Finance FCA authorised?

Accepted Answer

Yes. Spark Finance Ltd is registered with the Financial Conduct Authority (FCA) as a credit broker, with FRN 958123. It is important to understand that most business finance arranged for UK limited companies is not a regulated activity under FCA rules - regulation primarily covers credit extended to sole traders, small partnerships, and consumer lending. That said, Spark Finance operates to FCA ethical standards across all its work: transparent fee disclosure, full explanation of terms, and a genuine focus on finding the most suitable product for your business. You can verify our FCA registration at register.fca.org.uk.

Question 6

Does Spark Finance charge any fees?

Accepted Answer

Spark Finance charges a success fee when a facility is successfully arranged. This is typically paid by the lender and is always disclosed to you before you proceed. For highly specialised or complex requirements, an upfront fee or retainer may apply - this is always agreed with you in writing before any work commences.

Question 7

What is asset finance?

Accepted Answer

Asset finance is a form of business funding that allows you to acquire equipment, machinery, or vehicles without paying the full purchase price upfront. Instead, you make regular payments over an agreed term. The main types include hire purchase (you own the asset at the end), finance lease (you use but do not own the asset), and operating lease (similar to renting). Asset finance is widely used across manufacturing, construction, transport, and healthcare.

Question 8

What can asset finance be used for?

Accepted Answer

Asset finance can be used for almost any tangible business asset, including: commercial vehicles, HGVs, and company cars; manufacturing machinery and CNC equipment; construction plant and heavy equipment; medical and dental equipment; catering equipment and refrigeration; IT hardware and technology; printing presses; agricultural machinery; and solar panels or renewable energy equipment.

Question 9

What is the difference between hire purchase and a finance lease?

Accepted Answer

With hire purchase, you make fixed monthly repayments and own the asset outright at the end of the agreement (usually after paying a small final 'option to purchase' fee). With a finance lease, the lender retains ownership of the asset throughout. You use it in exchange for regular payments, and at the end of the term you typically have the option to continue leasing at a reduced rate or receive a share of the sale proceeds. Finance leases can have tax advantages as lease payments may be fully deductible.

Question 10

What is an unsecured business loan?

Accepted Answer

An unsecured business loan is a loan that does not require you to pledge specific assets as collateral. Lenders assess your application based on business performance, credit history, and cash flow. Because there is no security, unsecured loans typically carry higher interest rates than secured alternatives, but they are faster to arrange and do not put your assets at risk. Most unsecured loans range from £1,000 to £500,000 with terms of 1-7 years.

Question 11

What is a secured business loan?

Accepted Answer

A secured business loan is backed by an asset - typically commercial or residential property. Because the lender has security, they can usually offer larger loan amounts, lower interest rates, and longer repayment terms compared to unsecured finance. Secured loans are suitable for significant investment or where the business needs a large sum over an extended period. Terms can extend to 25 years for property-backed lending.

Question 12

What is invoice finance?

Accepted Answer

Invoice finance allows businesses to unlock cash tied up in unpaid invoices before customers pay. There are two main types: invoice factoring (the lender manages your sales ledger and collects payments from customers) and invoice discounting (you maintain control of collections, and the arrangement is confidential). Typically, you can access up to 90% of the invoice value within 24 hours of raising the invoice.

Question 13

How does invoice discounting work?

Accepted Answer

With invoice discounting, you raise invoices to your customers as normal and upload them to the lender's platform. The lender advances you typically 70-90% of the invoice value within 24 hours. When your customer pays, the lender releases the remaining balance minus their fee. The arrangement is usually confidential - your customers are unaware of the facility. Invoice discounting is ideal for businesses with strong credit control processes and a turnover above £250,000.

Question 14

What is a bridging loan?

Accepted Answer

A bridging loan is a short-term, secured loan designed to 'bridge' a gap in funding - typically for property purchases, refurbishments, or when speed is critical. Bridging loans are usually arranged over 1-24 months and are secured against property. They are widely used by property developers, investors, and businesses that need to act quickly before longer-term finance can be arranged.

Question 15

How quickly can a bridging loan be arranged?

Accepted Answer

One of the key advantages of bridging finance is speed. In straightforward cases with good security and clear exit routes, bridging loans can be agreed in principle within hours and complete in 5-10 working days. Complex cases with multiple security properties or development elements may take 2-4 weeks. Spark Finance works with specialist bridging lenders who prioritise fast completions.

Question 16

What is a merchant cash advance?

Accepted Answer

A merchant cash advance (MCA) provides upfront funding in exchange for a percentage of your future card sales. Unlike a traditional loan with fixed monthly repayments, MCA repayments flex with your revenue - you pay more when sales are high and less when they're slow. This makes it ideal for businesses with seasonal revenue or variable income. Most MCAs are available to businesses processing at least £5,000 per month in card transactions.

Question 17

What is trade finance?

Accepted Answer

Trade finance refers to financial instruments and products used to facilitate international and domestic trade. It bridges the gap between when payment is needed and when it is received, reducing risk for both buyers and sellers. Common trade finance products include letters of credit, trade loans, supply chain finance, and import/export finance. Spark Finance works with specialist trade finance lenders to support UK businesses trading globally.

Question 18

What is a letter of credit?

Accepted Answer

A letter of credit (LC) is a guarantee from a bank or financial institution that a seller will receive payment once specific terms and conditions are met (such as delivery of goods). Letters of credit are commonly used in international trade to reduce payment risk. There are several types including documentary LCs, standby LCs, and confirmed LCs. Spark Finance can arrange letters of credit for UK importers and exporters through our specialist trade finance panel.

Frequently asked questions

General

Asset Finance

Business Loans

Invoice Finance

Bridging Loans

Merchant Cash Advance

Trade Finance

Letter of Credit

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