Unlike an overdraft or invoice finance, a bank loan is a less flexible method of raising finance for your business. If the bank agrees to the loan, you’re given a period of time in which to repay it, often a number of months or years.
A bank loan gives you the benefit of being easy to plan for, because you know exactly what you’re paying out every month. Your bank will want to know what you plan to do with the funds you borrow, and they’re seeking confidence that you can repay over the agreed term.
Your bank is likely to ask for a personal guarantee or some other form of security to ensure they will get their money back.
Borrow against an asset
You can raise finance for your business by borrowing against an asset that it owns. Typically, this asset is land, property or valuable equipment. The asset has a resale value on the open market, meaning the lender could sell it, should they need to.
Asset-based finance is common in many industries, because it effectively unlocks cash that is otherwise tied up in assets. That capital can be put to work, helping the business generate additional income.
Assets can also be a route to improved cashflow, through the grants and other incentives that can be available to assist with their purchase.
Loan from friends, family or an investor
There are a host of individuals and groups who are open to providing finance for business. Indeed, some actively seek it. This can be a very cost-effective approach to raising funds, but any such arrangement should not be undertaken lightly.
Most lenders will want solid assurance of your future capability to repay the loan, meaning you’ll need to put together some clear projections about future income and costs. Where your relationship with the lender is more personal, such as friends and family, they may not be so demanding, but you are putting personal relationships at risk if your finances don’t go as planned.
How we can help
We’ve worked with many businesses seeking to raise finance, helping a large number to set up a facility that’s right for their circumstances. Many business owners speak highly of the service and support we have provided.
If you’re looking at ways to raise finance for your business, talk to one of our team. Get in touch today to discuss your options.
As a founder of multiple businesses, Jamie believes that mindset, discipline and ambition are key drivers for success, both for his businesses and for his clients.
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The first steps towards the funding your business deserves
Disclaimer: JD Capital Finance (Registered office -First Floor, Steeple House, Church Lane, Chelmsford, England, CM1 1NH, Registered Number 10128297) helps UK firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. JD Capital Finance can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness. JD Capital Finance may receive a commission or finder’s fee for effecting such introductions.