Venturing into a new business is not an easy cake. Most of the business plans fails because of deficiency of capital. The circumstances change and the business plan expires. If you are already in business and want to venture into new area getting finance is easy as you may have developed good contacts by now with banks and financial institutions. But in case you are totally new to the field then it is a biggest challenge to get the financial assistance.
Therefore business start up loans are designed specially to arrange finance to promote new business. You can get funds ranging from £5000 to £500,000 with repayment duration 05 to 25 Yrs
Following are the steps you need to follow
1. A solid business plan need to prepared and presented to lending institution which includes budget , forecast and the reason good enough to convince the lender to give advance
2. The presentation may be arranged where the borrower can convince why he wants the finance. The lucrative business blueprint may be presented.
3. Check your personal finances as they are closely examined by the lender . The probability of getting the finance reduces if there had been personal bankruptcies or has a low personal credit rating. Credit rating of the owner is considered because in the new set up credit history is missing. Difficulty occurs in the case of large corporations and partnership.
4. You are required to fill in the application form and mention the principle objective of the business and lender finds the deal that match to the details. Therefore giving the correct details is required
5. The new concern cannot guarantee profits which is generally considered negative feature for financing. You can provide personal guarantee which may not only guarantee the lender that the money would be returned on time but also show your seriousness and commitment towards the business
New Business Loans is the funding of the business, from proprietor’s salary, to solicitor’s fee, to documentation cost, cost of plant and machinery and any other expenses related to the business. Different options for different needs. It can be segregated into secured and unsecured loan.
1. Secured-A valuable asset is given as collateral to get loan. A home for example can be used as a collateral as it cant get you huge funds on its equity. The repayment term is longer giving you good flexibility to repay
2. Unsecured-It is basically for meeting smaller business needs. The repayment term is shorter and involved high risk for the lender.