Since business loans are used across practically all industries, they're useful for anyone. In particular, they're most commonly used by small or medium businesses. For smaller businesses, the loan can be used to cover startup costs, including staff hiring and stocking inventory.
For medium or larger businesses, a business loan is useful for acquiring machinery and equipment used to grow and elevate the business.
The uses for a business loan, however, are wide and flexible, and can be used in a variety of ways to grow and enhance your business.
Business loans offer an effective solution for businesses short on capital, but there are several risks involved with receiving loans. The primary risk of a business loan is its financial risk. Should you receive an offer from a lender that lacks flexibility, has a particularly high interest rate or has other factors that make it difficult to repay the loan, there is a risk of an impact on your credit score, loss of secured property, or fines.
Businesses use finance to pay for a variety of products, properties, and more. As a business, finance is commonly used to start up businesses, and cover upfront costs, including staff payroll, equipment and inventory stock.
Business finance is also used for expansion: if you're looking to improve the speed, efficiency, or capabilities of your business, and it's a fantastic way of securing funding to support growth by covering expensive equipment costs.
Business finance involves the direct involvement of brokers in organising financial transactions, business finance brokers liaise with clients and lenders to secure the best coverage of a requested loan amount, as well as the most competitive interest rate.
Accountants, however, are solely responsible for the documents and reporting of the transactions.
When it comes to business finance, a business loan is perhaps the most standard method of acquiring capital for your business. These traditional loans are highly flexible, with a broad range of applications to support the growth and development of your business.
The following is an example of a business loan application that is particularly common:
Scenario:
A construction company is looking to acquire equipment to undertake a large project, but they lack sufficient funds to purchase the equipment outright.
Instead, they consult with Clifton Private Finance, who find the very best market rate business finance deals and organise a £100,000 loan for the construction company.
Process:
After an initial consultation with one of our business finance brokers, the broker reaches out to a wide panel of lenders, offering a range of competitive offers to review. The broker receives an offer for the full amount with a competitive interest rate, allowing the owner to pay the business finance loan without greatly reducing cash flow.
Result:
With the purchase of the new equipment, the construction company can now complete the large project, and once complete, the large profit generated from the project itself is more than enough to cover the cost of the business loan.
