If you are seeking funding for a new business or simply wish to invest further to grow or diversify an existing business, a business loan may be an option to consider.
Secured business loans offer advantages over unsecured business loans but those advantages come with associated risks. As with any financial agreement or commitment, it is always wise to ensure that you review your options and take advice where necessary before proceeding with a loan agreement.
- A secured business loan will typically allow higher values to be borrowed than an unsecured loan, although the sum available will be limited by the equity available in the property or item against which you are securing the loan.
- Secured loans usually also offer longer periods in which to pay back the loan. This can be advantageous for the small business and something to look for when you compare secured business loans.
– Repayments are also likely to be lower than for unsecured loans. This often helps small businesses, in particular, if cashflow is tight.
- They may be a better option for those with credit histories that are less than exemplary. As there is security for the lender, individual credit history is less critical.
- Potential for costs upfront. A secured business loan involves more administration than one which is unsecured and there may be a requirement to cover administration fees. Checking if these costs will apply and how much they are likely to be is important when you compare secure business loans.
– Timescales between applying for and obtaining secured business loans are likely to be longer than those for unsecured loans. This is because there is a more complex process surrounding secured business loans, including property or asset valuations.
– The most obvious and commonly known potential disadvantage of a secured business loan is, of course, the potential for the loss of the property against which the loan is secured. Ultimately, if you fall behind with loan repayments, the asset may be repossessed, even if this is your home.
If you are looking for a secured business loan, it makes sense to do your due diligence and carry out a secured business loans comparison. However, for many applicants, their starting point is likely to be a search on a well-known search engine or perhaps a quick chat with their accountant or bank.
Whilst these approaches are likely to result in more knowledge than previously, they are equally likely to provide limited information. A bank will be tied to selling only its own products and an accountant is unlikely to have full market knowledge as that is not their area of speciality. Internet searches can produce excellent results but for someone new to the world of secured business loans comparison, it can be difficult to determine who is independent.
We believe in making sure you get the best deal. As we are completely independent and impartial, we can help you to identify products appropriate to your needs. Simply provide a few details and our smart comparison technology will get to work to provide you with quotes. Should you decide to proceed, we will complete all the paperwork.
When you compare secured business loans, it is important to decide what matters most to you. If cashflow is likely to be challenging, for example, then lower monthly payments might be high up on the list of must-haves. Alternatively, if the overall cost is the driver, then the lowest interest rate, rather than the lowest monthly payment might be the most attractive feature of a potential loan.
Other things to consider could include:
– The length over which the lender is prepared to offer a loan
– The cost of administrative and legal fees that may be associated with securing a loan
– The option to take payment breaks if necessary
– What potential penalties may be incurred should you wish to repay the loan early
- The type of charge that may be registered against property or assets against which the loan is to be secured
- Whether you need a fixed-rate loan in order to be able to accurately forecast cash flow
Many potential borrowers assume that property is the only collateral allowable for a secured business loan. In fact, whilst property is undoubtedly the most common form of collateral, there are other options. However, it is possible that the more unusual types of collateral may limit the number of potential lenders willing to supply a secured business loan.
Collateral can be divided into two types: tangible and intangible. Lenders accepting intangible assets as security such as trademarks, copyrights or intellectual property tend to be specialist. Also, it should be considered that loans secured against intangible assets such as these could take more time to arrange than loans secured against tangible assets as the valuation process can be considerably more complex.
In terms of tangible assets, these could include:
- Equipment and Machinery
Assets can either be held by the business or can be held personally. However, the potential for them to be repossessed by the lender if repayments are not maintained remains regardless.
As with any other type of loan, secured business loans will require that certain requirements are met before lending can be approved. Whilst they are likely to be similar, requirements can vary from lender to lender and according to applicant status and circumstances.
Using an independent and impartial service such as Bright Loans which utilises smart comparison technology can put you firmly in the driving seat when you carry out a secured business loans comparison. This will help to ensure that you get the right secured business loan at the right rate.