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How much Interest do lenders charge?
The amount of interest you must pay is really down to how strong your business is and the strength of the individual applicants. Lenders will access the overall picture of the business including reviewing accounts, managements, bank account statements and personal credit searches everything combined will determine what you will pay.
Unsecured loans are loans that are not secured against an asset or property and are usually offered over a 3 month to maximum 5 year term by lenders. They can generally be used for any business purpose and lenders will offer between £1,000 to £500,000+ dependent on the strength of each application.
Secured loans are loans protected by an asset or collateral. The item purchased, such as a home or a car is used as collateral which then becomes a secured debt owed to the creditor who gives the loan. If a borrower defaults on a secured loan the creditor will take possession of the asset used as collateral and may sell it to reclaim some or all of the amount originally loaned to the borrower.
A personal guarantee (PG) acts as security for company borrowings and is given by a business owner and or business executive guaranteeing payment on an equipment lease or loan in the event the business does not pay. Since it is unsecured, a personal guarantee is not tied to a specific asset.
Director Guarantees can be requested by a lenders and banks offering a loan, lease or other finance if the company has limited assets or there are concerns about the company's ability to service the loan basically providing additional security that could be seized to settle any outstanding debt.
Asset finance is used by businesses to obtain the equipment they need to operate and grow their businesses. An asset finance facility involves paying a regular charge for use of the asset over an agreed period of time avoiding the full cost of buying the equipment outright which can effect the cash flow of in a SME’s. The most common types of asset finance are leasing and hire purchase.
Hire purchase (HP) agreement can be useful when a business buy’s IT equipment, plant, cars and/or any other equipment were normally you pay an initial deposit and pay off the entire value of the equipment in monthly installments. A business or person with poor credit ratings could still apply for (HP) facility because the loan is secured against the equipment with the equipment used as collateral to cover the cost of the facility if you default on the loan.
A facility a business uses to purchase or hire equipment. Similar to hire purchase, but sometimes with a large final payment, (also known as a balloon payment) this will then reduce the monthly repayments.
Set by financial institutions such as banks and lenders the rate affects how much money a customer is charged for the use of a finance facility. If the base rate goes up, it's likely lenders may want to charge more as the cost of borrowing increases. A businesses financial accounts and bank statements together with your personal credit search may effect what Interest Rate you will pay for a loan.
Professions Loans Limited regularly checks and updates seebusinessloans.co.uk and try’s to ensure that the information published is correct and up to date to the best of our ability but please NOTE that no absolute warranty or representation is given as to its accuracy or reliability as lenders and/or service providers we work with may change their offerings/products/services at any point.