Business Loans online in the UK
With more and more people in the UK doing business through their smart phones, tablets, and computers, it doesn’t come as a surprise that online applications for business loans have become the preferred option for many business owners in the country. As a matter of fact, one of the main reasons why businesses are increasingly relying on online loans for starting or expanding their business is because of the seamless application process that if offers. And side from the easy process, the speed of funding and affordable rates that online business loans provide simply make them an irresistible option compared to traditional business loans from banks that can take forever to obtain.
Business Loans from an Online Direct Lender
If you are a business owner, securing the funding that you need to grow your business can be quite challenging if you don’t know where to look. Fortunately, online direct lenders have made the entire process of obtaining a loan much faster and easier.
One of the main reasons for this radical change is technology. The technological advancement has made a significant impact on business loan funding, especially when it comes to obtaining alternative financing instead of traditional bank financing.
The problem with traditional business loans from banks
When your managing a small or medium scale business, capital is essential. The traditional way of processing a business loan has always been a time consuming and complex ordeal with tons of paperwork and documentation involved. If you are a small business that needs reliable funding right away, then traditional loans are clearly not the ideal solutions.
Banks, are in the first place business entities, and will always prioritize bigger ROI (Return on Investment). It’s simply not that lucrative for banks to lend loans of a million pounds or less to small and medium businesses when there ROI would plummet over the roof on multi-million dollar loans to large corporations. That’s why even though small and medium businesses employ more than half of UK’s workforce, they still struggle to secure the financing that they need to grow their business.
Direct business lending
With plenty of small and medium scale businesses left underfunded, this served as a great opportunity for alternative financing companies to step in and fill out the void. Direct lenders with an assortment of alternative business loan options are now available in the UK today and are increasingly becoming the number one financing option for business owners with each passing year.
Business loans from a direct lender is readily accessible directly to the business owner without the need for a third party. This provides the lender better discretion in processing loan applications. A lot of UK’s direct lenders and loan companies have also set up their operations online to reach every business in the UK that require a quick and easy means to secure the financing that they need.
Advantages of Direct lenders online
There are numerous direct lenders online which can be quite overwhelming for business owners looking to obtain a business loan. With a little bit of research however, business owners can easily select a reputable direct lender that can help them secure the financing option that suites their business best. And because they operate online, business owners can also enjoy certain advantages that they won’t find in traditional business loans from banks and mainstream lenders such as:
- If you are a business owner, you might be surprised with the minimal to no paperwork required in taking out a business loan from an online direct lender as well as its amazingly fast approval process.
- Majority of direct lender’s websites provide seamless application forms that can be completed without much stress. And when you apply for a short-term business loan online, the financial products are normally unsecured and won’t need extensive collateral.
- Direct online lenders who provide business loans also utilize advanced data-driven algorithms in determining a business’s creditworthiness. With state-of-the-art technology, an applicant’s credit score, business cash flow, and even social media can all be reviewed in an instant allowing lenders to reach a decision on whether or not the applicant is eligible for their loan service within 24 hours. This is a far cry to the approval process from traditional banks which can take weeks to complete.
Business owners can also take advantage of the internet and the available technology not only in the application process but also in searching for the right direct lender online. There is an abundance of information that you can find in the world wide web including the available direct lenders in the UK that provide the best loan offers as well as comparison sites and customer reviews to help you make the best decision for your funding needs.
How to find Business Loans if you have bad credit Online
There are businesses in the UK who have trouble securing the financing from traditional lenders because they often cannot satisfy the stringent eligibility requirements. And if you are a business owner with poor credit history, you will find many challenges when applying for a loan even from direct lenders online who normally have more lenient eligibility criteria. But this doesn’t mean that you can’t take out a loan for your business entirely. If you want to take out business loans for bad credit, here are some of the steps that you can take:
Construct a strong business plan
So you can significantly improve your chances of getting approved, having a sound business plan with intelligible goals is crucial. When creating a business plan that you will present to your lender when you apply for a business loan, here are some essential points that you need to bear in mind:
- Your business plan should be comprehensible enough so lenders will understand why your business will be successful and how the funding that you are requesting for will aid to that success.
- It should cover an executive summary, nature of your products, services and industry, an analysis of your competitors, a go-to market strategy, an operating and management plan, financial statements and projections, and general background of your business.
- You should demonstrate how the loan proceeds will be used. Be as concise as you can, down to the tiniest detail.
Make the necessary steps to fix your credit
Make it a point to rebuild your tarnished credit by not being late on paying your bills, creating a growing savings account and minimizing the use of credit. Here are some of the tips that you can use to keep your credit rating on favourable levels:
- Payment of debts and bills is particularly important in painting a positive credit history and this is something that you need to look into with great care.
- Pay off any existing debt in your name and never take out unnecessary debt.
- Check your credit report at each major credit reporting bureau so you can keep track of the progress you are making and detect any inaccuracies in your report that can negatively affect your credit rating as well.
It may take years before you build back a poor credit score but consciously taking the necessary steps on repairing it will benefit you and your business in the future. In the event that you take out a business loan for bad credit from a lender, tell the company on the kind of steps you have been doing for your credit as this can aid you in your application.
Consider less traditional options
Traditional business loans from banks and other mainstream lenders might not be the suitable option to consider if you are a business owner with bad credit given the strict eligibility requirements that need to be met in applying for the said financial products. With that being said, there are alternative ways of getting the funding that you need from non-traditional lenders who specialize in providing business financing to applicants with less than stellar credit ratings. Most of these lenders operate online which means you can easily access them when you need to.
Business Loans with a guarantor
Taking out a guarantor loan for your business is pretty straight forward. The primary borrower (the business owner) applies for the loan and will need to find another person to include in the loan application (the guarantor). The guarantor is typically a family member like a spouse, parent or sibling and the person will agree to “guarantee” the loan’s payment. This means that if the primary borrower defaults from the loan or fails to keep up with its repayments, the guarantor will step in and cover the payments.
Business loans with a guarantor are particularly suited to borrowers who have poor credit histories. As long as you have a guarantor who possesses a strong credit rating and is a home owner, you can enjoy the financing that you need to back your business.
Additionally, if you manage to make the monthly payments on time in the agreed terms and conditions, the information will be forwarded to the credit reference agencies and overtime, it will result to an improved credit score. With that being said, the point of having a guarantor in your business loan is to help you obtain the funding that you need and at the same time rebuild your credit for future borrowing.
Terms of business loans with a guarantor
With a business loan with a guarantor, you can borrow as much as £15,000 with fixed monthly payments that can last for 5 years. This kind of payment term gives you the flexibility that you need to repay your loan without much trouble. In addition, if you find yourself in a favourable financial situation and your business profitable, you can repay your loan earlier and enjoy significant savings on the interest payable.
You can also use your loan for various different business purposes such as:
- Start-up-costs. This covers those essential expenses to jump start your business such as a building or website if you operate an online business, tables and chairs, and specific equipments that you need to provide your business.
- Legal fees and insurance – So your business can operate legally, you may need to set up some legal framework and authorisation and some basic insurance as well and you can use the loan proceeds to cover them all.
- Cash flow – If you are a small business owner, you might have a disparity between the money that is coming in (earnings) and the money going out (expenses) and there are times when you need a loan to augment your cash flow if your current earning are lower than your expenses. Particularly for restaurants, caterers and contractors, having some money in between invoices can be very useful.
- Staff expenses – Having extra help to kick start your business of the ground can make a big difference between stagnancy and growth.
- Emergency costs – When you are faced with an emergency expense such as a broken oven for your pizza restaurant, it can be quite helpful to have a loan to cover any unforeseen costs.
Business Loans without a guarantor
There are also ways in which you can secure the funding for your business without a guarantor regardless of your credit rating as long as you can prove your ability to repay the funds that will be provided to you by sharing essential information pertaining to your equity investment and collateral and business management experience. Here are some of the no guarantor business loan options that you can consider in the UK today:
- Peer-to-Peer Financing. Peer-to-peer financing, widely known as peer-to-peer investing or P2P lending, entails individuals rather than banks and lending companies offering unsecured business loans to potential borrowers. To apply, simply use a P2P lender’s website that will match you with private individual lenders. The interest rate for your loan will depend on the lender or the company handling the transactions and on your credit rating as well.
- Form a Partnership. If you have a sound business plan in place for a business idea that has great potential, you can decide to partner with a person that has good credit rating who will then apply for a loan to jump start your business off the ground. If it’s a joint loan, then both you and your partner will be equally responsible in paying off the loan. Your partner will also hold some kind of right on how the proceeds of the loan will be used and depending on your agreement, some rights on your business as well.
- Family and Friends. You can also turn to your family and friends who have more than enough money to lend you the funds that you are looking for in starting or growing your business. If needed, try to explain why you are relying on them for financing because your credit rating and qualifications is not good enough to take out a conventional business loan.
Business loans in the UK and Business Loans with instant Funding
When you are in a hurry to start a new business idea or cover an unforeseen business expense, you’re probably looking for a business loan that provides instant funding. Before, getting approved for a business loan in the UK was a long and hectic process – there are instances wherein it would take a few months before you can have your loan deposited into your bank account. And that’s if you are among the few who are lucky enough to meet the bank’s strict requirements for lending.
It would certainly be frustrating to spend an entire day or two in applying for a business loan from a bank to only get rejected in the end after several days of waiting for a response. Fortunately, the times have changed and business owners in the UK can now take out loan a whole lot faster than before. Because nowadays, any business in the UK, whether big or small, can find a quick loan whenever and wherever they want.
Here are the changes in the business loan industry in the UK today:
- As banks started to become quite “picky” in lending loan’s to business owners, alternative lenders came in to provide business owners access to the capital that banks wouldn’t give them. Alternative lenders fundamentally disrupted the business lending market.
- Today, business owners in the UK can get a small business loan in just a single day or two – not weeks or months that are common among banks and traditional lenders.
- You can take out a business loan with instant funding online with straightforward and convenient application processes.
- There are now specialist online lenders who can provide funding to business owners who have unique situations. This means that you cans secure funding from such lenders even if you have bad credit or don’t have any credit history at all.
Before you take out a business loan that offers instant funding in the UK however, be sure to shop around and compare the best options that provide the lowest rates that you can qualify for. After you have found the best loan option, simply apply online in the lender’s website and you can enjoy the funding that you are looking for in the same day if you are approved!