Whether you need to expand your business, invest in new equipment or plainly want to borrow for working capital, a business loan can be the best way to do so. Business loans are a quick and straightforward way to finance a business.
A business loan is mainly categorized into:
Short term loans
Medium to long term loans
Short Term Loans
As the name suggests, short term loans are typically offered for a short period of time that is for around 6 to 24 months. Short-term loans are further categorized into:
Secured loans: In case of secured loans, the loan amount depends on the value of assets held by the business owner. In the event of failure to repay the loan amount, the assets of the borrower may be forfeited as repayment to the lender.
Unsecured loans: In case of unsecured loans, the business owners are not required to produce any collateral, or security for small business loans. The rate of interest for unsecured loans is quite higher as compared to other types of loans.
Standard fixed rate loan: Standard fixed rate loans are the type of short-term loans where the business needs to repay the same amount each month.
Revenue advance loans: These are the loans where the business needs to repay a set percentage of sales revenue until the agreed-upon amount is repaid. The faster the business grows, the loan gets repaid quickly.
Revolving credit loans: These are the loans where the business has access to a set amount of credit over an agreed period. The business needs to pay the interest only on that portion of the loan that is draw of business use.
Medium and Long Term Loans
Unlike short term loans, the medium or long term loans are paid back over 1 to 10 years. They are usually fixed-rate loans. For businesses that wants to set up a new business or expanding their current one, the medium-long-term business loans can be one of the best ways to get funding. These types of loans are usually repaid in monthly installments, with interest added to the borrowed amount.
Before applying for any kind of loans, it is necessary to answer several critical questions such as how much money do you need, for what purpose you need the money for, how quickly do you need the money, how long will it take you pay back the money, what is the current financial state of your business, and most important Financial Literacy For Millenials to be considered. This will help you to determine your exact financing requirements and the best suitable loan to fulfill your business needs.
Santander is one of the most popular and reliable source to get business loans in the UK. Getting a business loan from Santander could help to make your business plan a reality. It also provides the best banking solutions to all types of businesses including start-ups as well as established businesses. Using the Santander contact number, one can directly talk to their representatives to get all the important information about any kind of loans.