Business Loans
When embarking on a new business venture or expanding an existing one, obtaining loan financing can be a crucial step in managing expenses. Unlike personal loans, a business loan requires you to present information about your business’s financial health, such as its revenue and profit margins. Business loans can address both immediate and long-term financial needs, although they typically involve repaying the principal amount along with a predetermined interest rate. A variety of loans exist to suit different needs, and it’s beneficial to have a detailed understanding of your financial requirements before evaluating and selecting the right business financing options.
Secured Loans
Secured loans involve borrowing funds by leveraging an asset, such as business property or real estate. This arrangement indicates that if you fail to meet repayment obligations, the asset used as collateral may be seized. While secured loans often come with lower interest rates due to reduced lender risk, they carry the potential drawback of risking your valuable assets.
Unsecured loans
In contrast, unsecured loans do not require an asset as collateral. Instead, the lender assesses your business’s or your personal creditworthiness to approve the loan. Since the lack of collateral means the lender assumes more risk, unsecured loans generally feature higher interest rates. Despite this, they offer the advantage of not putting any assets at risk.
Certain varieties of commercial financing fall outside the regulatory scope of the Financial Conduct Authority.