Be informed when taking a business loan
While your Northwest Business may need a cash injection the market is becoming swamped with quick wins and easy access small business loans. These may seem the perfect and easy solution. However, you really do need to know exactly what you are getting into. Northwest Business Funding has put together a business language jargon free guide to the information that we believe you will need when considering a business loan
The government Covid loans have been great for many business, but not all businesses will br ready for the repayments to begin. We have created a new service that means we can specialise is working with businesses to improve efficiency, streamline processes and improve business performance, find out more ……..
Some Terms –
Loan Period: this is simply how long you wish to borrow the money for. this can be a strategically planned period for example 60 months, but what if you want to pay early?
Early Payment: you may want to borrow money for a project that will improve business performance and therefore you may be able to repay early. You need to know if this will cost you any additional money. Will it be able to be repaid back as you like? Make sure you think about future events.
What is APR: this is the Annual Percentage Rate this is the amount of interest you will pay on the amount borrowed over the term of the loan each year and over the full term. This is important as you need to be able to compare products. Some business lenders are asking for daily repayments, these may seem small but can have a very high APR.
What are Fees: Fees are the amount charged for a service provided. this rate can vary and if you work with a broker these fees can be high, make sure you understand ahead of entering into any agreement that the fees are explained and you understand what you are getting for your money. These fees are normally arrangement fees. Northwest Business Funding fees are explained HERE. We take over the application process and manage the complete process, many brokers leave that to you.
What are Penalties: penalties are a charge usually made if things are going wrong, for example, repayments are late or missed. You need to understand again exactly what is required should you run into difficulty in making repayments.
What are Guarantees: as part of the security against default, a Director or more than one Director will need to make a promise in the form of a guarantee, that the borrowed amount will be repaid if the business cannot pay. A guarantor does not need to be in the business but will need to prove sufficient resource to cover the borrowed amount
What is Security: security is again put in place to cover default in repaying the loan. A business mortgage takes the property as security and a Director may be asked to provide a security on a property or other asset. Greater security for the lender usually means better terms (APR) and more funds, for higher amounts it is not unusual for security to be required.