Types of business loans are of many types but fall in to two broad categories, secured and unsecured.
Secured loans are not ideally suited or typically used to fund the short-term working capital needs of a business and are looked in another section.
In the past banks used to use the assets of the business as security for an overdraft facility but increasingly they have stopped doing this and now rely upon the personal guarantee of the owners and directors and or a charge on the family home. This is not always the case when dealing with the new challenger banks or with other types of loans that may be available.
Business Start-up Loans
The Government is currently offering unsecured business loans to assist new start businesses. These loans are specifically designed for entrepreneurs looking to raise small amounts of up to a few thousand pounds. Provided that your business hasn’t been trading for more than 2 years and you have a credible business plan, each partner or director of your new business may be eligible for a new start business loan of up to £25,000.
Unlike the high street banks, who have never been happy to lend small amounts to small businesses, other lenders are happy to provide loans for as little as a thousand pounds, and unlike the high street banks, personal guarantees may not always be required.
Bad credit loans
There are a number of specialist lenders who will consider your application and will listen to your explanation of any difficulties in the past. So simply having been through tough times in the past need not prevent you from being granted a loan.