WHERE LOCAL BUSINESS GROWS

Bank Loans



Overview
 

A loan is an amount of money borrowed for a set period within an agreed repayment schedule. The repayment amount will depend upon the size and duration of the loan and the rate of interest.

Banks usually charge interest on any loans that you use, but the terms and price will vary between providers.

Different types of bank loan include:

  • working capital loans- for short notice or emergency situations
  • fixed asset loans - for buying assets where the asset itself is collateral
  • factoring loans - loans based on money owed to your business by customers
  • hire purchase loans- for long-term purchase of assets such as vehicles or machinery

The process
 

Most lenders require you to:

  • share the financial risk by providing capital up to the same amount as you want to borrow - demonstrating your commitment and providing a contingency for repayment if things go wrong
  • provide security for borrowing requests - eg personal or business assets, such as your home or business premises
  • provide personal guarantees if you run a limited company, and the business cannot offer adequate security
  • keep them informed of your progress, particularly changes or problems
  • have a comprehensive business plan and cashflow forecast for larger borrowing requests
  • have a good credit record - including a good payment record with other creditors

Getting the best loan deal

In order to get a good deal, you should:
  • Shop around - compare interest rates and negotiate to get the best deal, and ask for any special terms in writing. The British Bankers’ Association website offers a business account finder service
  • Use a finance broker - they can save you time and increase your chances of success by presenting your proposal efficiently to appropriate lenders
  • Research the small print - assess all lending criteria, such as interest rates, loan terms and set-up fees, plus special deals for start-ups. Consider having an expert, such as a solicitor, review the loan documents
  • Compare loans between different banks and be prepared to switch providers

Agreeing the terms of your loan

You need to:
  • establish the due date and interest rate
  • establish what the lender's loan fees are
  • check if you can make overpayments
  • see if there is an early repayment charge
  • find out if you can take 'repayment holidays'
  • check to see that late payment charges are reasonable

Pros and cons
 

Pros

  • The loan is not repayable on demand and so available for the term of the loan - generally three to ten years - unless you breach the loan conditions
  • Loans can be tied to the lifetime of the equipment or other assets you're borrowing the money to pay for
  • At the beginning of the term of the loan you may be able to negotiate a repayment holiday, meaning that you only pay interest for a certain amount of time while repayments on the capital are frozen
  • You do not have to give the lender a percentage of your profits or a share in your company
  • Interest rates may be fixed for the term so you will know the level of repayments throughout the life of the loan
  • There may be an arrangement fee that is paid at the start of the loan but not throughout its life. If it is an on-demand loan, an annual renewal fee may be payable

Cons
  • Larger loans will have certain terms and conditions that you must adhere to, such as giving the bank quarterly management information
  • Loans are not very flexible - you could be paying interest on funds you're not using
  • You could have trouble making monthly repayments if your customers don't pay you on time, causing cashflow problems
  • In some cases, loans are secured against the assets of the business or your personal possessions, eg your home. The interest rates for secured loans may be lower than for unsecured ones, but your assets or home could be at risk if you cannot make the repayments
  • There may be a charge if you want to repay the loan before the end of the loan term, particularly if the interest rate on the loan is fixed

Common mistakes
 

It’s not a good idea to take out a loan for ongoing expenses, as it may be difficult to keep up repayments. Ongoing expenses are instead best funded from cash received from sales, possibly with an overdraft as backup. Your bank may turn you down if you can’t:

  • explain why you want the loan and how you will use it
  • demonstrate that you understand the risks and that you have taken steps to reduce their effect.
  • explain who looks after your business’ finance and that you have solid financial systems in place
  • provide financial data, ie accounts, budgets and forecasts
  • provide security

Funding sources
 

Banks are the main source of small business loans, but many other organisations provide loans at competitive rates. Building societies offer business mortgages and personal loans. You can also consider seeking finance from non-bank lenders.

If you want to compare business bank accounts, the Better Business Finance website offers a business account finder service.

European Investment Bank

A number of UK high street banks have secured financing from the European Investment Bank (EIB) to provide lower-cost long-term loans to small and medium-sized enterprises. You may eligible to apply if you run a business with fewer than 250 employees.

The loan must be for a minimum of 2 years and the loans cannot be for short-term working capital needs.

Download a list of financial institutions offering EIB loans in the UK (PDF, 25K)

Appeals
 

You can launch an appeal if you've been been turned down for a bank loan. Though it's possible this won't make a difference. For example, you may have been turned down because your business plan wasn't convincing, or because of your credit history.

You can start your appeal on the Better Business Finance website.

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News

2 results found 
Around Town In the Huddersfield Live Hygge Tipi

Wednesday 15 November 2017

What better time to get together than Christmas? Around Town believe that connecting the business community of Huddersfield in its iconic locations and organisations is a brilliant way to share ideas, hear inspirational stories and have some FUN. Organised by Oli Smith, Michelle Crowther and Chris Buckley Around Town create memorable events every 3 months. 2018 plans are already underway; “as well as meeting at some amazing businesses we are walking Around Town in Spring - a fantastic way to get to know each other whilst experiencing some award winning locations and scenery in Huddersfield “ says Michelle And with Huddersfield Live December promises to be a memorable Around Town event. Hosted in the Hygge Tipi in St Georges Square, hear Sam Watt and Poppy Stahelin tell of the fabulous work the team at Huddersfield Live are doing and some of the stunning events planned for next year. Laura Drury sets the backdrop of how she formed the The Hygge Tipi and how it creates a convivial atmosphere for Huddersfield folk to mingle, drink mulled wine, and keep the winter night out in front of the log fire. All In the heart of Huddersfield. Tickets are limited and can be reserved FREE here. Chamber members old and new are very welcome. Around Town Events for 2018 confirmed. March 1st - Valli Opticians May 17th - Owen Scott Tailors May 25th - (Walk) Around Town - 15miles (approx) Breakfast Sarnies, The Kirklees Way, Finish in a Brewery!
Posted by The Alternative Board
Group supporting crisis-hit asylum seekers wins crowdfunding cash at Huddersfield SOUP

Friday 10 November 2017

A charity that feeds and supports people fleeing war zones and violence gained a boost to its funds after winning the fourth Huddersfield SOUP event at The Media Centre. Destitute Asylum Seekers Huddersfield (DASH) was one of four good causes to pitch for audience members’ £5 entry fees at the packed crowdfunding get-together at Café Ollo and was delighted to win £400. Mike Shaw, who presented a four-minute bid, explained how DASH provides hot meals and help with casework, health and education issues and language. He said: “We will spend this money well, it won’t last long. It will go on food, bus fares and essentials. It is wonderful to be in room full of people who care. Thank you for the generosity of the citizens of Huddersfield.” Huddersfield SOUP, which has been running for a year, is based on an American concept in which four people pitch, four questions can be asked of each presenter and then the audience must vote for their favourite – as well as enjoying a bowl of warming soup, a bar and live music. The Media Centre’s Chief Executive, Brent Woods, said: “This was another great SOUP event with original, emotive pitches. The atmosphere was buzzing and there was plenty of opportunity for participants to meet new people and make connections. Big congratulations to DASH, our worthy winner.” Other people to pitch were: • Rachel Devereux who wants to develop her idea of ‘emergency bears’ for families to keep in their cars so that if there is an accident, paramedics can scan the bear electronically to receive important information about children on board. • Victoria Callum-Ward who is organising a Winter Pride event at Tokyo in Huddersfield to raise money for the Hands Off HRI campaign. • Sam Booth who talked about Crowns For Courage, her initiative to offer confidence-boosting head henna tattoos to women who have undergone chemotherapy and lost their hair. The event was compered by Rebecca Winwood, Zephyr Bar and Kitchen provided delicious pumpkin and pea and ham soups and Clint Junior, booked through Small Seeds acoustic nights, sang and played guitar. Those seeking help from DASH include women fleeing forced marriage and domestic violence, gay men facing persecution and many escaping war zones and conflict. Often they don’t know if they will be allowed to stay in the UK and find it difficult to prove what they have been through. DASH operates from the Salvation Army premises in New Hey Road, Oakes. It has five part-time staff who are paid for through charitable trusts as well as over 50 volunteers. For more information about DASH or to donate, go to www.huddsdash.org.uk
Posted by Scriba PR Limited
2 results found 
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