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 
Yorkshire businesses get behind £10k fundraising campaign

Tuesday 04 April 2017

As preparations for the charity football initiative ‘The Match 2017’ continue to gain momentum, the latest supporters to get on board are Huddersfield-based businesses Magic Rock Brewing and Lindley Financial Management. The inaugural event, which will take place on Saturday 20th May at The MBI Shay Stadium in Halifax, will bring together footballing amateurs and Huddersfield Town legends, in a game that will help to raise much needed funds for Yorkshire Air Ambulance. Both firms have dug deep for the cause, and have each donated £500 in return for becoming an official shirt sponsor. With a running cost of £12,000 per day for the two yellow helicopters to remain active, the organisation relies entirely on donations to continue saving lives. And now further support is required to keep The Match proceeds growing, and help this initiative reach its £10,000 target. Magic Rock Brewing was founded by brothers Richard and Jonny Burhouse and inspired by brewing traditions and the US craft beer scene in particular. The award-winning and ever-growing company produces an innovative range of idiosyncratic beers in their 4,000sqft Tap Room, close to the town centre. When approached via social media and asked to get behind The Match, Richard says there was never any doubt about getting involved: “We are a community focused business, keen to support local initiatives wherever possible. We are aware of the excellent work the air ambulance does for the region, and wanted to do our bit.” Regular charity supporters Lindley Financial Management also had no qualms about signing up to help the event. The independent financial advisers, based in Brighouse, also support Pilgrim Bandits Charity, aiding soldier amputees injured in Iraq and Afghanistan. Commenting on The Match, director Mark Learmont, said: “I hope as many people as possible attend on May 20th. Nobody knows when they may need the help of the Yorkshire Air Ambulance – supporting them is vital and their services must be applauded.” Organiser, and founder of grassroots football specialists Coaches Club, Dave Learmont, adds: “I am so thankful that two local businesses have gone the extra mile to raise awareness and proceeds for this fantastic charity. 100% of all funds donated will go to Yorkshire Air Ambulance, and these shirt sponsorships put us well on our way to hitting our huge target.” But the search for sponsors isn’t over, with the players themselves now looking for individual support. For only £150, companies will secure their name and details on the official match website, alongside their logo on the programme. The players and Town legends are also appealing for members of the public to get on board and buy tickets. Available at £10 for adults and £5 for children, the aim is to provide a fun, low cost day out for all the family. Pre-match and half-time entertainment – as well as a couple of extra special guests – will be revealed over the coming weeks. All tickets must be purchased before the game, via justgiving.com/teams/coaches-club. Further information and updates about The Match and player sponsorship can be found at The Coaches Club website, and on Twitter @cccmatch.
Posted by Scriba PR
Vizulate becomes Approved Supplier on Digital Enterprise scheme

Friday 10 March 2017

Vizulate Digital is delighted to announce that we have been named as an approved supplier on the Leeds City Region Digital Enterprise scheme, which allows eligible small and medium sized businesses across Yorkshire to ‘Invest in Digital’. Running until March 2019, the Digital Enterprise scheme aims to support the growth and development of SMEs in the region through investment in digital skills and technology. Eligible businesses will be able to apply for 40% funding towards the cost of digital projects including digital marketing, social media, web design and development, e-commerce and more – up to a maximum of £5,000. The Digital Growth Vouchers could also fund part of the cost of technology upgrades such as IT and telecoms and, if approved, the business will then only have to cover the remaining 60% of the cost. The Digital Enterprise scheme is a partnership programme which is partly funded by the European Union (European Regional Development Fund), the West Yorkshire Combined Authority/Leeds city region Local Enterprise Partnership (LEP) and the 9 local authorities which form part of the Leeds city region – Leeds, Calderdale, Kirklees, Bradford, Selby, Craven, Harrogate, York and Wakefield. As approved suppliers on the Digital Enterprise scheme with over 10 years’ experience we are able to offer the full range of digital services including: Website Design & Development E-Commerce Digital Marketing Social Media Search Engine Optimisation (SEO) Online Advertising (Google AdWords, Facebook Ads etc.) Video & Animation Integrated Digital Solutions Web Hosting & Email Through our trusted partners we can also provide IT and telecoms solutions. We believe digital marketing represents the single biggest opportunity for businesses to achieve growth.
Posted by Vizulate Digital
2 results found 

Events Posted

2 results found 
Image for
Facebook Advertising Workshop
Thursday 27 April 2017, 09:30 - 12:30
Bridge House, 2 Woodhead Road, Holmfirth, HD9 6PX
£65 - 6 places
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Business Hub Live - Innovation and Research & Development
Wednesday 24 May 2017, 08:30 - 10:30
Firth Street, Huddersfield, HD1 3BD
Free Entry - 50 places
2 results found 
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