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Compare £10,000 business loans for January 2021
Need £10,000 to develop your business? Here are your options.
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What's in this guide?
How do business loans work?
Business finance comes in a variety of shapes and forms, and which is best for your company will depend on a range of factors. You might want a lump sum upfront, or you may simply be looking for the financial breathing room to focus on growth. This guide unpacks popular business finance products to help you home-in on the right finance for your company.
What business finance products could give me access to £10,000?
- A startup loan. Government-backed loans of £10,000 with fixed rates are available for startups that have been trading for less than 2 years and even come with free mentoring.
- A standard, fixed-term business loan. With a traditional business loan option, you’ll have £10,000 transferred directly into your bank account then make monthly repayments for a set period.
- A business cash advance. With a business cash advance or merchant cash advance, you’ll pay a fixed fee upon taking out the loan, then pay back a percentage of each sale until your debt is cleared. That means you won’t need to worry too much about sales falling: if business is booming, you’ll clear your debt faster, but if business is slow, it’ll take longer. Whatever happens, it’ll cost the same amount.
- Asset finance. Asset finance allows you to spread the cost of laptops, cameras or other assets for your business over a longer period. On the downside, you’ll pay more overall and assets can be repossessed if you fall behind on repayments. On the upside, it means you can give your team the best gear now, rather than waiting until you can buy it outright. Asset refinance is a similar type of finance, that, as the name suggests, lets you unlock the capital tied up in assets you already own.
If you’re looking for ongoing access to business credit, consider the following options:
- Invoice finance. Invoice finance products fall into two main categories: with “invoice discounting” the lender uses your unpaid invoices as collateral for your loan. With “invoice factoring”, the lender buys your unpaid invoices from you (at less than their full value).
If you need the lump sum upfront, but still like the idea of ongoing, flexible credit, consider these options:
- A business credit card. With a business credit card, you’ll be able to make purchases and overspend by your agreed credit limit. You’ll be charged interest if you don’t repay your balance in full each month.
- A business overdraft is a flexible line of credit available through your business bank account. However, the interest rates on overdrafts (even authorised ones) tend to be relatively high and the limits relatively low.
- A business line of credit. This works similarly to a credit card or overdraft, as you’ll only pay interest on the amount borrowed. It can be easier to get a credit limit of £10,000 or higher with this option.
What if I have bad credit?
Many of these products are available for businesses with bad credit, especially for relatively lower amounts such as £10,000. Bad credit finance products tend to have higher interest rates attached, especially those that are unsecured.
Borrowing options at a glance
| Type of finance | Security | Repayment terms | Good for | Bad for | |
|---|---|---|---|---|---|
| Business credit cards | Revolving | Unsecured | Flexible – no interest charged if you pay monthly |
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| Overdrafts | Revolving | Unsecured | Flexible – but the longer you borrow the more you’ll pay |
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| Business line of credit | Revolving | Secured or unsecured | Flexible – but the longer you borrow the more you’ll pay |
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| Invoice financing | One-off | Secured against your invoices | Short-to-medium terms – tied to invoice payments |
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| Merchant cash advances | One-off | Unsecured | Short-to-medium terms – tied to credit card takings |
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| Asset financing | One-off | Secured against business assets | Medium-to-long terms – usually to repay in monthly instalments |
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| Short-term business loans | One-off | Unsecured | Short terms – usually to repay in monthly instalments |
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| Business loans | One-off | Secured or unsecured | Long terms – usually to repay in monthly instalments |
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How much are payments on a £10,000 business loan?
| 6% p.a. interest | 12% p.a. interest | 20% p.a. interest | |
|---|---|---|---|
| 1-year term | £861 | £888 | £926 |
| 2-year term | £443 | £471 | £509 |
| 4-year term | £235 | £263 | £304 |
How much does a £10,000 business loan cost overall?
| 6% p.a. interest | 12% p.a. interest | 20% p.a. interest | |
|---|---|---|---|
| 1-year term | £10,328 | £10,662 | £11,116 |
| 2-year term | £10,637 | £11,298 | £12,215 |
| 4-year term | £11,273 | £12,640 | £14,607 |
£10,000 business loan calculator
This tool is designed to help you estimate the monthly and overall costs of borrowing £10,000. You can adjust the duration of the loan and the interest rate to get a better idea of what would be affordable. Our calculations assume that any fees involved are bundled in with the loan amount and repaid over the same term, at the same rate. Refer to your loan agreement for exact repayment amounts as they may vary from our calculations.
Interest rate
Loan term
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Your loan would cost around £ each month and £ overall.
What about a broker/matching service?
These services will show you which lenders would approve you for a £10,000 loan, saving time and preventing credit score damage from multiple failed loan applications.
Many broker/matching services are free, as they make their money by charging referral fees to lenders. However, it’s rare that they have access to the whole market, so you may not be recommended the best available deal.
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Merchant cash advances
Access a lump-sum of funding upfront for a fixed cost and then repay when your customers pay you.
Business credit cards
Boost your spending power, track employee spending and enjoy perks and rewards with a business credit card.
Frequently asked questions
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.
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