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.
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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.
Business funding for the real world
With Capital on Tap you get enhanced flexibility: Top up your loan or repay early at any time with no additional costs. You'll only pay interest for each day you have the funds.
Loans up to £50,000
Flexible repayment options
No monthly or annual fees
Representative example: When you spend £1,200 at a purchase rate of 22.9% (variable) p.a., your representative rate is 22.9% APR (variable).
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.
Long terms – usually to repay in monthly instalments
Long-term projects
Growing your business
Flexible borrowing
Improving cash flow
£10,000 loan illustrations
Interest rate of 5% fixed p.a.
Interest rate of 10% fixed p.a.
Interest rate of 20% fixed p.a.
1-year loan
Monthly: £856.07 Overall: £10,272.90
Monthly: £879.16 Overall: £10549.91
Monthly: £926.35 Overall: £11,116.14
2-year loan
Monthly: £438.71 Overall: £10,529.13
Monthly: £461.65 Overall: £11,074.78
Monthly: £508.96 Overall: £12,214.99
3-year loan
Monthly: £299.71 Overall: £10,789.52
Monthly: £322.67 Overall: £11,616.19
Monthly: £371.64 Overall: £13,378.89
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.
Frequently asked questions
Each lender has its own eligibility criteria, but you’ll boost your chances by demonstrating a good personal credit score and business credit score. It’s helpful if you’ve been in business for a long time and can show consistent history of profit. Higher-rate loans are generally easier to be approved for. Providing collateral or applying for less money will also boost your chances of being accepted.
Yes. Seek out lenders that specialise in providing finance for startups. They might not offer the best deals, but overlook the bigger risk of lending to newer businesses.
It varies depending on the loan type. You can get a £10,000 loan lasting a few months or a few years. Revolving lines of credit could potentially last as long as your business does.
Lenders tend to be relatively flexible, provided you show you’re able to comfortably repay the loan. However, they will ask what you will spend the money on and they tend to prefer it if the money is being used to spur business growth.
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.
Chris Lilly is a publisher at finder.com. He's a specialist in credit-based products including business and personal loans, mortgages and credit cards, and is passionate about helping UK consumers make informed decisions about their borrowing. In his spare time Chris likes forcing his kids to exercise more.
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