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Secured business loans and personal guarantees
For larger sums like £50,000, lenders may look to secure the loan against a business or personal asset, such as property or equipment. Much like a mortgage, if you fail to repay your loan, the lender can sell the asset to recoup any losses.
Realistically, a secured loan can take a little longer to fund because the lender will need to verify the value of the asset that you put forward. The benefit is that having security can mitigate some of the risk for a lender, which can mean better rates. However if you or your business have bad credit, then putting up some collateral as security might be the only way to get approved.
An unsecured loan doesn’t require you to put anything forward as collateral, but you’ll probably need good credit, healthy growth and a number of years of successfully trading under your belt – especially to get a decent rate or a larger sum. Not needing security generally means a faster turnaround – potentially even the same day.
Another option is a personal guarantee – which is where a director makes a legal promise to be personally responsible for a loan in the event that the business fails to repay. Under this sort of agreement, you’ll be putting your personal finances on the line, but many lenders will insist on it.
For a £50,000 business loan, you’ll usually (but not always) have to either secure it against business assets or sign a personal guarantee.
What are my options? Lump sums vs revolving credit
If you’re looking for a lump sum to be paid upfront, then options include the following:
If you’re looking for ongoing access to business credit, consider the following options:
If you need the lump sum upfront, but still like the idea of ongoing, flexible credit, consider these options:
A business overdraft is another flexible line of credit that you may wish to consider, but it won’t typically be available for large sums (like £50k), and although it’s super-flexible, it’s usually a very expensive method of borrowing.
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).
How can we help?
Compare loan rates
Get live, personalised quotes on unsecured or secured loans from a large panel of lenders through our partner Think Business Loans.Compare now
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.
£50,000 loan illustrations
|Interest rate of 5% fixed p.a.||Interest rate of 10% fixed p.a.||Interest rate of 25% fixed p.a.|
|1 year loan||Monthly: £4,280.37|
|3 year loan||Monthly: £1,498.54|
|5 year loan||Monthly: £943.56|
What about a start-up loan?
At the time of writing, government-backed start-up loans are available up to a maximum of £25,000, but that’s per director – meaning two directors could apply to achieve the £50,000 goal. These loans can be a smart choice – with fixed, competitive rates and free mentoring, so regardless of how many directors your firm has, you may wish to consider a start-up loan as part of your financing plan.
What about a broker/matching service?
Brokers and matching services come with some handy advantages – not least the “hand-holding” element that’s so useful when navigating a tricky subject like business finance.
A good matching service will be able to instantly check which lenders would offer you a £50,000 loan, saving you valuable time and stopping you from damaging your credit score via multiple loan applications.
Brokers and matching services will usually get a referral fee from the lender you end up taking out a loan with, so the service doesn’t have to cost your firm a penny.
The downside? These services rarely have access to the full market, but will instead refer you to lenders from their panel of partners. That means you may not be offered the very best deal you’re eligible for.
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