Getting a Business Loan is Getting Easier. Should You Apply?

Categories: Business Start-ups, Loans

Growing a business is rarely easy. Building and nurturing your own business isn’t for the faint-hearted and judging by the statistics it’s far from being a guaranteed success.

With 8 out of 10 SMEs and start-ups failing in the first year, it’s clear if you’re reading this having surpassed that milestone, that you’re one of the lucky (or smart) ones. Among the reasons for failing in business is cash flow and lack of funds, so it seems that business loans could help struggling SMEs continue to trade and then grow.

But isn’t getting a business loan difficult?

It’s not as hard as you might think. The majority of small businesses which applied for finance in the first six months of 2018 were successful.
According to BDRC, 85% of small businesses in the UK secured finance in the first half of 2018 with around 6 in 10 SMEs noting that they had a lot of trust in their bank.

In these uncertain times it’s reassuring to hear that SMEs are getting the support that they need. After all, they are the backbone of the UK economy.

But the same report also showed that despite a higher number of small businesses asking and receiving loans and finance, 73% of SMEs expressed more of an interest in growing their business slowly and more predictably rather than wanting to borrow money and grow more quickly.

To add to that, 48% of the SMEs asked said that they were unlikely to borrow in the near future for fear of the uncertain markets and business world with the significant UK issues still not agreed and fixed.

Stephen Pegge, director of commercial finance at UK Finance said:

“Overall appetite for finance among SMEs remains subdued, with many reluctant to borrow.”

“Legislation and red tape, political uncertainty, and the current economic climate are all increasingly cited as issues holding back SMEs, while only one in twenty see access to finance as a major barrier.”


Why would you apply for finance in your business?

There are many reasons you might want or need extra cash in your business and the majority of them are related to growth. This is the reason many haven’t opted for finance or business loans this year as the hesitancy of the markets and economy has left people somewhat nervous about growing, instead opting to stay safe and grow slowly but organically.
Here are some reasons to consider applying for business finance

To expand or buy new premises

Expanding due to growth or a change in direction could mean that you need more space, more desks, more computers, or a larger working area for your product creation and manufacture.

Expanding is one of the more obvious reasons to apply for finance for your business and of course the loan or finance deal can be easily secured with the property that you’re planning to purchase.

Moving office or expanding and adding to your existing building is often a good time to look into the options with business loans, if you’re certain you can make the repayments.

To buy or lease new equipment

If you make and create products then you’ll want to stay ahead of the competition in this incredibly fast-paced technology-driven world. Getting the latest equipment will often give you more capability, reliability, and help your company become more efficient and profitable. It’s a positive use of funding as, if managed correctly, you’ll grow because of the investment.

Once again the finance agreement can be made against the equipment in many instances and your case for finance is a clear one as it’s linked to potential growth and more profits, making the finance company more likely to be happy to loan to you/invest in you.

To stockpile ahead of busy times

As we write this it’s the time of year when retailers get rather busy and stock is likely to be higher than normal. Many retailers need a boost of cash to get the stock in so that they can sell it on. Quite obviously you can’t have items on your website or shop that you can’t sell right away – with the exception of drop-shipping of course.

Financing this busy period is fairly normal and getting finance for the eventual increase in profits shouldn’t be a chore in most cases, assuming you have a plan for how the extra stock is to be sold.

To increase cash flow or working capital

It’s often the case that running a business is made that bit harder by the lack of funds. Whether it’s your debtors not adhering to your payment terms, or poor credit agreements with your suppliers, it’s often a lack of cash will stop your business growing.

This is why finance is popular option to inject some much-needed cash into the business. Opportunities and business can slip by when you simply don’t have the resource, staff, technology, or funds to say “yes!” and finance is there to help you. A loan can be cheaper than credit cards so make sure you’re aware of the finer details of your chosen option.

Debt restructuring

Another reason for applying for finance in your business is help you to restructure your company’s current debt. A loan that consolidates your exiting borrowings and then reduces payments can make your finances more manageable and ease your money headaches.

Debt restructuring is advisable if you’re struggling to survive due to old debt repayments that have mounted up or are being recalled. This should also help you to plan your finances more easily for the future and reduce the financial strain on your business from outstanding debt.


Getting finance for your business is easier…

If you’re looking to grow, even if it’s gradually, business loans and finance can be a great option for you. Don’t be in the 8 out of 10 who don’t make it purely because you ran out of operating cash.

Speak to us now and see how we could help you.