Secured & Unsecured Loans
Secured Business Loans
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who issued the loan. In certain circumstances, for example if there is a need to invest in the business then a secured loan can be arranged using other forms of security.
These flexible loans can be tailored to meet the needs of the business, potentially providing interest only periods of borrowing to assist with expansion planning and product delivery. With a choice of fixed or variable rate options Cranfield can structure the loan to suit the company’s budgeting preferences.
Unsecured Business Loans
An unsecured loan is a loan that is issued and supported only by the borrower’s creditworthiness, rather than by a type of collateral. Unsecured lending is available to many businesses across all sectors (except property) for virtually any purpose. The amount that can be borrowed varies and is dependent upon a number of factors which includes but is not limited to the age of the business, turnover and strength of performance. The term of the borrowing is typically between 6 and 24 months however longer terms of up to 5 years could be available.
Unsecured loans take a variety of forms, such as a Trade Finance facility for the importing and/or exporting of goods or a Merchant Cash Advance where funds are raised against the Company’s future debit and credit card receipts. Unsecured loans are also available through Peer to Peer funding platforms. These platforms adopt a credit process more aligned to traditional bank funding where the lending criteria includes an established trading history.
As stated above, the amount you can borrow varies and is dependent upon a number of key factors;
- Are you a Limited Company, Sole Trader or Partnership?
- The length of time the business has been trading;
- The financial strength of the business;
- The turnover of the business. Typically you can borrow around 10% to 50% of monthly turnover;
- Are the directors or shareholders of the business homeowners and do they have a clean credit history;
- Serviceability of the loan; i.e. does the business currently generate or is projected to generate sufficient profit to fund the required repayments.
Even if the business does not meet all of these criteria, funding may still be available depending on the viability of the business and its future plans.
So who can benefit from an Unsecured or Secured loan?
- Start-ups and established businesses;
- Businesses seeking to invest in growth or to meet an urgent cash flow requirement such as payments to HMRC for Corporation Tax purposes or to fund payments to suppliers to fulfil a new order;
- Businesses rejected for funding by the Banks;
- Businesses seeking a swift injection of funds;
- Businesses with an adverse credit history could potentially benefit from this type of funding.
The search for the right financial solution begins & ends with Cranfield, so contact us today.