Traditionally a bank loan, a business loan (or debt) is a common type of finance. There are several types of business loans, and many loan providers. Most business loans are structured around security – what the business can offer the finance provider as a guarantee in case the business defaults on the loan. Business loans are seen as one of the cheapest forms of business finance.
Who provides business loans?
Many high street banks and alternative finance providers offer business loans which can last from a few weeks to a few years. In general, a loan provider will hand over cash to the business after a successful application and the arrangement is usually for a fixed amount of time. Interest rates are usually charged monthly, and can be fixed or variable.
Sources of business loans are not from high street banks. Many alternative funders such and also ‘crowd-sourced’ loans offer competitive rates for both secured and unsecured loans. Some public backed organisations such as governments and councils also provide schemes for businesses to access loans.