For many, 2020 and 2021 were difficult years for business, particularly for those with physical premises and who did not have a strong and well-established online presence. However, even with the various covid relief packages and support schemes provided by governments in the UK, US and further afield, business are only now just starting to get back on their feet, after some of the most tumultuous years for business on record.
When it comes to getting a business back on its feet and up and running after a difficult time however, there are a few options that business owners may consider to fund any business’ revival and resurgence, ranging from small business loans and grants to payday loans and short term personal loans (source: Kallyss) and even higher-value secured options.
Business loans are typically unsecured loans that are designed for and tailored to the specific needs of businesses. With business loans there will often be a period whereby the business can get things back on track before starting the process of repaying the loan in question.
A key benefit of business loans and small business loans is that they are specifically tailored to the needs and requirements of businesses and therefore, the broken or lender used should have a distinct and more in-depth understanding of what is needed and what will be desirable to the business requiring the loan.
Business loans however will usually be provided by ‘traditional’ lenders, such as banks and high street lenders, although there are some online disruptors too. Therefore, they can be a little more arduous to apply for and they may also take applicants’ credit history into account that can exclude some people.
Payday loans are a form of unsecured loan, also known as ‘high cost short term loans’ which provide personal loans to applicants quickly and with a higher APR and often more fees attached to the loan. Applicants and borrowers in the case of payday loans do pay a premium for the speed at which the loan can be provided as well as the sheer convenience.
In the UK, there are strict regulations, set by the Financial Conduct Authority (FCA) governing the lending and use of payday loans.
With regards to using the money for a business, although it is possible to use a payday loan, taken out in the name of an individual to access the money (or ‘capital’) needed to invest in the business, these loans are not typically designed to be used in this way.
However, it is possible for example for a company owner to borrow some money in their name, put that money into the business requiring the injection of funds and then, as the business generates profits, repay the loan by the required repayment date.
It is important to note with payday loans that if these loans are not repaid on time, they can incur quite high late repayment fees.
Mortgages and Secured Options
Often one of the last resorts for business owners, it is possible to remortgage a property to release some funds to then put into the business. Although borrowing money against a property, to be used as collateral can allow for more money to be borrowed, it does carry a higher risk.
The main risk in the case of mortgages and secured loans is that the high value asset, such as a property or even your home does stand to get repossessed through the courts if you do not keep up with your required repayments.
Secured loans such as mortgages and title loans or ‘logbook loans’ (loans secured against a vehicle) should always be used with an increased degree of care and caution.