Loans For Start Up Business – Getting funding for your startup can be a difficult business. Bootstrapping is an effective option if you’re either willing to tap into a healthy bank of cash or are happy to struggle your way to success. Some entrepreneurs seek out venture capitalists, but they can often be hard to come by and even harder to entice into parting with their money in exchange for modest equity.
One possible option is to look towards government business loans. This form of financing your startup can be a highly effective way of accessing a good amount of money to ensure your growth or develop enough stock to enter the market. But what exactly are government business loans and how do they work? Here’s an in-depth look at the world of accessing credit through government initiatives:
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Of course, government loan programs will vary depending on where you are in the world. Some nations have more ambitious infrastructure to support domestic efforts than others.
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In essence, government loan programs are structured to provide local entrepreneurs with the opportunity to leverage enough to grow their businesses at exceptionally low risk rates.
In the UK, the start up loan company has offered more than £400 million in funding to more than 50,000 businesses across the country – each loan backed by the government.
Loans offered by start up loan companies are designed to be available only to businesses that have been in business for less than two years. This means that it is not possible to apply for the scheme if your company has been in existence for a long time and you are only looking for a cash injection. The scheme enables entrepreneurs to access between £500 and £25,000 at a fixed interest rate of 6%. While some banks may be able to offer lower amounts, it’s fair to say that 6% will have significant appeal to many business owners.
This form of business loan is repayable over a period of one to five years, and the UK government does not charge for early repayment or set-up fees.
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Naturally, the detailed terms on government loans come with a catch. This particular program has a relatively strict set of requirements that both businesses and entrepreneurs need to navigate to access their findings. Furthermore, employers are not able to use government loans to pay off pre-existing debts or train for industry qualifications or investment opportunities.
The sheer range of criteria entrepreneurs need to meet can be a little daunting, so let’s explore them further:
Despite the strict eligibility criteria, applying for a government loan in the UK is a straightforward process, and simply involves filling in a form containing questions about your personal situation, the money you’re aiming to earn and what you plan to do with the windfall. . You will need to agree to a credit check that will help provide insight into whether or not you are able to afford the specified repayment rates.
Eligibility is tricky for some entrepreneurs, and loans are available online for those aged 18 or over and current UK residents. The business in question must have been operating for less than two years and be based in the UK. Government loans are only available to those who can prove that they are unable to raise funds through other forms, and to be accepted your business plan and loan objective is deemed acceptable.
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If you meet the initial eligibility requirements, you must finalize and submit all relevant business paperwork supporting your loan application. It is likely to include your business plan, a reliable cash flow forecast and a personal survival budget.
This part of the process can seem daunting, but luckily, start up loan companies offer a robust range of templates to help you build your forecasts and plans.
It is important to double-check the validity of your supporting documents, to be able to prove that your business will use the money wisely and convert it into tangible profits. After you submit your application, the government will assess the viability of the information you have submitted as well as the likelihood that you will be able to make the payment without delay.
If you get approved by the start up loan company, you will be sent a physical copy of your loan agreement by mail. You will then need to sign in and withdraw before you can access your money. Following your acceptance, you will be invited to join the Government’s Business Guidance Scheme to help ensure you are always on the right track.
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Of course, if you ultimately fail to secure funding, it’s worth remembering that the government isn’t the only organization in the UK willing to offer loan programs for startups. Many local authorities are willing to grant grants to businesses based in their catchment areas or working in eligible industries. The grant also requires no payment – but business owners will likely come under heavy scrutiny to ensure they are complying with all agreed terms.
It is unlikely that you will find many loans out there that offer good payment rates in such a safe and up-front manner. Funding will only be available to organizations deemed safe enough to pay, and payment can be expedited once an entrepreneur confirms their eligibility.
A fixed 6% interest rate provides peace of mind, and the relatively small amount involved means very little risk. This makes government business loans a great way to secure the money you need to introduce a new product to the market or conduct some initial scaling within your industry.
However, it’s worth remembering that a loan capped at £25,000 may not be enough to secure the level of funding your business needs if you’re aiming to acquire some office space and expand rapidly.
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The hassle of jumping through hoops to confirm your eligibility can ultimately prove time-consuming. Creating cash flow forecasts along with a well-accounted business plan can be demanding work when you’re aiming to keep your business afloat, and with no guarantee of success, government business loans can be draining for entrepreneurs.
If you have established a business and are looking to hire a new staff member or two, or are looking to develop a prototype to go on sale and have exhausted your other financing options, a government business loan may be right for you.
However, if your company is a bit long in the tooth, or you are aiming to get a significant amount to establish an ambitious company, for example, it may be worth turning to venture capital or angel investors.
In the UK, the government provides credit facilities to businesses looking to grow in their respective industries. If you are looking for a cash injection into your company it is definitely worth seeing what a start up loan company can do for you. But at the same time, keep an eye out for local authority grants that you may be eligible for. As always, the world of business ownership rewards those who keep their ear to the ground.
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Investor, founder and CEO with over 20 years of industry experience in aviation, logistics, finance and tech. Chairman at ACT Airlines, myTechnic and Mesmerise VR. CEO at Red Carpet Capital and Eastern Harmony. Marsfields, Co-Founder of ARQ and Repeat App.
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Any cookies that may not be specifically required for the website to function and are used specifically to collect the user’s personal data through analytics, advertisements, other embedded content, are called non-essential cookies. It is mandatory to obtain user consent before running these cookies on your website. Borrowing money from family or friends is a great way to lower your overall debt level, but it has some disadvantages. One of the biggest drawbacks is that conflicts can arise if the money is not used as intended. A small business loan is a very simple process and does not carry such risks. Be sure to research your credit history and get organized to make sure you get the best deal possible. The next time you need to borrow money for your startup, consider a startup loan from MooreSuccess Inc.
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