Business financing simplified

Business Loans

Business financing simplified

What Are Business Loans?

A business loan is the umbrella term for the loan options available for SMEs. 

Alongside invoice finance and asset finance, there are plenty more types of business loan product. Funding Bay work with lenders who offer secured loans, unsecured loans, merchant cash advances, revolving credit facility, bridging loans; just to name a few. 

Some of our lenders

Merchant Cash Advance

Bridging Loans

Revolving Credit Facility

Secured Business Loan

Unsecured Business Loan

Development Finance

Types of Business Loans

Merchant Cash Advance

The product where the lender is most closely involved. Once the company has paid, your factoring company will collect the debt, deposit the remaining balance and take their fee. They will provide ‘credit control’ to ensure customers pay on time. Factoring facilities provide both the advanced funding and credit control, on a disclosed basis with the client customers.

Revolving Credit Facility

You send the invoice details to your invoice finance provider, the provider then makes the funds available immediately to you. Once your client pays you, the remaining balance of the invoice is available for you to withdraw and the finance provider take their service fee. Raise your invoice and get paid quickly.

Bridging Loans

This doesn’t involve an agreement with for the sales ledger, so you choose which invoices you’d like to advance. This means you keep control and have flexibility to adjust your cash flow when you needed.

Unsecured Business Loans

The product where the lender is most closely involved. Once the company has paid, your factoring company will collect the debt, deposit the remaining balance and take their fee. They will provide ‘credit control’ to ensure customers pay on time. Factoring facilities provide both the advanced funding and credit control, on a disclosed basis with the client customers.

Secured Business Loans

You send the invoice details to your invoice finance provider, the provider then makes the funds available immediately to you. Once your client pays you, the remaining balance of the invoice is available for you to withdraw and the finance provider take their service fee. Raise your invoice and get paid quickly.

How Does It Work?

Here is an example:

There are many different types of business loans, which work to specifically help different situations and industries. But the traditional concept of a business loan will include borrowing money and then setting a repayment agreement with the lender that suits you best. 

A loan is usually repaid in regular payments over a set period of time, with an agreed interest rate. The repayment time usually lasts between one and ten years, but in some cases, they can be repaid over 20+ years. 

The Benefits

Business loans may be taken out for several reasons such as the need to maintain business operations, invest in equipment, or other manners to advocate growth. They are both beneficial for businesses and usually easy to obtain due to the multitude of lenders. 

Working capital

The main benefit is the increase of working capital. A business loan allows you to maintain your operating cash flow so that you can cover unexpected expenses. It also makes things easier when you are seeking to pay your everyday bills, such as utilities, salaries and rent, and can provide a welcome boost during any periods when business volumes are lower. Once you’ve improved your working capital, you might be able to purchase stock, or take on new staff, or seek a major new contract, or even negotiate lower prices with certain suppliers

BENEFITS

Retain full control

Unlike borrowing equity, a business loan from a lender provides you with full control of your business. You retain full control and management of your business. There’s no need to hand over control to investors, as would be the case with an equity finance arrangement. These investors would then be likely to demand a share of your future profit, but debt financing allows you to avoid all of this. The only other party involved in the business loan would be the lender, but they won’t interfere with the running of your business in any way.

BENEFITS

Access finance quickly

There is a quick turnaround with most business loan facilities. You should hopefully be able to get a decision on your application within a few working days.

BENEFITS

Variety of options

With a selection of lenders that specialise for various sectors, business loans offer a wide variety. These include short-term loans, longer term loans, loans specifically designed for small businesses or for start-ups, equipment finance and merchant cash advances.

BENEFITS

Interest is tax deductible

Interest on your business bank loan is tax deductible. This is particularly so with fixed-rate loans, in which interest rates does not change throughout the course of your loan. Provided the loan is entirely for business purposes, the interest repayments will be treated as a revenue expense, and this could allow you to reduce interest payments by as much as 45%. If the loan was taken out for both personal and business reasons, you can still make a claim on a proportion of the interest payable. Unfortunately, tax relief is not available on repayments of capital.

BENEFITS

Qualifing questions

Can I Borrow?