One of the most pressing challenges for any business these days is keeping the financial side on the straight and narrow. Now that is probably easier for a smaller company, less folk with fingers in the pie. A larger concern will have so many overheads, more staff to pay and a great deal more responsibility. Leaving out the goverment backed business start up loan for a moment, there are times when a business needs to access different types of funding such as debt funding which in a nutshell involves borrowing an amount of money or purchasing an asset with borrowed finance that has to be paid back over an agreed period with interest. The most common forms of debt finance could incude business loans which can be offered by a wide variety of lenders from high street banks or dedicated business lenders. These loans can be secured or unsecured. The secured type would involve using one of the firms assets as surety against the company defaulting on their repayments. This asset could be property, machinery or in fact high value stock. An unsecured loan on the other hand does not require any such guarantee mechanism but it’s true to say that being more risky, attracts a higher interest rate and often less generous repayment period.

To obtain business loans, the borrower is expected to be able to offer a proven track record in terms of previous loan repayments and a steady to strong trading history. For this reason, new business start ups would struggle to meet the criteria for standard business loans. this is where the government backed business start up loan scheme comes in and that’s a whole chapter in itself.