When your business is getting started you need access to business loans more than at any other time. But it’s at this time when it’s hardest to get. The pandemic hasn’t helped matters either. You don’t have enough history for lenders to make informed decisions to give you longer terms. We often speak to business owners who have gone to the bank and are not getting support or they see the information request and they are reluctant to put in their time and expense of getting the request attended to. Here are a few ways we offer to help.
BANK LOAN APPLICATION SUPPORT
We have a contact in the bank who can help early stage businesses but he wants a business plan, financial projections for the short, medium and long term and a whole lot more. He also wants to know how much of your own funds are committed to the business. The less ‘skin in the game’ you have the more likely it’s a decline. If you can provide what they require you can get up to €120,000 at rates or around 6%. Alternative lenders for early stage businesses will generally have lower paperwork requirements but the rates are higher. If you want the best deal of a bank with the added convenience of getting the hard yards done for you, we have partners who produce business plans and financial modelling with a track record of success in approvals.
Unsecured loans from alternative lenders
We have partners who will offer early-stage businesses unsecured loans. Generally we are talking about having one years set of accounts done before they will look. Then you can expect, instead of around 6% with the bank, a double-digit percentage with the non-banks. One thing to note is you usually won’t have to worry about an early-repayment penalty. So if you can find cheaper finance elsewhere as you get more profitable trading history you can exit the more expensive loan. For unsecured loans from non-banks it’s when you get to two years accounts that rates become more reasonable. They’re graded for risk, A, B, C, D, E etc so your rate could start at 4.75% currently in that situation.
Merchant cash advance
Any business with at least 6 months history, that uses a card machine or a merchant account online such as Stripe or PayPal, can get an easy finance solution based on the volume of monthly sales. The rule of thumb is you can get a quote equivalent to one month’s sales. If you are doing, for example, €50,000 a month you might get a €50,000 offer. At the moment the is especially important for hospitality businesses finding their feet and eCommerce businesses needing advertising and stock.
INvoice Finance
If you’re building up a book of debtors and you need working capital to pay wages, buy materials or just keep the lights on then you can release cash flow trapped in your invoices as soon as they’re issued. The flexible options enable you to get around 80% now, get charged around 1.5% per 30 days and you then get a final settlement when the debtor pays and you exit the short-term arrangement. Usually your debtor is insured so you get extra comfort. If something goes wrong with their business you’ll get a pay out.
Asset Finance
A lot of early-stage business owners who come to us looking for loan quotes want cash loans. But when you drill down you can find a lot of their need is made up of buying assets such as equipment, machines & vehicles. It’s far easier for asset finance companies to approve an early stage business because they retain ownership of the asset until the final payment is made. If something goes wrong with your business they can take it back so that’s an easier lending decision than lending cash unsecured.
There are a host of other business loan quote options that might fit your situation. We’re here to help 7 days from early ‘til late. Call us on 01 55 636 55 or email hello@businessloans.ie.