There are various types of short-term loans you can take out to fund your needs, but sometimes you may need money for your business. Most of the short-term loans aim to help you tide over during an emergency. Still, the business may need money for planned projects, for instance, increasing working capital, buying equipment and investing in a new project.
Start-Up Loans are a type of personal loans or instant cash loans you can borrow to help to trade your new business. Such loans aim to help young entrepreneurs who have come up with an idea to generate more employment opportunities. Whatever the reason you have to borrow money, you are eligible to take out Start-Up Loans as long as:
Start-Up Loans are government-backed personal loans to help you grow your new business. Since these are unsecured loans, you do not need to put collateral, nor do you need to arrange a guarantor. If you meet all terms and conditions of the Start-Up Loan scheme, you will get free mentoring and exclusive offers to make your business successful.
Since Start Up Loans are government-backed, the fixed rate will not be more than 6% per year. Depending on the amount you borrow, you can pay back the loan over five years. Good news is you do not have to pay application fees at the time of applying for a loan, nor do you have to pay early repayment charge in case you settle your dues before the due date. The maximum amount of loan you can apply for under the Start-Up Loan Scheme is between £500 and £25,000 in the UK.
Even though Start Up Loans are government-backed, there are a lot of factors you need to consider before applying for the Start-Up Loan.
At the time of applying for these loans, you will need to have a credit check. It is essential to know about your financial behaviour. Running a credit check is paramount to make sure that you do not get money beyond affordability. Responsible lending involves a credit check. However, a poor credit rating will not restrict you from getting money.
Just because you have a good credit rating, it does not mean that you can afford any amount of loan you put in the application form. Whatever the amount you borrow, you will have to pay back along with the interest even if your financial condition changes down the road. Although you do not need to put collateral, you cannot welch on the debt.
Any default will attract late payment fees that add up the cost of the loan. Thus, you have to turn in a budget statement and the application that outlines your income sources and expenses. It will help lenders assess your application.
Another critical factor to consider while signing off on your application is business viability. It is crucial to ensure that your business will generate enough revenues. Therefore, you will have to prove that there is enough market for your product or service.
You will have to submit a business plan or cash flow statements to make sure that you will not face problems in making repayments. If you have not prepared such documents, you can use free online templates.
Though Start-Up Loans come with various benefits such as no application fees and no early repayment charge, they are subject to a few risks.
It is easy to apply for Start-Up Loans, but you should consider your affordability before putting in the application.