If you’ve got an exciting new idea for a business, you’re probably aware of the minefield that is funding applications.
Should you approach your bank or choose a start-up loans specialist lender? Read on, and we’ll demystify all.
High Street Banks – traditionally, banks have preferred to loan money to established businesses as they like to mitigate their risk with some form of security (such as your assets) to underwrite the loan. This hasn’t really changed and, despite some claims that they lend to start-ups, once you get to the small print, they are only offering growth or expansion loans to those who have already started trading for at least 2 years and filed positive returns.
Start-up Loan Scheme – this is the government-backed Start-Up Loan Scheme. These loans are considered a personal loan but can only be used for business purposes. They are unsecured, which means there is no need for your assets to be secured against the loan. They are available to brand new businesses who have not yet started trading, and established businesses that have been trading for less than 2 years.
Alternative Lenders – there are some lenders out there who will lend to start-up businesses. Typically this will be industry specific and over a certain minimum amount. Can also be postcode dependent and the interest rates are usually higher.
The real choice
Once you start investigating what’s available, you are likely to find the start-up loan scheme is the only viable option for most genuine start-up businesses.
The scheme has been set up to focus on new businesses and there is no risk to your personal assets with this method of financing. Loans are available up to the value of £25,000, payable over 60 months maximum at an interest rate of 6%.
Don’t be put off by the narrative that start-up loans are “for would-be business owners who have struggled to secure funding from traditional lenders”. This doesn’t mean start-up loans are for people with poor credit ratings or high-risk businesses. It simply means that you need to try to secure funding from your bank first and if unsuccessful, then the start-up loan scheme is there for you. And you do need a good credit rating and eligible business idea to apply.
How to apply
Start-up loan timeframes vary hugely and that’s because there are so many different ways you can apply. From a completely do-it-yourself approach, to working with a broker or advisor, the key to a swift and successful application is to plan thoroughly and carefully.
That’s where Streamlion comes in. To date, we’ve helped our clients with over 500 applications and secured them over £7.7 million of funding. To do this, we partner with the UK’s number one start-up loans provider, Transmit Start-Ups, and we can work with you in different ways including:
- Have an initial discussion with you about your business idea and the viability of your plans. We have a great deal of experience in many different industries, so can help you create a business model that works for you.
- Explain about the importance of the credit check and guide you to the secure start-up loans application page so you can begin the process and complete these important checks.
- Help you submit your business idea, financial forecast, loan expenditure and ‘personal survival budget’ (this is the main loan application process, and we can also check all your documentation to ensure you have the highest chance of success)
- Work with you through the review of your loan application to approval and receipt of your funds.
If you’d like to know more about accessing funding for your start-up business, why not get in touch for a chat? You can contact Helen, Streamlion’s founder, on 07790 493033 or email email@example.com