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Loans and overdrafts

Written by: Finn Ryan

Article Overview: Details the finance options from high street banks and other sources, with advice on how to choose between them.

Loans and overdrafts

When you start your own business, you may need to borrow money to cover day-to-day expenses until your business generates surplus cash, or for initial costs like buying equipment or premises.

This guide looks at the advantages and disadvantages of loans and overdrafts - two popular sources of start-up funding. It provides practical help when choosing a loan or overdraft, taking you through the options available from high street banks and building societies to companies offering unsecured loans.

It also gives guidance on how to raise your chances of success when approaching a lender and lists the main sources of borrowing including specialist loan providers.

To read the full guide on loans and overdrafts for your business visit www.businesslinknorthants.org/loans

You may also want to subscribe to the Business Link Northamptonshire eNewsletter in order to stay up to date with new grants and support services as they arise - visit www.businesslinknorthants.org/signup to find out more.

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New Small Business Topic - Hello everyone, I'm on the lookout for new topics to add to my site. We just launched a Franchising section and are planning Human Resources section. Do you have any thoughts for a new section? Here's a list of what we currently have: Angel Investors Branding Bank Loans Business Coaching Business Plan Franchises (New) Insurance Legal Marketing Public Relations Sales Small Biz Loans Venture Capital
Re: The Top 50 Get Out of Debt Blogs To Watch In 2009 - I've never heard of anyone having overdrafts that big. I just thought they were $20-30 here and there an that you got them paid of ASAP. I would be worried too if I were you. Perhaps you should to charge of the money.
Re: The Top 50 Get Out of Debt Blogs To Watch In 2009 - [quote="Kevin":1w9gj2oq][quote="MichelleJ":1w9gj2oq]Hi Mary Many people have extremely large overdrafts and a lot of companies run their businesses using the overdraft facilities continuously. The point to remember though is that you pay a high interest rate on an overdraft, as it is basically borrowed money, so the quicker you manage to pay it off the bigger your saving on interest is. MichelleJ[/quote:1w9gj2oq] Hi Michelle, Then would you advise that people or small businesses pay for overdraft protection?[/quote:1w9gj2oq] Hi Kevin I don't think that is really necessary, so long as people are careful with what they use the overdrafts for and so long as they know that they can pay them back in a relatively short period of time. Unfortunately most people forget that an overdraft is a debt which does have to be paid back and they tend to let it drag on and get bigger and bigger and that is usually when the bank will call it in. If used sensibly then it is fine. MichelleJ
Re: The Top 50 Get Out of Debt Blogs To Watch In 2009 - Hi Mary Many people have extremely large overdrafts and a lot of companies run their businesses using the overdraft facilities continuously. The point to remember though is that you pay a high interest rate on an overdraft, as it is basically borrowed money, so the quicker you manage to pay it off the bigger your saving on interest is. MichelleJ
Getting financed - It has always been my experience that it will always be better to be in business debt rather than personal debt, but I suppose when you can run your business out of your home and have so little overhead, it could be better to simply finance yourself and secure a business line of credit just in case you need it. On the flip side, when it comes to businesses outside the home, you want to secure financing and SBA is probably the way to go (depending upon what your total project will cost). Banks that provide SBA loan products prefer the loan be 100K or more. Then there are Micro Loans (loans that go up to 35K) and Signature Loans that are unsecured loans and mainly based on your credit score (680 or higher), they can finance anything in between and then some. It's been said in some of my other posts that when you obtain business loans its beneficial because you are building a track record with a lender for future use. Should you get financed via a business loan and later you need additional working capital to keep your business going (or to expand) the lender is going to be more apt to help you because they have already taken on the risk of your loan. Now, they would prefer you better yourself whether it be expansion or to pull yourself out of a hole so you do not default on the 1st loan... and if that means helping you further, believe me they will do it. However, if you finance yourself, who's going to help you with additional working capital if you run into trouble? Lenders won't help you because you financed yourself...they tend to take on the attitude that you didnt need them before, so why now? What if you had originally financed yourslef with home equity and still haven't paid it back...now you have a first mortgage a second or Home Equity line of Credit and your business is in touble and you have no way out.


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