Most business owners who are considering taking out a loan think first of all of making approaches to banks, building societies or other established financial institutions. Whilst this is only natural, there are a number of other sources of advice and help and a number of different approaches to finding finance. There is government funding, for example, which is offered to companies fulfilling certain criteria and can be a combination of grants and loans. Funds are offered for a whole range of purposes, including renovations, new equipment, marketing, training or staff recruitment.
In fact, the UK government and European Union have created a funding programme valued at £2 billion in order to offer finance to new and established small businesses. Amongst the business loans available are low-interest or no-interest loans and government guaranteed loans.
Low-interest or No-interest Loans
There are two national and eight regional loan schemes in this category. As the scheme title suggests, these loans can be very good value and offer highly competitive rates. Frequently, they are offered unsecured, so a guarantee or other collateral is not needed. There are specific loans for young entrepreneurs and for women and they are directed at a variety of different industries and a number of geographical areas. The range of finance available is from £1,500 to £10 million.
Government Guaranteed Loans
There are six national and eight regional loan schemes in this category, in the range £5,000 to £250,000. The Enterprise Finance Guarantee Scheme helps small businesses to access business loans from private lenders by providing a government guarantee, which reduces the risk associated with lending money to small businesses. This is particularly appropriate for companies that want to expand by moving into export markets. One advantage of the scheme is that there are virtually no premiums to pay for the ‘insurance’ provided by the government and no additional security is required.