What Advantages do Secured Loans Offer to New Startups?
As you can see from the three companies listed above, it can be difficult for a brand new company, with little history, to acquire unsecured funding. For this reason, Secured loans may be an excellent option for dedicated new traders. P2P lenders like Funding Circle offer secured business loans in the forms of: asset finance, property finance, and secured loans.
Security can range from a personal guarantee to the use of the asset purchased or all business assets as collateral. Because lenders have little business behavior on which to predict creditworthiness when it comes to startups, secured loans may be the easiest form of financing for these to secure.
What about the UK’s Government Loans Startup Programme?
If you are looking for a regional small business or startup grant read our comprehensive guide.
Also, the UK Government’s Startup Loan Scheme (Startup co uk) provides loans of ₤1,000 to ₤25,000 to 18+ year old persons living in the UK. The average loan awarded is ₤4,000, and is paid off at 6% interest over 5 years. Startups, here, include businesses that have existed for less than one year, though this is extended to two years in some circumstances.
Approved businesses also receive business mentoring as part of the programme. The application is simple and performed online, with a reply received in 3 business days. Though the government does not publish the percentage of applicants who receive funding, the programme has been extended to tens of thousands of businesses and sole proprietors.