Biz-Online.com » Cash Flow & Finance

Steps for applying for a business Loan

Biz-Online — Fri, 06 Mar 2009 12:02:45 +0000

There are many reasons why businesses can need a financial boost. It may be that you have just started up and need to purchase expensive equipment or work vehicles, or you may be an established business that wants to move to newer, better premises and taker on more staff to expand your profit growth. Whatever the reasons a business loan can inject vital capital into your company, and it is important you choose the right loan at the right interest rates to suit your business budget.

The first step to applying for a business loan is to work out exactly how much you are going to need. Banks and lenders will want you to justify every penny that you are asking for, so make sure you draw up a complete finance plan, and also project your future earnings during and after the changes you are planning have taken place.

Lenders will be more willing to accept your application if you can show you will have adequate money coming into your business in the future, and also if you are willing to put some cash into the project yourself (which demonstrates your commitment). Owners who do not have any money to put in, can find it difficult to get finance and banks may ask you for some kind of security such as your house.

Banks decide on finance on a case by case basis, so it is vital that you present your business finance plan clearly and professionally, as you can sometimes literally ‘blow it’ by being unorganized or unrealistic. Many banks do provide useful business plan guides, which can help you to write and prepare your finance applications.

The next step is to review the loan products on offer from the various lenders, and see if they can accommodate your needs. Many applications fail because people have asked to borrow outside of the lenders minimum and maximum loan parameters, so don’t waste your time and theirs and check first before you apply.

Don’t be put off if your first application is turned down, Review your small business financing options and see if you can make any changes, then try again with another suitable lender.

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Best Banks for Small Business UK

Biz-Online — Sat, 07 Feb 2009 11:54:51 +0000

A recent poll by SmallBusiness.co.uk revealed that as many as 65% of small business owners were unhappy with services they had received from their business bank. When you consider that many of these business banking services come with significant charges and overdraft fees, it is more important than ever that you look around and choose the type of account and service that suits you.

The reviewcentre.com provide a good resource on all the main small business account services, which is based on the helpful reviews and comments from people who have, or are currently, using the various services. Also the British Bankers Association (BBA) provide a Business Account Finder at www.bba.moneyfacts.co.uk, which can help you to narrow down exactly what kind of account you need by asking you questions about your type of business (partnership, limited sola trader etc) and what kind of facilities your require (local branch, credit card, overdraft etc).

Here are a few of the best offers currently available for business banking from the main UK banks:

Lloyds TSB Business Banking – this is a comprehensive business service which can provide you with advice on account, loans, insurance and pensions. Lloyds TSB offer a good range of products and services from start up accounts with 18 months free banking to designated client accounts where you can hold client funds in separate accounts, all with instant access and credit interest (ideal for businesses like solicitors, accountants, and estate agents.)
Alliance and Leicester Business Accounts – a free and unlimited business account is offered with a competitive interest rate. This is ideal for small accounts, and those businesses that operate in remote areas where there are no high street bank facilities, as deposits can be made at local post offices.
NatWest Business Banking – a free 2 year business account is offered to new business customers who have been trading for less than 12 months. There is also a good range of products and services available such as business loans and insurance, and you also get the bonus of being assigned your very own dedicated business manager, who can help guide your through setting up your finances.

If you know more some cool latest offers, post via comment so that readers can take advantage of it.

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Starting up a small business – Finance

Biz-Online — Sat, 24 Jan 2009 06:21:02 +0000

Starting up a new business can be expensive, and you will likely need some capital to buy equipment, finance marketing and also establish your place of work.
You will also need to allow for a reasonable sum of money to pay for wages, bills and stock until you have been trading for long enough to start bringing back in some money.

There are a range of different financing options for those people starting up a small business and these include:

Your own money – if you have sufficient savings you may want to consider using these to help start up your business. Remember that you should leave something aside to live off in case the business is slow to start making a profit.
Family or friends – you should always think very carefully before borrowing money from close friends or family, as you could have no way to repay them if your business fails, or takes a long time to become successful. You should also get a proper legal contract drawn up, to ensure that all parties have some security, and to clearly define the amount of money the loan is for, and how it is to be repaid.
Banks – before you approach a bank for a loan make sure you have a well thought out, credible business plan in place. This will help your advisor select the best product for you, such as an account with an overdraft facility or business loans to help with the financing for any vehicles or equipment you need.
Investors – some larger businesses can attract investors, especially if you have taken the time to work out a thorough business plan and projected profits and earnings.Make sure you get some advice on how to set up investment agreements properly, to protect all the parties involved.
Grants – some businesses can qualify for a government or local business association grant to help with the costs of the initial set up.This is a great boost for some small businesses as grants are often offered on subsidized or 0% interest loans which are excellent ways of getting cheap finance, and some grants may even by straight cash gifts, which do not have to be repaid.The main disadvantages of grants are that they can have very restricted criteria’s for applicants, and they may not be enough to finance the whole of the business set up.Also there can be heavy competition for grants, and the application process can sometimes be long and involving.

So there are lots of options available for you. It’s just you have to decide which option to choose from. Sit back with your friends and relatives OR your financial advisor to come to a conclusion.

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Business guide to National Minimum Wage

Biz-Online — Tue, 15 Apr 2008 12:19:39 +0000

In the UK most workers have the legal right to a National Minimum level of pay, which is set out by the government each year. This means that employers must ensure that all qualifying employees are receiving on, or above this minimum wage level, to avoid any legal disputes. In cases of suspected wage under payment, National Minimum Wage Officers will investigate the case and can take legal action to force employers to pay the right hourly wage, and also pay any backdated wages.

If you have employed workers for a long time under the wrong wage levels this could be a significant amount of money. For example if you had underpaid two employees by just £2 an hour for a year (on a 37hr week), then this could cost you over £7,000 to repay, plus any legal charges in the process of sorting out your case.

There is a National Minimum Wage Helpline on 0845 6000 678 if you are unsure exactly who qualifies for minimum wage, but basically, with a few exceptions, most UK citizens over the age of 16 are legally entitled to the following rates:

Adults (aged 22 and over) – £5.73 an hour
Young Adults (aged 18-21) – £4.77 an hour
School leavers (aged 16-18) – £3.53 an hour

The main exceptions include:

Self employed workers
Agricultural workers, as they have their own payment system set up by the Agricultural Wages Board
Certain apprentices under the age of 19 years old
Voluntary workers

You will need to consider the costs of the National Minimum Wage when you are employing new workers. At £5.73 an hour even a basic worker on a standard 37hr week is earning just over £10,000 a year, which is a lot of money to a small business. Think about the type of business you own, and whether you can minimise the number of staff you employ without compromising overall efficiency. Utilise every member of staff to their full potential, and make sure the workload is spread evenly.

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