Business loans are a great way inject some quick funding into your business to support your goals. A loan can support a wealth of business purchases and get you on track to increasing your revenue.

There are a variety of business loans for small businesses to use, and each are designed for a specific purpose.

Small Business Loans

A small business loan is generally an amount lower than £100k and can offer a huge helping hand to the operation of an SME. It can fund new contracts, equipment, marketing, and a wide variety of other purchases a business needs to make.

Whilst the loan amount might be low, the growth opportunities can be huge. Often, younger businesses are only eligible for lower amounts. So, a small business loan is a frequent option for startups and businesses that have been trading for less than a year.

Short-term Business Loans

A short-term loan is one of the most popular business loans for small businesses, as they have a higher chance of approval. This is because lenders are less reluctant to tie into a short-term repayment plan with an SME.

Short-term loans have a higher approval rate than long-term loans. Therefore, some small businesses take out multiple loans throughout the year as stop gaps for dips in trading.

What’s more, regular repayments will improve your credit score and open more funding opportunities.

Long-term Business Loans

If you’re eligible, a long-term business loan can give you access to higher amounts than other finance options.

That’s because lenders will only distribute long-term loans to businesses that can already prove long-term growth. As it poses a reduced risk for lenders, they reward these SMEs with more funding opportunities.

A long-term business loan can also be an effective way to split big expenses into monthly instalments. For instance, if you are investing in expensive equipment or a renovation.

VAT Loans

A VAT tax bill can take a big toll on a small business. Sometimes, the lump sum payment can be an issue during a difficult quarter or when cash flow is low.

A VAT loan helps companies spread the cost of their VAT tax bill across multiple months. Businesses receive the loan amount to pay the bill and then repay the lender over monthly instalments.

The loan can protect SMEs from a big financial hit and keep you compliant with the regulations set by HMRC.

Merchant Cash Advance

Merchant Cash Advances are business loans for small businesses that rely on card sales for payments. These are SMEs that use card terminals in their daily operation such as convenience stores, salons, and restaurants.

This business loan offers a lump sum of funds which they repay to the lender through future card sales. The SME repays the loan through a percentage of every sale.

It’s a quick and easy finance plan that is manageable for small businesses that are still growing.

Cash Flow Loans

A healthy cash flow is crucial to the operation of a small business, but there will always be dips.

These shortages can prevent growth as there may not be readily available funds for staff, stock, and equipment to complete the next job.

A Cash Flow Loan is a financial buffer that covers your expenses until you get paid. It can fund future projects, even when you’re waiting on payment from the last one. For many SMEs, these loans are key to securing consistent work.

What Is the Best Type of Business Loan for Small Businesses Like Mine?

The best business loan for you will vary depending on your business health, personal credit, and long-term goals. Nonetheless, it’s important to understand the types of finance products that are out there.

The easiest way to check if you meet the eligibility criteria is to apply for a business loan. It only takes 30 seconds and won’t affect your credit score. You could land the loan term and amount you’re looking for.