If you believe in being your own master and want to start a business for earning a good income independently, then small business loans can serve the purpose. These loans are specially created for helping the people who are new to the business field and wish to make a beginning by opening a small business, though establish business people are also eligible to borrow for a new venture or for any other financial needs.
These loans require the borrower to submit a business plan to the lender. The plan should clearly show the prospects of the trade and its likely profit in the coming day. Another aspect that the lenders want to ensure is that the business should be capable of generating enough money for repaying the loan installment. The applicants’ individual capability should also be sufficient to repay the loan.
Depending on the requirement, small business loans are given in secured or unsecured options. The secured loan comes against a valued property for collateral, until the period the loan is fully paid back. Usually, such loan is taken either for borrowing greater amount that may go up to £75000, or for borrowing any amount at low rate of interest. These loans can be repaid in larger duration ranging from 5 to 30 years. This is an ideal loan for bad credit borrowers as they are easily approved against collateral.
The unsecured loan option should be explored for smaller amount of loan ranging from £3000 to £25000 for a short duration of one to 15 years without collateral. But interest rate will be little higher in the absence of collateral.
Bad credit history tags like late payments, payment defaults and CCJs require you to make a good amount of down payment to the lender. Otherwise the interest rate will be higher. Make sure that you have checked your credit report and have made it free of errors before applying for the loan.