Most growing companies require funding at some stage or another. Business loans can enable you to boost your working capital, invest in more stock, hire staff, open new premises – you name it, there’s probably a type of business finance for it. With so many business loan options out there, it’s important to choose the right one for you. When researching, one of the first steps is to figure out if you can actually afford the loan. Remember: you’ll have to pay interest on top of the amount you borrow. The More4Business Ltd business loan calculator is for indicative use only, for loans where you repay the same amount every month and there's a set end date. But every business is different, and the individual terms for each loan or finance product vary. Business term loans are a popular type of business finance. However, there are also other types of lending within business finance that our calculator can't tell you about, for example: - Loans repaid as a percentage of revenue like merchant cash advances - Overdraft alternatives like revolving credit facilities - Asset finance like equipment leasing - Rolling facilities like invoice finance/factoring

A loan’s “term” is the length of time it takes for the borrower to pay it back (plus interest) in monthly repayment instalments. Business loans can be short-term or long-term; it all depends on the loan amount, lender and type of loan. Invoice finance terms, for example, can be between one to three months. Short-term business loan terms can range from 3 to 24 months and asset finance terms can be for one up to five years. Business lines of credit are typically for six months up to five years.

The interest rate on your loan is a percentage of its balance. You’ll have to pay the interest on top of the original amount you borrow, which is known as the “capital” or “principal”. The interest is the main cost associated with borrowing. Interest rates vary. The percentage you pay depends on the term of the loan and other factors, such as the strength of your credit profile. Even if your credit history isn't perfect, you could still be eligible for a business loan from an alternative lender.

Every lender and finance product has its own eligibility criteria that you’ll have to meet to be able to take out the loan. When deciding how much to lend to your business, and how much interest to charge, the lender will consider your: Profit and turnover Business and Personal credit history The loan’s term (length) Loans that are secured will require you to offer security in the form of a business asset, e.g. property, a vehicle or machinery. Most unsecured loans require a personal guarantee, whereas others, such as some merchant cash advances, don’t require any kind of security. When offering a property, vehicle or machinery as security, bear in mind that you may lose it if you fail to keep up with your repayments.

To help speed the application process along, it helps to have the relevant documents ready. The paperwork you need will depend on the lender; for example, some will ask for your business plan or insurance documents, whereas others won’t. As a starting point, prepare the following: Proof of ID and address - These will assist the lender to satisfy their internal KYC (Know Your Customer) requirements, which is a regulated standard that all lenders must adhere too. Business bank statements - The lender will look at your business bank statements to verify your company’s income and outgoings. Financial accounts - These will provide the lender with a clear insight into your company’s finances for that financial year. VAT returns - You may also be asked to provide your VAT returns, which are typically updated every three months. Company directors and financiers - You’ll be expected to provide details of your company’s directors and financiers in your application.