What Are Business Loans?

Business loans are available in a number of formats, and providing you have a sound credit history and a solvent company, we should be able to identify a number of solutions for your business (there are options available for those with poor credit, of course).

If you’re new to business loans, it can seem quite overwhelming when you’re trying to work out which type is most suitable for your needs. Below you will find a short overview of each business loan we offer at Aurora Capital, and you can find more information on each loan in the FAQ section.

If business loans are not what you’re looking for, why not look into property finance or cash flow finance?

Discover the Different Types of Business Loans

Business loans are a general term that covers several separate business funding products that we can offer at Aurora Capital. Find out more about each of our available business loans below.

What are the different types of business loans?

Recovery Loan Scheme:

The Recovery Loans Scheme (RLS) is a government funded scheme designed to support small and large businesses in surviving the financial repercussions of coronavirus. There is no need for personal guarantees for loans of up to £250k, and you can borrow on top of your existing BBL and CBILS loans.

Unsecured loans:

As the name suggests, these business loans do not require any collateral as a guarantee of payment. Instead, the credit provider will most likely ask for a personal guarantee to secure the loan, meaning you do not need to tie any personal or commercial assets into the deal. Repayments can be made by either weekly or monthly instalments, depending on each lender’s preference.

To access an unsecured business loan, you will most often need a good credit history both on the business and the personal side. We would also expect a business to be trading positively and to have made a profit in its most recent year.

Secured loans:

Secured business loans allow your business to use an asset as collateral to raise funds. Lenders will secure a specific asset, which means there is far less risk for them compared with unsecured loans. You can therefore expect lower interest rates.

Businesses with a poor credit rating or no financial history can often still access secured loans. While you’ll have to offset your loan against one of your assets, if you’re confident you can repay, this is still a great way to access business credit.

Business cash advance:

Business cash advances (often called PDQ or merchant cash advances), provide businesses with a lump sum payment that is repaid from the business’s credit and debit card takings. Put simply, an arranged percentage of your takings via card will be paid directly to your credit provider.

To access this type of business funding, you’ll need to show that a bulk of your sales come through card payments, whether that’s through a physical terminal or through an eCommerce provider. The benefit of this is that you only repay when you earn – plus, you can use the loan for whatever benefits your business the most.

Asset finance:

Asset finance allows businesses to access assets such as equipment, machinery and vehicles without having to purchase them upfront. It can also enable businesses to release much needed capital tied up in already purchased assets.

There are 3 types of asset finance:

• Hire purchase: when a business purchases an asset and spreads the repayments over time.
• Finance lease: when a business is looking to rent the piece of equipment over a number of years.
• Refinancing: when a business is looking to release cash in an already purchased asset such as machinery or a vehicle.