Your Guide to Quick Business Loans from Aurora Capital

George Holmes
Managing Director + Co-Founder
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. With so many loans to choose from, and lenders offering different terms, it’s almost tempting to turn away and find other means of financing your business! But fear not, because this guide from our business loan experts here at Aurora Capital will provide everything you need to know in an easy-to-read format, helping you take the first steps in deciding how you can access reliable business funds.
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 by clicking through to their individual pages.
What are the different types of 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).
The Recovery Loan Scheme
Overview
- Loans from £1k-£2m
- Terms from 1-6 years
- No personal guarantees up to £250k
The Recovery Loan 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.
How much can you borrow?
The Recovery Loan Scheme allows businesses to borrow up to £2m, however, how much you can borrow will depend on a few different details. The maximum a business can borrow through the scheme is either 25% of Pre-Covid turnover or 2x your most recent annual wage bill. If your business took a CBILS loan (not a Bounce Back Loan) this will also be deducted from the above calculation.
Example 1
If your business was turning over £1m prior to Covid and you took a £100k CBILS loan, the maximum amount you could borrow would be £150k.
Example 2
If your businesses annual wage bill was £125k and you didn’t take a CBILS loan, the maximum you could borrow would be £250k.
How much does it cost?
There are a huge amount of lenders on the scheme, however rates can typically vary between 4-12.5% per annum. Most lenders will also charge an arrangement fee that can be as small as £295 all that way to 5% of the loan amount.
Unsecured loans
Overview
- Loans up to £500k
- Terms up to 5 years
- Decisions in 48 hours
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 installments, 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.
How much can you borrow?
This is very difficult to determine, as there are a lot of factors that go into making this decision. However, most lenders will either use a % of turnover or a multiple of profit to determine how much a business can borrow. Typically this will be 2x the most recent annual turnover or up to 5x annual profit.
There are also other factors that can determine how much you can borrow, such as more recent cash balance in bank statements, credit history and whether the business already has any existing loans. The maximum any business can borrow is £500k.
How much does it cost?
Unsecured loans come in many shapes and sizes, however rates can vary between 6% – 25% per annum.
Secured loans
Overview
- Loans up to £2m
- Terms over 30 years
- Up to 75% LTV
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.
How much can you borrow?
The maximum any business can borrow will depend on how much equity you have in the property being used as security. Typically lenders will use the loan-to-value calculation and can lend up to 75%, also taking into consideration any existing mortgages or charges the property has on it.
Example
If you have a property with a market value of £500k, with a £150k mortgage on it, you could potentially borrow up to £225k. This is worked out using the below calculation:
75% of Property Value (£500k) = £375k
Loan to Value (£375k) – Existing mortgage (£150k) = £225k
Max Loan = £225k
How much does it cost?
This will depend on how long your business has been trading for and whether you can evidence affordability for the loan. If your business has been trading for over 2 years and has financials to support the loan, rates can be as low as 4.5% per annum. However, if you are a start up, with no financials rates can be between 10% – 15%.
Explore Secured Business Loans
Business/merchant cash advance
Overview
- Loans up to £2m
- No interest, just a single fixed fee
- Only repay when you earn
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.
How much can you borrow?
A merchant cash advance allows businesses that are taking card payments to borrow up to 2x your monthly average takings. Other factors will also determine how much you can borrow including available cash balance, time trading and overall credit history.
Example
Your business has taken on average £30k per month over the last 12 months, this means the maximum you can borrow would be £60k.
How much does it cost?
Seeing as this product has a variable term (no fixed end point), it uses a slightly different way when calculating the cost. Rather than attaching an interest rate to the facility, you will pay just a single fixed fee on top of the amount you are borrowing. This fee can range from as small as 6% up to 25%.
Asset finance
Overview
- Facilities up to £1m
- Terms over 7 years
- HP, Lease and Refinance options
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.
How much can you borrow?
This will all depend on the asset you are looking to acquire. The normal process would be for the lender to value the asset you are looking to purchase and if all checks out, they will then check affordability to confirm you can afford the repayments. If the valuation of the asset does not check out, they could advise you to choose another supplier to purchase from and then reassess the application.
How much does it cost?
Rates can vary depending on the type of asset you are acquiring and whether you are looking to lease or purchase the piece of kit/vehicle. Purchase agreements can vary between 4-9% flat rate and most lenders will have a small admin or doc fee to pay.
Business Loan FAQs
How to apply for a business loan with Aurora Capital
Applying for any of the above business loans with Aurora Capital is straightforward and can be done in minutes. You can apply online now and our decision engine will match you with an ideal lender depending on your requirements. From there, you can begin discussions with the lender and have your funds in your account within days.
You will usually be required to provide the following when you connect with a lender:
- Application form
- Latest full accounts
- Management accounts
- Last 6 months Bank statements
Please note the importance of completing your application accurately. The smallest mistake could lead to your application getting declined.
Most businesses will be eligible for a form of business loan, however there is still some general criteria that is worth understanding before you apply. This is not the official criteria; it is simply what lenders will likely keep in mind when determining eligibility.
- The loan amount is less than 25% of your annual turnover
- Your business is profitable and you have more than 24 months trading history (see our section about starting a business later in this guide for information about new business loans)
- You have no outstanding CCJs or late payments
Getting a business loan with bad credit
If you have a poor credit rating, that doesn’t necessarily mean you cannot access business funding. While it may be more difficult and you may receive an offer with slightly different terms, accessing funds is definitely still feasible, and we can help to make it happen.
If you’re applying for a loan and you know you have bad credit, make sure you are prepared to provide a personal guarantee or any number of security assets. You should also be aware that you may have to pay higher interest rates, and that you may have less flexibility when it comes to repayments. Once you have secured a loan of course, regular and timely repayments will allow you to start building back a more positive picture of your credit rating, helping you secure easier loans in the future.
How long do business loans take to come through?
Our quick business loans can be with you in as little as a week, depending on the type of loan you opt for. Following your application, we can provide a personalised quote within 24 hours as well as any additional support you might need.
What are the interest rates on business loans?
The interest rate you pay on each product will depend on several different factors, including affordability and credit rating. Credit rating can be made of several different characteristics from both your personal and commercial report. Some factors that could have an adverse effect on your overall score include CCJs, bankruptcies, defaults or missed payments. The fixed interest rate will not include any arrangement fees the lender may have, so it’s always best to ask for an APR.
How much money can I borrow to start a business?
If you’re borrowing money to start a business, the likelihood is that you will be having to borrow through a secured business loan. If this is the case, you will be able to borrow up to £2m in funds depending on the security you can provide. However, we recommend that before you start conversations with a lender that you have a clear idea of how much you are looking to borrow. If you can demonstrate you have conducted research, have a powerful growth plan in place and will be able to repay the funds without any difficulty, you are more likely to be approved for the loan.
Please note that when it comes to startup business loans, they can be more difficult to access. This is because lenders may be reluctant to take on the risks associated with new business ventures. However, if you are prepared to pay slightly higher interest rates, and you have a strong, achievable business growth plan in place, you should still be able to access financing.
How long can I borrow for?
The length of time for which you can borrow funds will depend on a number of factors. Firstly, it will depend on which business loan you choose and how much you are planning to borrow. Lenders will also take into account any security you are offering, as well as the purpose of your business loan. Generally speaking, business loans are distributed and paid back within a matter of months, but you may be able to borrow for an extended period depending on your situation.
Can I repay my business loan early?
Yes, there is nothing stopping you from repaying your loan early if you have the means to, and you may be able to save on your interest. However, it’s important to remember that paying your loan back early could increase your profits and therefore increase your tax liability. If you’re thinking about repaying your loan early, be sure to look at your finances and find out whether it is really worthwhile.
What happens if I miss a business loan payment?
Different lenders will have alternative approaches to this problem, but in most cases, late payment fees and additional interest will be added to the bill for businesses who cannot pay or miss their business loan payments. If you’re worried about being able to repay your loan but haven’t yet missed a payment, you may be able to contact your lender and adjust the terms depending on the circumstances.
Generally we would recommend setting up automatic direct debit payments via your bank so that you always pay on time when you have the necessary funds.
What type of business loan do I need?
If you’re still not sure what type of business loan you need, you can always get in touch with our experts at Aurora Capital, who will be able to explain the benefits and drawbacks of each loan type and how it could work for your business. In addition to a range of business loans, we also supply cash flow finance and property finance.
Why choose Aurora Capital for fast business loans?
As funding specialists, we can provide any size company with fast, quality business loans that are suitable for their specific needs. We have built relationships with a portfolio of fantastic lenders who can provide flexible funding, meaning we can offer your business the most competitive rates on top of additional benefits.
Finding the right funding can be a challenge at first, but our experts are always on hand to guide you through the process and make it as seamless as possible. We’ll provide you with a list of the best deals and rates suitable for your company, and ensure you’re in-the-know when it comes to repayment terms and any crucial legalities.
Access the best rates and deals for unsecured and secured loans, including asset finance, cash advances and more. Our business loans are suitable for any size company, and we’re able to make decisions in as little as 24 hours. See how much your business qualifies for today and prepare to see significant business growth!
Table of contents
- What are the different types of business loans?
- How to apply for a business loan with Aurora Capital
- How long do business loans take to come through?
- What are the interest rates on business loans?
- How much money can I borrow to start a business?
- How long can I borrow for?
- Can I repay my business loan early?
- What happens if I miss a business loan payment?
- What type of business loan do I need?
- Why choose Aurora Capital for fast business loans?
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