Money for business is like blood for the human body. It’s a necessity as crucial and essential as the air we breathe. Given below is everything you need to know about loans and used to hesitate from asking personally.
Why one needs loans? There may be several reasons including home renovation, car repair, educational fees, medical bills, payday, or a business startup. Even though people have money to start business still they opt for loans why? There is always a need to take a loan despite availability of capital because if we use our capital then the capital would get reduced and make the business look unattractive to potential consumers. Hence the financial experts all over the world advise entrepreneurs to go for loans rather than using up the saved capital.
There are currently two efficient ways in which we can get loans from a bank; secured and unsecured. The best way to get a loan is by providing a security against the loan amount one is seeking for.
Some of the benefits of secured business loans over unsecured loans include:
– A secured business loan is charged an interest rate lower than an unsecured loan.
– Since the money is already covered the bank has no problems giving the loan and the procedure, becomes much faster plus the confidence of the bank in you, increases.
– When the amount loaned becomes high, the interest charges, that a business has to pay each month becomes a liability. This amount becomes less due to the security provided against the loans.
– The default due to constraints in business such as a recession can be handled amicably with the bank since they know there is a security involved with the loan.
It is important to understand that a secured business loans are very different from a mortgage. Mortgage is only done against a property whereas the security for the loan can be anything varying from shares to jewelry to property to anything that has value.
The markets in the UK are best suited for a secured loan in these times of recession. Since the banks are always jumpy about the loans they provide to creditors, the security is proof enough for the credibility of the borrower. The banks give you an option of taking the interest rates as fixed or variable.
Fixed interest rates option has the interest payment to be made each month as a fixed amount for principle and interest. In the variable interest rate option one can have the interest on the principle varying according to the market conditions. This is a better option in the times of recession because the banks have been made to cut down their interest rates considerably, by the central banks of each country. The UK central bank has also official announced that the interest rates should be lowered to facilitate business.
The reason why the UK markets are the best for a secured business loans is that the banks are open and not restricted or controlled, like other developing countries and they have a better credit standing compared to the US banks.
Barry Jones is a financial expert dealing with business loans, who provides counseling and ex