What types of loans are available for growing businesses?

Now that banks are offering simple lending processes, securing funding has become a smooth process. Banks can not only match your loan requirements to your business plans, but they will allow you to select the monthly repayment terms, choose a repayment option, and borrow between £1,000 and £25,000. You’ll find all the options on any bank’s website, with details of all their financial options including a business overdraft and business credit cards, too.

Alternatively, there are government-funded schemes available to SMEs which come with a multitude of benefits, like the Start-Up Loans service. Not only does it offer funding in the form of loans, but it also offers mentoring for entrepreneurs. The scheme assigns a partner to each company who will help develop and initiate a structured business plan. You’ll receive a low-cost, unsecured loan, backed by a range of business support products if your plan is approved.

There are some key types of loan available through government funding:

1. Soft loan

This particular type of loan includes a generous repayment plan; interest rate are usually lower, and the repayment terms can be extended for a longer period. Organisations across the country offer soft loans of up to £25,000 for six per cent interest to businesses, social enterprises, and charities. The government’s Start-Up Loans is the perfect place to explore the range of opportunities available. Through this scheme, loans must be repaid within five years, and at a fixed rate of interest. Capital repayment holidays are also available, with monthly interest options.

2. The Prince’s Trust

For young entrepreneurs ages between 18-30, soft loans of up to £4,000 are available to support business ideas through The Prince’s Trust. With repayment options available over two to five years, and interest rates capped at three per cent, they’re ideal for young business owners.

3. Innovate Loans

Innovate loans are a financial product offered by Innovate UK. They are for UK businesses that want to scale up and grow through innovation, developing new or improved products, processes or services.The loans are for late-stage research and development projects only. A late-stage R&D project is one which builds on a new idea but has not yet reached the point of commercialisation.

You can use a loan to finance a late-stage research and development project categorised as experimental development.

Experimental development includes:

  • producing plans, arrangements and designs for your products, processes or services
  • developing commercially-usable prototypes and pilots
  • experimental production and testing of products, processes and services

To be apply for an innovation loan you will need to successfully apply into one of the Innovate UK loan competitions. You could borrow between £100,00 and £1 million to cover up to 100% of your eligible project.

4. The East of England Regional Growth Loan Scheme.

Supported by the Department for Business, Innovation, and Skills, is available to offer a comprehensive support programme to businesses based in the region.

The criteria for loan application can be found here.