For years, developing enterprises have relied on business loans from banks, like a Barclays bank business loan. Although banks have reduced their levels of lending to small businesses in recent years, it may still be worth applying. Loans are available, but it’s not as easy as it once used to be.
You need to be prepared to submit the required paperwork and the bank's decision might take a few weeks to come through. As long as you’re in a position to wait as well as meet the requirements of a Barclays business loan, then it could provide the financing you need.
However, if you want a short-term business loan or faster and more flexible funding, there are several convenient options to consider from alternative finance (altfi) providers like Fleximize.
Is a Barclays small business loan right for you?
Here's a quick look at Barclays' business loans:
- Small business loans: Barclays offers unsecured business loans with 9.9% APR between £1,000 and £25,000 for a term of up to 10 years.
- Larger loans: You can also apply for a loan up to £100,000 with a term of up to 20 years.
- Loan purpose: Loans can be used for all kinds of purposes – from office renovations to purchasing equipment.
- Security: Loans of up to £25,000 can be provided on an unsecured basis, but larger loans will require a form of security.
- Application: You can apply for a small business loan of up to £25,000 online, but you'll need to visit a branch or call Barclays to discuss loans which are larger than £25,000.
- Repayments: You can take a 6-month repayment holiday at the start of your loan if it's £25,000 or less, though you'll still accrue interest. If you have a loan of over £25,000, you may be able to request interest-only repayments for a set period.
- Speed: If you apply for a loan of less than £25,000, the funds could be in your account 24 hours after your application is accepted. If you've applied for a loan of up to £100,000, the money will arrive in your account 48 hours after you have signed the final paperwork.
As with all business loans you need to make sure you’re applying for a realistic amount. If you’re overly optimistic, you’ll struggle to pay it back and even end up defaulting. But if you underestimate the loan amount, you’ll burn through the money so quickly, you’ll find yourself applying for loan top-up (and possibly incurring additional costs, depending on the lender), or starting your hunt all over again for more money. To prevent this, be careful when calculating your loan amount.
What you need when applying for a loan
As with all finance providers, there are hoops to jump through. Some application processes are more complicated than others, but you need to be prepared before you complete an application. To get a Barclays business loan, expect to give the bank a detailed picture of your venture. This takes preparation, so here are a few things you’ll need to work on before you apply:
Business Plan – It's crucial to have your business plan to hand, as this will make your lending application faster. Here's some useful advice on writing your first business plan.
Financial information – You'll need to share your growth expectations, and tell Barclays how you’ll find the money to repay the loan. You'll also need to submit profit and loss figures, as well as your forecast for the next year. Prepare a breakdown of costs to show how you'll use the loan, and be ready to share any business savings. Top tip: if you can show that you pay suppliers on time, this could help your application.
Security – Have you planned which assets you can use if Barclays offers you a secured loan? If your business or level of funding is seen as a higher risk by the bank, it's likely you’ll probably be asked to provide security against the loan like your home (if you own it).
Credit score – How healthy is your company credit score? If it's not tip-top, it could seriously impact your chances of securing a Barclays business loan. Check your credit rating with Noddle to become more aware of your position before you many any loan applications. If you're a new company with a short trading history or a bad credit score, and you're turned down by the banks, there are plenty of alternative lenders who'll still consider your application.
Business loans from alternative finance providers
Barclays business lending is just one option – nowadays small businesses have a choice of a wide range of non-traditional finance providers. Lenders like Fleximize have been set up to offer SMEs a quicker, less bureaucratic process, so you can get your hands on the vital working capital your business deserves.
For more information on SME financing, check out our list of regional alternative finance providers within the UK.