High street bank Santander opened its doors to UK customers for the first time in 2004, and has gone on to offer products for small and medium-sized enterprises. It’s won awards for its financial services to SMEs, and its business loan is part of the package offered with a current account.
Santander business loans for SMEs
So what’s the deal with Santander’s award-worthy offering to entrepreneurs and small business owners? Well, the bank offers unsecured loans between £1,000 and £25,000, which are paid back between 1 to 5 years. The drawback is that there’s a one-off £100 arrangement fee, and if you want to repay early you might be charged. Larger loans over £25,000 are available for medium and larger sized companies from the bank's Corporate & Commercial service.
The Santander’s lending guide (it's a PDF download) can help you figure out what size loan is best for your business, and whether you'll need various features like international services as part of the package.
Banks judge your credit score
Santander, like most high street banks, will give your credit score a lot of attention when making a lending decision, so if you’re a new business without much credit history or your credit score isn’t great, you can work on improving it before you apply.
Or you can take a different approach to borrowing money and, instead, look for alternative finance (altfi) providers, who assess a whole range of other factors when making their decisions – your credit score probably won’t be a barrier to funding, even if it's low.
Advantages of a Santander business loan
With experience in working with SMEs, Santander aims to cater for needs that are specific to smaller businesses. So they could provide the convenient financial products you need to launch or grow your business.
The bank has local business managers, which could be useful in terms of face-to-face meetings with your lender. On top of a loan you can also make use of a business overdraft (watch out for fees though), financing for vehicles and equipment, and insurance.
Disadvantages of a bank business loan
Banks have slashed their lending to SMEs making access to loans a lot more difficult than before the recession. This alone is an unfortunate but major disadvantage of relying on banks for financing.
Another black mark against a bank business loan, is that the application process can be downright cumbersome and bureaucratic. Newer altfi providers have cut down the time it takes to get hold of money – helpful when you want to take quick action to ease cash flow or take advantage of a special offer on stock.
The bank might only offer you part of your required loan amount, meaning you’ll need to look for additional sources of funding. This isn’t ideal when you’re desperate to crack on with projects, like recruitment or an office re-structure.
How to decide which options works for you?
Your SME is unique, with its own priorities and goals, so your bank account and business loan needs to fit your own requirements. It's worth taking your time searching for the right solution.
Basically, you need to research your funding options, by checking out which providers are likely to give you a loan, and the criteria and lending requirements of each lender.
Also look at customer reviews on TrustPilot if you’re curious about other business owners’ experiences. However, use it as part of your decision-making process, alongside your other research. You’d take this approach when finding a holiday or buying a car – it’s about making a balanced, well-informed decision when it comes to a major financial commitment.
Call Fleximize today
If you’d like to discuss what kinds of loans could boost your business, the team at Fleximize is here to help. Call them on 0207 100 0110 to ask your questions, find out what you could realistically borrow and the flexible funding options on offer to SMEs.