Enable Finance’s director, Phillip Evans, dispels the myths surrounding unsecured business loans.
“History has conditioned the business owner to go to the bank first when seeking financial assistance. This is often a good idea but if the bank manager says no or is not making a fast decision some people assume it is the end of the road for financing. In fact, there are hundreds of alternatives.
“Typically, we can lend up to £250,000 to a trading business via an unsecured business loan, but a lot of people don’t realise this.
“Unsecured business loans are generally described as ‘alternative business finance’ but in actual fact they are pretty mainstream as we are using them so often.
“Typically, banks will lend between £5,000 and £25,000 on an overdraft but they will also take a debenture – or a fixed or floating charge – against your business and may request security by way of a second charge against property, where the overdraft is greater than £25,000. We can provide clients with up to £250,000 with no debenture registered against the company and no fixed or floating charges.
“Yes, we may ask for a personal guarantee from the director, but these guarantees are not supported against property.
“A common misconception is that funding from anywhere other than the bank is more expensive but risk is always profiled on an individual basis whether the customer goes to a bank or another lender – and in many cases alternative finance can be as cost effective, or even cheaper, than bank funding.
“On an unsecured loan rates are from 6%. Most of the time there are no early repayment charges and the terms can be spread up to five years.
“Another merit of utilising the alternative finance market is that the technology enables us to give lending decisions more quickly and pay loans out faster. Some of our faster loans pay within 24 hours but the typical time frame is between seven and 14 days from application to loan payment.
“This is not just high risk lending, this is lending for mainstream, active trading businesses. We are not here to take over from the banks but we can add value to the banking facilities businesses already have and help them grow at a faster rate.”