Term lending for working capital, growth, stock, a tax bill or refinancing debt that costs more than it should. This is the facility where structuring around cash flow does the most work, because the repayment has to fit a real trading year rather than an average one.
£10,000 to £2 million · 1 to 6 years unsecured, longer secured · unsecured typically to around £500,000
Typical situations
Two quiet months, a quarter that carries the rest of the year, and a VAT bill that lands in the wrong one. A facility set at a flat monthly figure against the annual average will be comfortable for nine months and painful for three. The term, the start date and the repayment profile are all decisions, and they are where most of the value in a broker sits on a loan like this.
Several small facilities taken quickly, each priced for speed rather than cost. Consolidating them into one term loan usually lowers the monthly outgoing, and the case is made on the statements that show them.
A confirmed order larger than the working capital behind it. A term loan is one answer; where the order is the security, invoice or trade finance is often the better one, and we will say so.
Filed accounts tell a lender what happened up to eighteen months ago. Management accounts and the last twelve months of bank statements tell it what is happening now, and that is what the decision turns on. Underwriters read statements line by line: returned direct debits, the size and timing of the peaks, any existing lending that does not appear in the accounts.
Unsecured lending is usually available to around £500,000 depending on the lender and the profile, almost always with personal guarantees from the directors. Beyond that, or where the trading record is short, lenders look for security: a charge over property, a debenture over the company’s assets, or both.
Affordability is tested on what is left after the business has paid everyone else. Directors’ remuneration, one-off costs and the debt being refinanced can all be adjusted for, but only where the pack sets them out and evidences them. That work is the difference between a decline and an offer far more often than the headline numbers are.
Indicative market ranges, not an offer of finance. Terms depend on the lender, the security and your circumstances.
What the lender assesses
What goes in the pack
A lender reading figures that stop four months ago will either price for the uncertainty or decline it. Bringing the management accounts up to the last full month before submission is usually a day of work and saves a fortnight.
Large one-off transfers, director loans and returned payments all get noticed. They go into the pack with an explanation attached, rather than becoming a question two weeks into underwriting.
Guarantors are credit searched. A default from four years ago is workable when it is disclosed at the start and routed to a lender that accepts it, and fatal when it appears after an offer.
We build the facility around the actual trading year, including the quiet months and the tax dates, so the payment is one the business can carry in February as well as in October.
On unsecured lending, almost always. A personal guarantee makes a director personally liable for the debt if the company cannot pay it, which is why it is worth understanding the amount and the terms before signing. Some lenders cap the guarantee at a proportion of the facility, and guarantee insurance is available.
Most term lenders want two years of filed accounts. Some will look at twelve months of trading where the bank statements are strong, and start-up lending exists but is a different product with different pricing. Tell us how long you have traded at the outset so the case only goes to lenders that can write it.
Usually, but the cost varies more than people expect. Some lenders charge only the interest accrued to the date of settlement, others the full remaining interest on the term. On a facility you may repay early, that clause is worth more attention than a small difference in the headline rate.
Not in itself, though repeated applications leave credit searches behind them, and a pattern of searches is something an underwriter will ask about. It is one of the reasons cases go to a small number of lenders chosen for fit rather than to everybody at once.
Not always. Where the need is equipment, asset finance usually costs less and preserves working capital. Where cash is tied up in unpaid invoices, invoice finance releases it without adding debt. We will say when one of those is the better route rather than arranging the loan anyway.
Where the shortfall is cash tied up in the ledger rather than a genuine funding gap.
Where the money is going on equipment, which usually funds more cheaply against the asset itself.
Send the last twelve months of statements and the most recent management figures, and we will come back with the facility the business can carry and the lenders that would write it.
