Government Guaranteed Loans For Small Business – Getting financing for your startup can be a tough business. Bootstrapping is an effective option provided you are either willing to put in good reserves of money or are happy on your way to success. Some entrepreneurs look to venture capitalists, but they are often hard to come by, and even harder to get to part with their money for modest equity.
One possible option is to look to government business loans. This form of financing your startup can be a very effective way to access a good amount of money to ensure your growth or develop enough stock to enter the market. But what exactly are government business loans and how do they work? Here is a deeper look into the world of obtaining loans through government initiatives:
Government Guaranteed Loans For Small Business
Of course, government loan programs will vary depending on where you are in the world. Some countries have more ambitious infrastructure than others to support local endeavours.
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In short, government loan programs are designed to provide local entrepreneurs with an opportunity to earn enough windfall to develop their businesses at an exceptionally low risk rate.
In the UK, Start Up Loans Company has provided over £400m of financing to over 50,000 businesses across the country – each loan backed by the government.
The loans offered by Start Up Loans are designed to be made available exclusively to companies that have been trading for less than two years. This means that it is not possible to apply for the scheme if your company has been around for a longer period of time and you are simply looking for a cash injection. This scheme enables entrepreneurs to access between £500 and £25,000 at a fixed interest rate of 6%. While some banks may be able to offer a lower amount, it is fair to say that 6% will be very attractive to most business owners.
This type of business loan is repaid over a period of one to five years, and the UK government does not charge early repayment or set-up fees.
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Of course, the large terms detailed in government loans come with difficulty. This particular program has a relatively strict set of requirements that both companies and entrepreneurs will need to navigate in order to reach their discoveries. Furthermore, the owners cannot use a government loan to pay off pre-existing debts, or train for industry qualifications or investment opportunities.
The whole set of criteria that entrepreneurs have to meet can be a little tricky, so let’s explore them further next:
Despite the strict eligibility criteria, applying for a UK government loan is a straightforward process, and just involves filling in a form consisting of questions regarding your personal situation, the money you aim for and what you plan to do with the windfall. . You will be asked to agree to a credit check which will help provide insight into whether you are able to afford the specified repayment rates.
The issue of eligibility is difficult for some entrepreneurs, and loans are available online for citizens aged 18 or over who are currently residing in the UK. The business in question must have been in operation for less than two years and must be based in the UK. Government loans are only available to those who can prove that they cannot raise financing through other forms, and your business plan and purpose for the loan must be deemed acceptable in order to be accepted.
Small Business Administration
If you meet the initial eligibility requirements, you will need to finish and submit all relevant working paperwork that supports your loan application. It will likely include your business plan, reliable cash flow projections, and a personal survival budget.
This part of the process may seem daunting, but fortunately, Start Up Loans Company offers a solid set of templates to help you create your projections and plans.
It is important to double check the validity of the supporting documents, and it is necessary to prove that your business will use the money wisely and turn it into tangible profits. Once you submit your application, the government will assess the feasibility of the information you have submitted to them as well as the likelihood that you will be able to repay without delay.
If approved by the Start Up Loans Company, a physical copy of your loan agreement will be mailed to you. You will then need to sign and return it before you can access your funds. Upon acceptance you will be invited to join the Government’s Business Mentoring Scheme to help ensure you are on track at all times.
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Of course, if you are ultimately unsuccessful in securing funding, it is worth noting that the government is not the only organization in the UK willing to offer loan programs to startups. Many local authorities are willing to offer grants to companies that are residents of their catchment areas, or those that work in an eligible industry. Grants require no payment either – but business owners are likely to come under intense scrutiny to ensure they comply with all agreed terms.
It is unlikely that you will find many loans that offer better repayment rates in a safe and advance manner. Funding will only be available to organizations deemed secure enough to pay off, and payment can be fast once the entrepreneur confirms eligibility.
A fixed interest rate of 6% offers you peace of mind, and the relatively low amounts involved mean that there is much less risk involved. This makes a government business loan a great way to secure the funds you need to bring a new product to market or do some early expansion of your business.
However, it should be noted that loans of a maximum of £25,000 may not be enough to secure the level of funding your business needs if you aim to acquire some office space and expand quickly.
Small Business Loans Gov How To Qualify For One
The hassle of jumping through hoops to finally confirm your eligibility can also be a waste of time. Crafting cash flow projections along with well-calculated business plans can take work when you’re aiming to keep your business afloat, and with no guarantee of success, the government business loan path can be a draining road for entrepreneurs.
If you’ve set up a business and are looking to hire an employee or two, or you’re looking to start developing a prototype to sell and have exhausted other financing options, a government business loan could be ideal for you.
However, if your company has been around for a bit longer, or you are aiming for a large amount of windfall to start an ambitious company, it may be worth turning to venture capital or angel investors, for example.
In the United Kingdom, the government offers a great loan service to companies looking to develop in their respective industries. If you’re looking for a cash infusion into your company, it’s definitely worth taking a look at what Start Up Loans can do for you. But at the same time, keep an eye out for local authority grants for which you may qualify. As always, the world of business ownership tends to reward those who keep their ears to the ground.
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Investor, founder, and CEO with over 20 years of experience in aviation, logistics, finance, and technology. Chairman of the Board of Directors of ACT Airlines, myTechnic and Mesmerise VR. CEO at Red Carpet Capital and Eastern Harmony. Co-founder of Marsfields, ARQ, and the Repeat App.
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Prime Minister Announces Support For Small Businesses Facing Impacts Of Covid‑19
The Prime Minister, Justin Trudeau, today announced additional new measures to support small businesses dealing with the economic impacts of the pandemic. These measures will help Canadian businesses protect the jobs Canadians depend on, and pay their workers and their bills during these challenging times.
Today’s announcement is part of the government’s economic response to COVID-19
