What is a business loan?

It’s no secret that businesses need capital in order to thrive. That’s where business loans (also known as commercial loans) come in, providing you with the financial boost your business needs to keep growing. Read on as we explain what a business loan is, how business loans work at Esme, and how you can apply for a business loan today.
What is a business loan?

What are business loans?

Put simply, a business is provided with a capital sum which it then repays in pre-agreed instalments over a pre-agreed amount of time.

Loans like this can grow your business in many different directions. You could buy new equipment, hire more staff, upscale your premises, acquire additional stock, or simply pay for a range of services to improve your business’s long term prospects.

If your business is seasonal, then you can also take out a loan for an important injection of cash ahead of significant times of the year – meaning you can spend more to make more, or keep your cash flow stable during the not so busy times.

What types of business loan are there?

Though there are many different types of business loans, they typically fall into one of two categories – either secured, or unsecured.

A secured commercial loan requires a business asset as security, for example, company equipment or property. It means that if you can’t repay the loan, then the lender takes ownership of the asset and can sell it to cover the cost of the loan.

Contrastingly, with an unsecured commercial loan, your business can borrow money without using your assets as a security. Instead, a personal guarantee usually becomes your commitment to the loan’s repayment.

How much can you borrow?

The size of your loan can be varied to meet your business’s needs.

In today’s market, available amounts typically range from small cash injections of around one thousand pounds, to much more substantial sums of up to three million, making much larger projects possible.

Loans are then repaid in monthly instalments, which can be from just one month to a period of up to a number of years.

This will include business loan interest rates applied by the lender. These rates can be fixed or variable, so it’s important to pay attention to the pricing details.

What do we offer?

At Esme, we offer SME business loans ranging from ten thousand to one hundred and fifty thousand pounds, which are repayable between a one-year and five-year time period.

We’re here to support SMEs. So, you can apply for a second Esme business loan, provided you’ve made six consecutive monthly payments on your original loan consecutively.

How can I apply for a business loan?

At Esme, we’ve worked tirelessly to ensure our application process is as easy and intuitive as possible.

In order to be eligible for an Esme loan, you’ll need to be:

  • over eighteen years old
  • a director of a UK Limited Company
  • having been actively trading for at least 18 months
  • turning over more that £15k per annum
  • able to provide a personal guarantee
  • If you meet those criteria, simply fill in our online application form, selecting the amount you need and the time period in which you’re seeking to repay it.

If your application is approved, you choose whether to pay by monthly direct debit or debit card. Once you’ve reviewed the terms and conditions, we’ll transfer the funds within an hour.

How can Esme help?

At Esme, we offer business loans ranging from £10,000 to £250,000* over a 1 to 5 year repayment period. A business loan can offer you a quick injection of capital that can help your business expand in exciting directions without having to worry about major hits to your cash flow.

Think you’re ready to make the next move? Just fill out our 10 minute application form or try our business loan calculator to get an idea of how much your monthly repayments could be.

*From £25,500 for Sole Traders

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