• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Where To Look For Loans Long-Term Loans for my Business

Extracts from this document...

Introduction

Where to Look for Loans Long-term loans Long term loans are more likely to be provided by insurance companies, pension funds, building societies, 3I's (Investors and Industry) and the institutions which provide industrial property mortgages, many of whom are connected with insurance companies. These lenders look forward to high returns on the funds. Contractual term loans are formalized by a specific agreement to cover a specific purpose, period and repayment programmer, which might match the cash flow of a project. Medium-term loans Medium term loans are much more home ground for the banks. Every bank has some form of development lone scheme providing five or seven year money. Most have a start-up loan scheme by which they will lend money to new businesses, and hope to recover their money and make a profit from those that a successful. The cost of schemes, if they involve quality options or royalties, may be difficult to quantify, although in general the banks will want to charge the equivalent of between 3 and 5 percent above base rates of the money lent. ...read more.

Middle

Smaller companies usually bear a margin of 2 to 3 percent, with new companies being charged up to four percent. A bank manager may offer loans at a fixed rate of interest; therefore it is fortunate if interest rates increase, however the opposite may happen. Many bank managers will have nursed along a new small businesses on nothing more than an overdraft supported by personal guarantee. The disadvantage is that the bank can withdraw the overdraft at any time without giving a reason. Government Schemes The government schemes are based around in two areas: development and indevelopment areas. In development areas Regional Selective Assistance (RSA) and Regional Enterprise Grants (REGs) for investment and innovation projects are available. In intermediate areas (IAs) RSA and REGs for innovative projects are available; REGs for investment projects are available in limited number of las. Assistance is available to manufacturing and some service industries. ...read more.

Conclusion

I am prepared to pay a 3-5% interest charge under a fixed interest rate, since the interest rates may increase. If they decrease, it would only however roughly cancel out the advantage gained by a previous increase. By sticking to fixed interest I would only have to pay 0.5% premium if I seek help from the Loan Guarantee Scheme offered by the government. Since my business is a service, I will seek help from the intermediate areas of the government scheme (e.g. RSA) and then negotiate with the Department of Trade and industry. As a new business, the guarantee set by the government is 70% on loans and spans from �5,000 to �200,000. I will not rely on overdrafts since they are unreliable because the bank can withdraw them any time they wanted with no reason. Overdrafts are also a disadvantage as it means to put my home and possessions at risk and they make it harder to switch to another bank if I am dissatisfied. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    the risk I would advise Jamie McPherson to invest small amount with different business he must check the return/yield. The rest of the money I would recommend his to save in saving account. If Jamie McPherson was to take out a loan or his credit card he must be ware of the APR (Annual Percentage Rate)

  2. The Purpose of Keeping Accurate Accounts

    There are less worries of the accounts balancing because each entry you make will be automatically be entered into the right ledgers. All of the transactions have to be entered accurately. If a mistake is made and a figure is entered into the wrong account, for example entering a sale

  1. Complete Report on Askari Commercial Bank

    The bank has seen its role developed in syndicated consortium finance, from simply gain a participant or co-arranger, to increasingly becoming the arranger and lead manager. Progress on the setting up of an asset Management Company was slow because of delays in receiving statutory approvals.

  2. Identifying and describing the main financial service needs for a student starting at university

    parents' residual income, they decide on the parents' contribution according to the following calculations: > No contribution if income is less than �20,480 > �45 if their residual income is �20,480 > plus �1 for every �9.50 of residual income over �20,480 For example, a parent whose residual income is

  1. Unit 5 Introduction to Accounting

    In bad years, dividends may be nothing whereas in good years they may be substantial. Some businesses may choose to pay out a dividend even if it has had a difficult trading year and has made a loss. Ordinary shareholders can vote on all of the issues raised at a

  2. What does Finance involve.

    I am going to think about the stock I am going to need for the first 2 weeks, how I am going to decorate my shop, the equipments needed for my services and general/ miscellaneous costs. I will have a number of start-up costs when I first open my business.

  1. Exploring business purposes

    Thanks to the close cooperation between all of the plants, manufacturing takes place quickly and flexibly. This creates significant advantages in the international market. The BMW Group currently has 15 production and assembly plants, in seven countries: I am now going to research about Cheney School.

  2. Planning the finance for my new business.

    my business because I may not have enough money to afford everything. However as my business is only a small beauty salon I do not think that the start up cost will be significantly high. Equipment Price of one Number needed Total price Wash Units �191.49 3 �574.47 Mirrors �15.99

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work