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

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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.

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