• 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. Complete Report on Askari Commercial Bank

    Credit Cards Division The credit cards division (CCD) is responsible for managing the credit cards business of the bank. CCD is headquarter in Karachi as separate strategic business unit (SBU) of the bank with all internal functions including credit, operations, marketing, sales, finance and audit, perform independently.

  2. The Purpose of Keeping Accurate Accounts

    Disadvantages using the computerised accounting system. 1. Computer fraud: the use of computers by programmers to assist in defrauding business entities of huge amounts of money. 2. Power failures: the other forms of system breakdowns or crashes. Such system therefore require an elaborate program of constantly backing - up computer records.

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

    By pooling lots of investors' money into a fund that invests in shares on their behalf, the investment achieves economies of scale. However, there are important differences between unit trusts and investment trusts. Investment trusts are public limited companies which invest in the shares of other companies to make profits for their shareholders.

  2. Unit 5 Introduction to Accounting

    Cash sales are often best because the company receives the money for the sale immediately.

  1. What does Finance involve.

    Opening stock: Picture Item Quantity Whole sale price Total cost Supplier Towels 5 �2.98 each �14.90 www.linenwholesale.com I have compared this company's price with Avon and Woolworth's price and I have found that this supplier gives me the best price. All creams types (plan creams, facial creams, herbal creams etc.)

  2. Exploring business purposes

    * The tertiary sector includes all the businesses that provide a service to businesses and/or individuals, such as retailers and banks. The primary sector The primary sector contains all those businesses which create or obtain raw materials or natural products from the land or the sea.

  1. Financial Services

    university and as he has managed to get a full-time job at a bank starting 1st October 2004, he will have to pay back 270.83 pounds every month, he is going to get paid �450 a week. He currently holds a current account with Barclays and has �650 in his account.

  2. Planning the finance for my new business.

    their customers to help guide new business through the various processes of start up and expansion. The Sharing the Success programme has also developed a business growth fund offering grant assistance for capital purchases to enable job creation. A wide variety of grants and loans are also currently available from

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