14
Jul

Any enterprise seeking to raise more capital might consider trying to raise a business loan.  These types of loans might also be considered for those seeking cash to start up a new business.

The loans are usually borrowed through the banks or, depending on the type of business, Community Development Finance Institutions.  Loans where investors also lend money to enterprises to assist companies with their borrowing requirements are also available.  Alternatives for securing a business loan are through borrowing from other companies or even family and acquaintances.

As with any other loan, interest will have to be paid on a business loan.  This will mean the company or enterprise being subjected to costs during the period of the loan, and this should be carefully considered when considering their financing options.

Business loans are also available to sole traders and partnerships as well.  As these enterprises do not enjoy limited liability this could mean a home being at risk if the loan is secured and payments are not met.

The amount of interest a business will have to pay on the loan will depend on several factors, including the amount being borrowed and the length of the loan period.  The rate of interest may be fixed, not changing at all during the period of the loan, or be variable where it is likely to fluctuate.  Both have their advantages and disadvantages.   A fixed rate will ensure the business owner knows how much he will be paying throughout.  He will not be forced to pay any more should the interest rate rise, but also will not be able to benefit should rates tumble.

With a variable interest rate the owner must realise that payments are likely to change while it is being paid back.  He will benefit should rates tumble, but could face difficulties should they rise.

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