Small business is a designation for certain statutory purposes referring to a firm, corporation or establishment having a small number of employees, low volume of sales, small amount of assets or limited impact on the market.

Well, in general new business loans in the UK are becoming increasingly popular among people because number of educated people are making foray into business. You may have great business idea, management plan, intellectual backing and almost everything. But if you do not have financial support, you will not be able to start a business. New business loan UK can take your business idea in the right way.

There is no need to believe that new business loan in the UK is difficult to arrange. The most common source of arranging new business loan UK is credit unions and banks. However, raising money for new business will not be possible without adequate knowledge. Approval of new business loan UK largely depends on how a business proposal is written by you.

A written proposal will contain details of financial status, profitability and all relevant personal information. Business proposals will also contain a synopsis of profit and loss, income and expenses etc. It is recommended to get the services of professional consultancy firm. They can make very convincing and elaborate business plan and they will make sure that your business plan is approved.

New business loan UK can be long term or short term depending on your financial demands. Long term business loan have repayment period ranging from one year to seven year. Short term business loan will have a loan term up to one year. Depending on your repayment capacity, businessmen can get business loans ranging from 15,000- 250,000. Some high street lenders are willing to lend even more provided you offer any high value collateral and your credit record is pristine.

Small business loans can help you come out of financial crisis. Small business is established for the profit and also contributes to the economy of the nation by paying taxes. Small business creates employment opportunities for the people. Small businesses are run with a small number of employees. Small businesses are generally cottage industry, partnerships and proprietorships.

Whether business is small or big, it needs finance to run. Sometimes an organization earns a profit and at times it can incur losses also. However, during financial crisis, every business organization needs a financial support. Small business loans can also help in starting new joint ventures. Although small business contributes a lot in nation's economy, all lenders will not be ready to provide finances to small business owners. As there is huge risk involved, lenders think number of times before providing financial assistance to small business owners.

However, your credit history plays a major role in getting small business loans. The person with sound credit record can always be hopeful for getting small business loans. Small business owner should consider loan repayment flexibility. Because initially, small businesses would experience irregular and unstable income, so choosing a flexible repayment would be an ideal choice.

There is also increase in the numbers of sources available for financing small businesses. Apart from conventional lenders like banks and credit union also provides small business loans. Business loans can also be applied online. Online loans will be always fast, easy and flexible. Secured small business loans offer low rate of interest because of collateral's involvement. Unsecured business loans will have slightly higher rate of interest. Depending upon your situation, you can apply for the small business loans and empower your business acumen.

Although taking out a small business loan is not always the most appealing option; it can sometimes be the only one. With some thorough research there is no reason why your business shouldn't soon be off the ground, generating profit and success.

Taking out a small business loan does not come without its risks and obviously it is advisable to thoroughly check your business plan and predicted figures. Being careful in these early stages will probably save you time, money and stress later on. Before you take out a small business loan, make sure you are confident about the potential of your business and the revenue it is going to generate. If necessary test the business on a smaller scale or try it on a part time basis temporarily, in order to gain a better insight into any adjustments that might need to be made. Remember that small business loans are often secured against your personal possessions and/or the assets of the business.

When you are deliberating about the source of your loan consider the following points:

Repayment terms: don't make any assumptions about this, read all the small print.

Interest rate: try to get a decent deal on the interest on your loan. This way it wont chew too far into the profits of your small business.

Length of the Loan: agree a sensible and realistic period. Dont create unnecessary stress by agreeing to an over-early date. But reasonable targets can be motivating and helpful for you and your small business.

Before you apply for a small business loan it is worth checking if you are eligible for a grant. These come from a number of sources (largely government based) and rarely have to be paid back as long as you stick to the terms. By no means is this option open to everyone but you have nothing to loose by checking, and it could save your small business a lot of money.

There are a number of advantages of applying for a loan. Unless you breach the loan conditions, you are guaranteed the money for a specific period, normally between three and ten years. In some cases the interest rates for small business loans are fixed for a period of time, meaning you will always know how much you will be expected to pay back.

The government has a small business loan scheme. This generally requires you to place down 25% security (maybe your house as deposit) and the government scheme guarantees the rest of it. Bear in mind that this is administered through the UK banks and not the government itself.

Another outlet is for smaller loans to smaller businesses (termed micro businesses). Really this is for loans around the 2000 mark rather than anything more. There are a few other organizations that cater for micro businesses, but these may not be for you as the interest rates are normally very high (really due to the fact the set up costs have to be recovered somehow)

Small business bank loans

All of the banks provide loans to small businesses and it's probably best to approach your bank in the first instance to see what they can do for you. Remember that at some point you will require a business plan to outline how you will pay the loan and to attempt to mitigate the risk on the bank. Here are links to some of the major banks:

Small business personal Loans

You can finance your start-up through personal loans - secured or not. Here are some great links:

Credit Cards:

To improve your cash flow you should ensure you do not have outstanding balances on credit cards. Transfer to one of these 0% schemes.

For your information, its necessary to know that changes to the Small Firms Loan Guarantee (SFLG) came into effect from 1 April 2003 and cover:

• A single guarantee rate of 75% for all new loans;

• Sector exclusions removed for retailing, catering, coal, hairdressing and beauty parlors, house and estate agents, libraries, museums and cultural activities, motor vehicle repair and servicing, steel and travel agents;

• The maximum turnover level for non-manufacturing businesses increased from 1.5m to 3m;

• The premium paid by the borrower set at 2% per year on the outstanding balance for all new loans.

Main Terms and Conditions

The SFLG guarantees loans from the banks and other financial institutions for small firms that have viable business proposals but who have tried and failed to get a conventional loan because of lack of security.

Loans are available for periods of between two and ten years on sums from 5,000 to 100,000 (250,000 if your business has been trading for more than two years). SFLG guarantees 75% of the loan. In return for the guarantee, the borrower pays DTI a premium of 2% a year on the outstanding amount of the loan. The commercial aspects of the loan are matters between the borrower and the lender.

To be eligible, you must be a UK company with an annual turnover of no more than 3m (5m if you are a manufacturer). Many business activities are eligible but there are a number of exclusions. Loans are available for most business purposes although there are some restrictions.

If you would like to make an application, please contact one of the lenders who are involved in the scheme. They are:

• Bank of Ireland (NI only)

• Bank of Scotland

• Barclays Bank

• Clydesdale Bank

• Co-operative Bank

• Doncaster Business Advice Center

• Emerging Business Trust Ltd

• First Trust Bank/Allied Irish Banks

• HSBC Bank

• Lloyds TSB Group Plc

• National Westminster Bank

• Northern Bank Ltd

• Northern Enterprise

• Northern Investors Company Ltd

• One London Ltd

• Royal Bank of Scotland

• State Securities plc

• Triodos Bank

• UK Steel Enterprise

• Ulster Bank Ltd

• Venture Finance plc

• Yorkshire Bank

Yorkshire Enterprise Ltd