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Bank loans are one of the most common forms of finance for small and medium-sized enterprises (SMEs) and business start-ups.

They are generally a quick and straightforward way to secure the funding needed, which is usually provided over a fixed period of time.

Bank loans can be capital / principal repayment or interest only and can be structured to meet the businesses needs. For businesses seeking to purchase premises, commercial mortgages are widely available and will offer flexible terms to suit each business’s needs. Loans can be short term or long term, depending on the purpose of the loan.

Applying 
The business should have a clear idea of the amount it needs to borrow, the amount it can repay and the duration and terms of the loan. It may be possible to arrange a flexible loan, under which a business can draw down additional funds

The bank will consider various factors in agreeing a bank loan, such as the length and history of the business relationship as well as the turnover, profitability and asset base of the company. A good relationship between the business and the bank is important and can help. Applications are generally be made to the business’s bank either in person, by telephone or online. 

Maintenance
The business must meet it obligations under the terms of the loan and keep to the agreed repayment schedule. Failure to do so will adversely affect the credit rating of a business. If the business defaults on the agreed schedule, the bank could demand full immediate repayment of the loan.

It is important that any banking covenants are complied with. Failure to do so may result in the bank withdrawing financial support and cause going concern problems for the business.  

From short term loans to commercial mortgages, Barclays can help businesses find the right solution to support growth. Follow the links below.

Last updated: 29 Jun 2012