Small business ventures that have the potential for huge growth over time are often referred to as a micro business, these types of ventures still require funding via a loan to grow.
If you have 9 employees or less, you are technically classed as a microbusiness and are therefore likely viable to receive a microbusiness loan that could help to shape the future of your company, especially if growth is something you are looking and hoping to achieve.
As time goes on and different types of business start to become classified and grouped together, it is becoming easier to weigh up the financial options available to you.
Over the past few year’s microbusinesses have started to become recognised as an official business type with a set of needs unique to the way it is run on a daily basis.
What is a Micro Business Loan?
Micro business loans are variants of a small business loan, this type of finance is designed for sole traders and single person companies to give a boost to help with growth. Lenders intend that the borrowing is for small-scale businesses, as such the loan sums is lower amounts, usually no more that £25,000 usually no collateral is needed. Due to this fact the requirements for application can be less stringent, but dependent on your status a personal guarantee is usually required.
Micro business financing
The unique nature of a microbusiness stems even from the creation of its business plan. For instance, the executive summary will look completely different to that of a large-scale organisation. The differences don’t end here though and we will touch further on them as this article progresses.
These business ventures are very small and therefore operate on a very small scale, but they rely on finances running smoothly in just the same way every other business in the world does.
Covid 19 has had a long lasting effect on the British economy with micro businesses being hardest hit by the coronavirus. Securing micro business financing for the long term and raising money for working capital will be a test in 2021 and over the next 12 months. A credit broker that offers financial services could be the first step to borrowing money to help grow your business.
The following types of financing for a micro business requires a financial commitment and you should form your own opinion on if the funding is right for you and your venture.
Types of micro business loans
As we mentioned earlier, starting out small as solely responsible for your growth and borrowing you will want to cast a wide net if you are a sole trader of single entrepreneur looking for a business loan. The more options you look at, the easier it will be to find a solution to your cash flow problems to help your business. We understand that one loan will never suit all, so we’ve provided a solution that can help all types of business proprietors.
Not all the following business finance solutions providers are authorised and regulated by the financial conduct authority, therefore you should make your own investigations into this matter when searching for business loans for women.
1. Merchant Cash Advance
Merchant cash advances many many positives for businesses to take advantage of. Every business owner runs into the need for working capital from time to time. But where do you go to get it, especially when your bank won’t even consider your funding request? There is a finance solution for businesses that take cards & debit card payments.
In fact, you could get cash from the sales you haven’t even made yet. Turn tomorrow’s credit card & debit card sales into today’s cash flow. There is no faster, safer or easier way to get unsecured business funding. The merchant cash advance is classed as a short term working capital loan.
This is because they have a term time of a maximum 18 – 24 months. Your business must also accept card payments and be trading for six months. No accounts are needed for this scheme.
The amount of money you are offered from a lender will be based on your average monthly card sales. Typically the more money you make each month, the more money you will be able to borrow.
When it comes to repay the loan, business cash advance have flexible repayment terms are taken automatically as a small percentage of future card sales. For each customer card transaction your business processes using a designated terminal, a small amount will be automatically withdrawn, the are designed to be affordable.
This type of funding offers businesses an instant cash injection between £5,000 and £200,000. You can then comfortably and repay the money, using a small percentage of future customer card payments.
- Access £5k to £200,000
- Funding in as little as 48 hours
- Get up to 150% of your monthly card turnover
2. Business Credit Cards
Business credit cards can be an appealing option for startups as well as more established businesses that want the flexibility of a credit line they can tap when needed. We cited earlier this you that Capital on tap allow a facility up to £100,000 with 56 days interest free on card purchases. They offer great interest rates from as low a 9.9% APR.
Ever wondered what Crowdfunding is? this type of funding option allows you raise money online from backers who are interested in supporting small businesses.
There are several types of crowdfunding available, including:
- Commission-based: You offer a tangible commission for those who contribute to your campaign
- Equity-based: You give others the opportunity to invest in your company, often by offering shares in your company.
- Lending-based: You borrow money that will be repaid back.
Finding the right platform and crafting an effective campaign to win investors takes work, but the fact that you have business that just has hit a stumbling block may be appealing to some backers on these platforms as they can see a history unlike startups.
4. Invoice Factoring
Invoice factoring is a way for businesses to raise money by selling invoices to a factoring company at a discount. Factoring usually includes collections control services, and helps companies release cash from their debtor book. In order to use this type of business finance, you must deal with other businesses and not consumers.
- Factoring is the ideal solution for businesses looking to save time chasing payments.
- It releases up to 90% of the value of your unpaid invoices the moment you issue them to your customers.
- You will have the full support of a dedicated relationship manager and access to your own online account to enable you to view your facility whenever you need to.
- A discreet and friendly credit management team will collect payments on your behalf giving you more time to focus on the day-to-day running of your business.
5. Bridging Loans
Bridging loans are used to finance the gap between when you need to pay to purchase something, but you’re waiting for funds to become available from the sale of another property or a long term business loan to be approved. Bridging loans are secured loans. This means you have to have a high-value assets to get one, such as a property or land.
When you apply for bridging finance, the lender adds a ‘charge’ to the property you’re using as security. These charges set the priority of debts if you can’t repay your loan. If a property was seized and sold to pay off outstanding loans, a first charge loan would have to be paid first before a secure second charge loan could be paid back. This is a quick turnaround on this type of loan and can be in place within a week.
- You’ll receive money quickly
- You can borrow a large sum of money
- You can have a lot of flexibility if needed
- It is secured against your home, so could risk losing your home
- Interest rates for bridge loans can be petty high
- Bridge loans come with a lot fees attached, so it can be a costly
6. Small Business Loan
A small business loan is a form of business financing that enables small businesses to fund their daily operations costs with a set interest rate. Term loans or business bank loans as the are called are often provided by a lender or high street banks and is usually secured against an asset, sometimes finance providers simply just ask for a personal guarantee if the borrowing is unsecured.
When business owners borrow money from a lender, a repayment plan with fixed costs is agreed as part of the lender’s terms of agreement. The money then gets paid back, with interest, in scheduled monthly payments over a pre-agreed repayment period.
A small business loan has a repayment term from 12 – 60 months.
There are two main types of small business loans in the UK:
- Unsecured business loans
- Secured business loans
The issues facing microbusinesses
As we have already stated, microbusinesses have a very unique set of needs, and it is no different when it comes to the difficulties they face; these are far removed from what troubles larger businesses and corporations.
Because of the small-scale nature of the microbusiness, it is often faced with overcoming many things, such as the following:
- It can be difficult for them to grow and expand into new markets
- Accessing finance via small business loans is often seen to be a great difficulty for smaller ventures
- Business support isn’t easy to come by
- The probability of attracting new customers and growing an audience can be limited by their size
These are certainly not the only problems facing microbusinesses right now, but they are some of the key issues and most commonly occurring ones.
You may be shocked to discover that many small business owners are not even yet familiar with the term microbusiness. This is an inherent problem within itself as it means they are not able to benefit from the protective services that are currently in place for them. Thus far, online information is currently rather limited in regard to microbusinesses, meaning many people are unable to uncover what they need to know about them.
This means that when financial issues build up for a microbusiness, the solutions are not as easily discoverable as people would like them to be. The more knowledge that is put out there on this subject, the easier it will become for business owners to get over hurdles that damage their business ventures, as well as fining solutions to some of the more prominent issues that are currently deteriorating them.
How could a loan help my microbusiness?
Our micro business financing unsecured loans have aided thousands of businesses in the past, especially smaller sized firms that wanted to help with covering the costs of the following:
- Hiring new members of staff
- Getting out of financial distress
- Stocking up on products or services
- Purchasing new tech and other equipment
- Increasing marketing budgets
- and even more
Micro loans for startup business with bad credit history
If you are a microbusiness owner that is currently undergoing some financial difficulties, you may well be wondering whether or not you are able to access business funds with a poor credit history. The plain and simple answer is ‘yes’, you most likely will still be able to apply for these types of loans with bad credit, due to the fact that it is a form of unsecured funding.
You can apply online for a business loan via our online application process. You will need to complete a quick online application to provide some basic information about yourself and about your business. So, with unsecured funding, it turns out that micro business loans can still work out for individuals that are looking to make improvements to their business venture or get it out of a spot of financial trouble.
Government backed funding is available for start ups again this it regardless of the type of business you maybe running. The government lenders will require business plans to have sight if your venture is viable or not. The loan amount, interest rates are dependent on your personal credit score and your business needs.
Micro business loans bad credit
Having a poor history of credit generally makes it tougher to get your hands on any kind of micro business loan with bad credit. This is normally a critical obstruction for business owners with a adverse history who have failed when attempting to obtain finance for their business venture in the past. However, the alternative business funding we offer can work as a life saver in these situations as we don’t need to check over your credit score.
You can wind up with a poor or bad credit record due to a variety of reasons. Your customers could fail to pay you on time for instance, which in turn leads to further problems. Most companies will find that are some stages in their timeline their business credit rating takes a hit.
If you have a blemish on your credit record, the chances are that you can overturn it easily enough and make it right once again. You should undoubtedly look into doing this prior to presenting your application, to guarantee you have the best possibility of being accepted by your loan provider.
Even if you find it difficult to change your credit score for the better, do not go thinking that a microbusiness loan is unachievable for you. We’ve helped various firms locate an unsecured business advance at a competitive interest rate even though they have a bad financial record, so don’t lose all hope straight away.
Is your business eligible for a microbusiness loan?
A a leading lender of finance to micro businesses the following types of funding are offered:
- Merchant cash advance
- Business Credit Cards
- Small Business Loans
Micro business owners are required to pass the following criteria:
- Registered and trading in the UK
- Minimum monthly turnover of £5,000 for any business loan
- For merchant cash advance, minimum monthly average card sales of £5,000
- Trading for at least 6 months
- Business owner / director is over the age of 18
Click to apply for a quick quote and to find out how much you can borrow. You will be redirected to a page where we will ask for more information about your business, including:
- The trading name of your microbusiness
- The number of years you have been trading
- Your microbusiness’ average monthly turnover
- The amount you want to borrow
The next step involves disclosing your personal details, please be ready to tell us:
- Your title, first name and surname
- Position in the business
- Registered office address if registered in England and Wales
- Company registration number
- Contact details
Carefully read through the terms and conditions and click ‘get my quote’. From here your application gets reviewed by one of our approved business finance suppliers, who will help find the best lender for your micro business loan.
Please expect a call and email from one of our dedicated account team members to discuss your business loan agreement.
Carefully read through the agreement and sign the relevant documentation ready to return to PDQ Funding. From there you will be able to access the funds in your account in just 24 hours.
What is Micro Business Loan?
A micro business loan is a variation of a small business loan, designed for companies which employ less than nine persons.
Getting a Micro Business Loan
If you considering a micro business loan the next step is the application. We take into account a variety of factors to decide if each business is eligible for micro business financing.
Why choose PDQ Funding for a Microbusiness Loan?
As a leading lender in the microbusiness loan space we recognise that it can be difficult for microbusinesses to find financing for their business to develop and grow. Simply apply by using our online form, it is quick and simple, we also do not charge any upfront fees for applying.