Lenders charge interest on the amount borrowed, calculated as a percentage of your expansion loan. The lender takes various factors into account when assessing your business profile and setting the interest rate. Once your loan application is approved, you will receive the loan amount, and in accordance with the agreement, you will repay the loan along with the interest to the lender over the agreed period.

Utilising a small business expansion loan is a viable option for market growth, product diversification, and facilitating the merger of businesses. Given the significant implications of business expansion, careful consideration is essential before implementing any changes. Therefore, it is important to understand the pros and cons of such a loan and make an informed decision.

Pros: A few advantages of taking out a business loan for expansion are outlined below.

• No Profit Sharing: The lender you borrow from does not share in your business profits.

• Straightforward Repayments: Loan repayments are generally simpler to manage compared to distributing profits with an equity investor.

• Quick Application Process: The application process is swift and straightforward. Once approved, funds can often be released within 24 hours, allowing you to begin your expansion plans promptly.

Cons: While making your decision, it is also important to consider the potential drawbacks of taking out a business expansion loan.

• Collateral at Risk: Many financial institutions require business owners to offer collateral to secure the loan, providing a safeguard in case of default. If you use a business asset as collateral, there is a risk of losing it should you be unable to repay the loan.

• High Interest Rates: The interest rates offered usually depend on your credit rating, including both personal and business credit histories. Although some lenders may offer competitive rates, qualifying for them can be difficult. If your credit score is poor, the cost of borrowing could be higher than anticipated.

• No Guarantee of Return on Investment: There is no certainty that your intended investment will lead to the desired business success.

• Lenders offer these loans to limited companies, sole traders, and other businesses seeking to borrow funds for the growth and expansion of their operations. Business expansion funding may be a suitable option if you:

  • Can comfortably afford the repayments

  • Have a clear and realistic roadmap for achieving success from your planned investments

  When might it not be suitable for you?

  Business expansion funding can provide the financial flexibility to grow your business and reach your goals. However, it may not be appropriate if you:

  • Are seeking a loan with a very low interest rate

  • Do not have a reliable plan in place to ensure timely repayment of the loan

The application process with LoanTube is straightforward. Our credit experts are highly knowledgeable about the business finance market and understand the specific criteria set by our panel of lenders. This enables swift access to the most suitable lenders, increasing the likelihood of securing the finance you need on the first attempt. It also helps minimise the risk of wasting time on direct applications that may result in refusals.

Most of our lenders typically look for:

• A background or credit check: Lenders usually conduct a quick credit search as part of the loan approval process. This is generally completed almost instantaneously, allowing your application to proceed without unnecessary delays.

• Recent trading history: The longer your business has been trading, the more lending options are usually available—often with more favourable interest rates. While trading for 18 months or more is considered ideal, funding is still accessible for newer businesses, so there’s no need for concern.

• A business health check: Lenders may request a general overview of your business’s financial performance to assess your ability to meet repayment obligations and ensure the loan is affordable.

Effortlessly save time and streamline the process with LoanTube, your trusted partner in finding the most suitable loan options on the market.
Thanks to our close relationships with a wide panel of UK lenders, we know exactly where to go to help you secure the finance you need. Our straightforward application process ensures quick access to loan options tailored to your specific requirements within the UK credit market.

Here’s how it works:

• Complete your enquiry without affecting your credit profile

• Speak to one of our experienced credit experts if you need guidance or support

• We search the market on your behalf to match you with the most appropriate lender and loan product

• We clearly explain the option we believe best suits your needs

• Submit the required documents to move forward with your application

• Receive the funds quickly—paid directly into your bank account