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Choosing a lender

Although traditional banks are still the main source of finance for smaller businesses, alternative sources of finance are available and you should consider whether any of those might be suitable for your business. This section will help you to understand five different categories of lenders. It will also help you to protect your business information when talking to lenders, and know what to do if a lender turns down your application or you have a complaint against a lender.

financing-a-business

What you should think about first before choosing a lender

  1. 1.How do I decide which lender is right for my business?

Family and friend lenders

  1. 2.What will a family member or friend be able to offer my business?
  2. 3.What will a family member or friend be looking for in return for lending to my business?
  3. 4.What is a typical process for a family member or friend to lend to my business?

High street banks

  1. 5.What will a high street bank be able to offer my business?
  2. 6.How do I find a high street bank which is suitable for my business?
  3. 7.What will a high street bank be looking for in return for lending to my business?
  4. 8.What is a typical process for a high street bank to lend to my business?

Challenger banks

  1. 9.What will a challenger bank be able to offer my business?
  2. 10.How do I find a challenger bank which is suitable for my business?
  3. 11.What will a challenger bank be looking for in return for lending to my business?
  4. 12.What is a typical process for a challenger bank to lend to my business?

Peer-to-peer and crowdfund lending platforms

  1. 13.What will a peer-to-peer or crowdfund platform be able to offer my business?
  2. 14.How do I find a peer-to-peer or crowdfund lending platform which is suitable for my business?
  3. 15.What will a peer-to-peer or crowdfund lender be looking for in return for lending to my business?
  4. 16.What is a typical process for borrowing through a peer-to-peer or crowdfund lending platform?

Debt funds

  1. 17.What will a debt fund be able to offer my business?
  2. 18.How do I find a debt fund which is suitable for my business?
  3. 19.What will a debt fund be looking for in return for making a loan to my business?
  4. 20.What is a typical process for a debt fund to lend to my business?

Giving information to lenders

  1. 21.How careful should I be when I provide information to lenders?

Rejection of loan applications

  1. 22.Can I do anything if my loan application is turned down?
  2. 23.If a lender rejects my application, does it have to help me find a loan from another lender?

Complaints against a lender

  1. 24.What can I do if I have a complaint about a lender?

Short-form loan agreement

You will find this template helpful if you are looking for a short-form, simple loan agreement for an unsecured loan to your company on which interest is payable. You have the option of repayment in one lump sum or in quarterly instalments. You are also given the choice of paying a fixed interest rate or a variable rate which is linked to the Bank of England base rate.
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