Small Business Loans Edinburgh

Small business loans can give Edinburgh SMEs the funds they need to get them through a cashflow dip, pay taxes, buy stock and raw materials, or give them the firepower to innovate, expand, and explore new business markets.

However, with so many types of business loans available, it can be difficult to know which is best for you. Read on to learn more about:

  • Small business loans for Edinburgh-based businesses
  • Edinburgh business grants
  • Alternative business financing options
  • What kind of credit score you need
  • How to apply for a business loan

What types of small business loans are available in Edinburgh?

Whether you’re seeking to expand production, start a business, pay taxes, cover cashflow, or buy vehicles, plant and machinery, there’s a business loan for you.

Expansion loans

Development and bridging loans are designed to help you expand your business. Refurbish, extend, expand your current operating facilities. Borrow up to 90% of the project cost. Repay over 1 – 30 years. The property acts as security. In most cases there is no need to provide extra collateral.

Start a small business in Edinburgh

It can be tough to find the seed money you need to start a new business. However, entrepreneurs seeking to launch a new venture in Edinburgh may get a financial boost with a startup loan – this is cash to get your new business off the ground. Government funds may also be available for this type of loan. 

Buy vehicles, plant, and machinery

Buying big-ticket business items, such as vehicles, plant, and machinery can be a problem when cash is tight. However, asset finance can make major purchases easy and affordable. Buy over time and use the equipment as you pay for the equipment. The asset acts as security for the loan. In most cases, there is no need to provide extra collateral.

Working capital loans

Working capital loans can be used to pay everyday expenses – things like wages, utility bills, and the cost of raw materials. Depending on the type of loan you choose, added security may be required. 

Working capital loans for Edinburgh business owners:

  • Small business loan – borrow from £1,000 to £500,000, works like a traditional bank loan,
  • Invoice finance – release the cash tied up in your outstanding invoices.
  • Revolving line of credit – works like a bank overdraft. Dip into the available funds as and when you need them.
  • Merchant cash advance – borrow against your credit card sales, the higher your card sales are, the more you can borrow.
  • Business credit cards – work like personal credit cards but are held by the business instead of an individual. May come with a higher credit limit than personal credit cards. 

Franchise finance

Buying into a successful franchise in Edinburgh can be a good idea – you become part of a well-known brand, enjoy centralised marketing support, and have easy access to products and equipment. However, joining a major franchise group can be costly, and few franchisors offer funding to soften the financial blow. An independent franchise loan can solve this problem. Borrow anywhere from £1,000 to £5million. Repay over months or years. Additional security may be required.

VAT loans

Slow paying customers can leave Edinburgh businesses battling to pay their VAT bill, making them vulnerable to penalties and interest. VAT loans can be used to pay HMRC on time, avoiding penalties and allowing businesses to hold on to their available cash for longer. The lender pays HMRC directly. Repay the loan over 3, 6, 9, or 12 months.

Commercial mortgages

A commercial mortgage in Edinburgh is a type of loan that enables businesses to purchase commercial property or land within the city. Unlike unsecured business loans, which have a maximum limit of £250,000, commercial mortgages are better suited for businesses requiring financing between £50,000 and £25,000,000.

Similar to a residential mortgage, the borrowed amount is typically obtained from a bank or specialized lender and repaid through monthly installments over a fixed term with added interest. However, the value of the property or land is typically higher with a commercial mortgage compared to a residential one.

If you’re considering obtaining a commercial mortgage in Edinburgh, our expert team is ready to discuss your requirements. Contact us today to learn more.

How do I find a business grant in Edinburgh?

Unlike business loans, business grants do not need to be repaid. The funds are a direct cash injection into your business. Business grants will usually take longer to secure than a loan and may come with restrictions on their use. Edinburgh business grants may be found at: 

What alternative business financing options are there?

Alternative business financing options include venture capital, angel investment, and microloans. Each of these options has its own advantages and disadvantages, so it’s important to do your research and understand which option is best for your business before making an application.

  • Venture capital: Private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have high growth potential, or which have already demonstrated high growth.
  • Angel investment: Capital for businesses, including startups, usually provided in exchange for convertible debt (a loan that can be converted to shares), or shares in the business.
  • Microloans: Very small loans to borrowers who typically lack collateral, steady employment, or a verifiable credit history. Designed to support entrepreneurship. Also includes Peer to Peer loans, where private individuals provide funds directly to small businesses or other individuals. Interest rates on microloans can be more expensive than other types of borrowing.
  • Crowdfunding: Fund a project or venture by raising money with many small donations from a large number of people, typically via the internet. Funds raised are not a loan and do not need to be repaid as long as you use them for the purposes described in your presentation.

How to apply for a small business loan in Edinburgh

Applying for a small business loan is usually a straightforward process, however, preparation is still key to success – most lenders will require the following information:

  • Most recent three-years bank and tax records. (Business account for established businesses,  personal account for entrepreneurs launching a new small business).
  • Cashflow forecast.
  • Profit and Loss Statement and recent Balance Sheet. (Established businesses).
  • Details of any existing debt.
  • List of major customers and suppliers.
  • List of any assets, such as property or inventory.
  • Business plan – as detailed as possible.

Top Tip: Some lenders may ask for a personal guarantee by the business owners or directors to secure the loan. If they do, they will check their personal credit scores. Don’t get caught out by an error on your credit report, always check your business and personal credit scores before you apply.

What credit score do I need?

As well as your business credit score, some lenders will review your personal credit report. The credit score you need to qualify for a business loan in Edinburgh will vary depending on the lender and type of loan. Generally, you will need a score of at least 600 in order to be approved. However, even if you’ve been turned down elsewhere, or have bad credit, it may still be possible to secure the funds you need.

What are the typical interest rates on a business loan in Edinburgh?

Different types of loan have different rates of interest. Typical interest rates on business loans in Edinburgh range from 4% to 15% APR.

How long does it take to get funds?

The length of time from application to receipt of funds varies from lender to lender and the type of business loan you choose. Some loans can provide funds within a couple of days, others can take much longer. In most cases, you should allow one to three weeks to receive your funds.

How to find the right small business loan in Edinburgh

There are many types of small business loan, with differing rules of application. Edinburgh SMEs seeking funds may find themselves forever searching and making applications to lender after lender. The delays this can create could cause you to lose revenues and leave your business vulnerable to the competition. Instead, working with a broker, who can access small business loans from a wide range of lenders is a better way to go. No more cold calls and endless demands for information, simply tell us what you need and leave the rest to us. 

Get started with Swoop

Give your business the funds it needs to thrive. Register with Swoop to find the best rates, the best terms and the best small business loans in Edinburgh. 

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

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At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.

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