Micro loans for small business can provide the much-needed cash infusion right on time. Although other ways might be available, not all of them can come with the assurance of getting a speedy decision. When there is a pressing necessity for cash to let business growth opportunities keep coming, they can be your go-to option.
What is a microloan, and can it help meet small needs?
This is a funding solution for necessities that might seem trivial, but can leave a deep imprint when left unattended. You can be a small start-up looking for external funds to manage capital requirements.
Borrow any amount between £1000 to £25,000 if you require upfront capital. These loans give you the privilege to obtain a suitable amount according to your needs. Thus, there is no question of accepting any amount decided by lenders.
Yes, these loans can help manage any small necessities. Some of the common scenarios where you can use them for 100% results are:
What are the typical repayment terms and interest rates?
Micro loan repayment terms can be from 1 year or 5 years. This will also depend on the type of lender you choose. Again, the loan amount you will opt for can be a prominent factor in deciding the length of repayment.
Some aspects about micro loan interest rates you must note are:
APR will be fixed throughout the loan term
Monthly rates might start from 2.5% / month (check with the lender first)
Rates might be slightly high for unsecured loans
Longer terms can make you pay more interest rates
Good credit is preferred to offer low-interest microloans
Can I repay early or adjust my repayment schedule if the situation changes?
Yes, pre-payment of loans is possible, and the best micro loan providers like 24loanswales also encourage such attempts. It is highly recommended to discuss it with the lender first. Usually, most direct lenders do not charge any extra fees for advance repayment of loans.
Who can apply and what is required?
There are standard micro loan eligibility criteria you must fulfil. Proceed to apply for loans after making sure about your eligibility. Here is a table for your easy understanding.
Conditions
How to qualify
Residency and age
Any UK resident with minimum 18 years age
Bank account
Having one separate business bank account is important
Use
Meant for serving business purposes
Trading history
At least three to six months of trading history is needed
Turnover
Minimum turnover vary from lender to lender
Business plan
New businesses must present a well-defined business plan
What documents or information should be provided with the loan application?
Income proof as revenue projections, to show that you can pay back loans
Profit or loss forecasts and bank statements, in some cases
A well-prepared business plan if you are a newbie in business
Credit records in the later part of the loan processing
This is done by checking your ability to repay. Now, here, two elements, i.e., your income and expenses, should be compared. Then, it can be confirmed whether you earn sufficient income or not.
Besides, you must assess the status of debts. If you have to spend a huge amount from your salary for this purpose, you can hardly afford to repay loans.
Are there special requirements for tenants or those receiving benefits?
Address proof: Keep your tenancy agreement handy along with some recent utility bills to show where you live and for how long you have been there.
Stable tenancy: Lenders usually consider someone who has stayed in the same address for 6+ months.
Affordability checks: Your rent payments can help the lender validate whether you can afford loan payments in the future.
To get a micro loan for people on benefits, some of the above considerations, like assessment of affordability, will remain the same. In addition, some new ones should be considered.
Income proof: Benefits are seen as a valid income source.
Purpose-centric: Get them to solve any financial issues existing in the business
Guarantor effect: If benefits are the only source of income, you might have to bring a guarantor for loan payment support.
What if I have low credit scores?
Basically, you want to know “how to get a micro loan with bad credit in the UK?”. For this purpose, you must approach a direct lender. They are the ones who consider validating other factors, other than just credit history.
Enhance your chances of getting loan assistance despite poor credit.
Come up with a strong loan application
Create a realistic business plan
Show a monthly cash flow forecast
Work with a personal budget
Be honest about your actual financial status
Get started with the credit improvement journey
What are the steps to follow from applying to receiving loans?
You can apply for a micro loan online. This is typically not like the traditional method of application. Forget about visiting the bank branch multiple times just to apply and get approved for these loans.
Some easy steps constitute the loan application process.
Online form – Fill out the quick form in just 5 minutes, as little paperwork will be required.
Get approved – Receive a decision within 1 business day because of the seamless processing steps.
Receive loans – You may not have to wait longer to get access to funds, as same-day or next-day money transfer is possible.
Repay flexibly – There will be no hidden surprises as you can repay as monthly instalments.
Is it really that simple and faster to get funded?
Yes, getting speedy loans is possible only when you have opted for the right lender. The readiness with which you can provide all the necessary paperwork will be crucial. If you apply for a small amount, the processing will always speed up.
The bottom line
After reviewing the essential pointers about these loans, you might be curious to understand if a short-term micro loan for personal needs is available or not. Getting them from Credit unions would be a good idea.
However, you must be a member of the Credit Union to avail of this facility. If you find them a risky option, some alternatives are worth mentioning. With these loans covering such a purpose, you might not get an elaborate borrowing range.
When someone writes about UK finance, both research and experience should be visible. Ken Stokes is a prime example of this. He is a well-experienced finance writer and author and possesses years of experience. He is currently responsible for the position of Senior Loan Executive at 24loanswales. He joined the organisation 6 months ago, but he already has enough experience to guide someone on any loan product.Ken Stokes is a PhD holder in the Business Finance stream. Therefore, he has extensive knowledge of the UK finance sector.
Being part of 24loanswales, he has already written research-based blogs for the company’s website. Start reading his blogs here before applying for any loan.
