Category: UK Borrowing

Can I Get A Small Business Loan For My Start Up?

This is a common question asked by many a start-up founder who needs cash to get a business off the ground. The unfortunate reality is, a start-up represents a high risk to most lenders making them reluctant to provide loans to untested business start-ups.

While this might seem unfair, think of it from a lenders point of view. With an established business they will have some track record to go over before making the decision to lend. They will see things such as order books, records of paying customers and so on.

With a start up all they are likely to see is a business plan at best and an unproven business model. While the business might have huge potential in the eyes of the business owner, lenders, particularly those on the high street will be far more pragmatic.

Yet the start up phase is when a business is most likely to need the funding which is why it is important to discover what lenders of all types will be looking for before they offer a business loan.

If your business doesn’t have any sort of track record to rely on, then lenders will look at things such as your personal credit rating. If this is good then it will make you less of a risk as the business owner. Also you could look at alternative sources of finance such as asset finance depending on the assets your business might already possess.

UK borrowing less than expected in August

The government borrowed less than expected in August, official figures

Public sector borrowing for the month was £13.2bn, the Office for National Statistics (ONS) said, lower than the £14.4bn recorded in August 2012. The UK’s net public debt pile stands at £1.19 trillion, which is equivalent to 74.6% of GDP. The government is aiming for a deficit of no more than £120bn this year. Efforts to reduce UK borrowing and cut the country’s debts are central to the government’s economic, helped by a fall in spending by government departments.

But Chancellor George Osborne has faced criticism as the deficit reduction plan has stalled, thanks in part to weak economic growth.

‘Painfully slow’

The government’s latest target is to eliminate the structural deficit by the end of the 2017-18 financial year – three years behind the original schedule. The government hopes that a recovery in the economy will boost tax receipts, helping it meet its borrowing targets.

According to the ONS, tax revenues so far this tax year have been 2.8% higher than the same period of 2012. The UK economy grew by 0.7% in the second quarter of this year, and is widely forecast to continue growing for the rest of the year. The August figures also suggest the public sector finances were being helped by the government’s austerity measures.

Total spending by central government – excluding investment – fell by 2.2%, led by a sharp drop in departmental spending.

“The improvement in economic growth seen in recent months will help to reduce the deficit further, but progress remains painfully slow,” said David Kern, chief economist at the British Chambers of Commerce.

“Our ability to generate tax revenues will struggle to return to pre-recession levels, even when the pace of growth picks up. As a result, the government must continue to make cuts in current spending in order to reduce the deficit further.”