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A business loan is a way of preserving your cash position, while expanding your earning potential.

If you borrow money, you keep your cash and use the borrowed money to buy more plant or equipment, or people, to earn increased revenue for the business.

So you have to have a very sober look at your cashflow, and at the earning potential of your intended reinvestment of the borrowed money. If it all works, great. You can use the cash you've preserved to buy more stock, do more business. Make more money.

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We've got a list of lenders who can deal with the loan requirements of small businesses . Just click on the button and compare the rates we can find for you . . .

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The pros and cons of business loans

Business loans are structured in many different ways. However, ultimately, they can be broken down into two vital aspects to their make up. The first is the interest rate and the second is the way the loan is repaid (otherwise known as the repayment schedule).

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Interest rates tend to come in two types - fixed and variable. A fixed rate loan sees the interest on the loan remaining constant throughout the repayment period. The interest rate is determined by the risk involved in lending the money and the current rates in the market.

The variable rate sees the interest that is applied on the principal outstanding fluctuating with changes in the LIBOR or the Bank of England base rate. This means your payments are variable as well. The current market rate will be added to a predetermined premium which is a constant throughout the loan.

The variable interest rate loan offers the advantage over the fixed rate should the market rate decrease, because you will end up paying less than you would have on a fixed rate.

Conversely, the disadvantage is in the fact that you have no protection from increases in the market rate, which could take your monthly payments above what they would be should you have a fixed rate loan.

Whichever, simply remember this. The longer the loan period, the more it's costing. It's a simple, business minded, approach

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