Business Term Loans Ireland
Business Term Loans in Ireland
Our business term loans are suitable for:
● Companies seeking larger loans - our term loans are up to €500k
● Companies whereby the majority of their revenue is not from card sales in person or online
Businesses Suitable to Term Loans
Our term loans are repayable monthly by direct debit and cater to the below industries & more:
Purchase of Stock
What is a term loan?
A business term loan is a type of loan designed to provide financing for specific business purposes, such as expanding operations, purchasing equipment, refinancing existing debt, or funding other large expenditures. These loans are typically repaid over a fixed term with regular payments of principal and interest.
Whether a business term loan is suitable for your business depends on various factors, including your business's financial situation, needs, and objectives.
How do I know if a term loan is suitable for my business?
Here are some considerations to help you determine if a business term loan is suitable for your business:
Purpose: Assess whether the intended use of funds aligns with the terms and conditions of a term loan. Research other loan types that are available such as merchant advance loans, invoice finance or asset finance.
Repayment Ability: Evaluate your business's cash flow and ability to make regular loan payments. Consider whether your business generates sufficient revenue to cover the loan payments along with other operating expenses. Generally, term loan repayments are once a month. Assess whether this chunk per month is suitable for the business's cash flow.
Term Length: Determine if the repayment term offered by the lender matches your business's needs. Longer loan terms may result in lower monthly payments but could also lead to higher total interest costs over the life of the loan.
Interest Rate: Understand the interest rate structure of the loan and whether it is fixed or variable.
Collateral Requirements: Consider whether the lender requires collateral to secure the loan. If so, evaluate whether your business has sufficient assets to pledge as collateral and whether you are comfortable with the risk involved.
Eligibility Criteria: Review the lender's eligibility requirements to determine if your business qualifies for a term loan. Factors such as credit history, business profitability, and time in operation may impact your eligibility.
Costs and Fees: Assess any associated costs and fees, such as origination fees, application fees, and prepayment penalties. Factor these expenses into your decision-making process to determine the overall affordability of the loan.
Future Growth Plans: Consider how the loan will impact your business's financial flexibility and ability to pursue future growth opportunities. Evaluate whether the benefits of obtaining financing outweigh the associated costs and risks.
Why would a business choose a term loan?
Predictable Repayment Schedule: Term loans offer a predictable repayment schedule with fixed monthly payments over a specified term. This predictability allows businesses to budget effectively and plan for future expenses, making it easier to manage cash flow and financial obligations.
Ownership Retention: Unlike equity financing, which involves selling ownership stakes in the business, term loans allow businesses to retain full ownership and control. This independence can be appealing to entrepreneurs who prefer to maintain autonomy and decision-making authority over their business operations.
Flexible Use of Funds: Businesses can use term loan proceeds for a variety of purposes, providing flexibility to address different financial needs. Whether it's funding expansion initiatives, purchasing inventory, or consolidating existing debt, term loans offer versatility in how businesses allocate and utilise the borrowed funds.
Types of term loans
Term loans can be categorised as either short term loans (approx 6 - 18 months), medium term loans (approx 3 - 5 years) or long term loans (approx 10 - 30).
How to apply for a term loan?
Preparing your business for a term loan involves several key steps to ensure that you can secure financing on favourable terms and meet your borrowing needs effectively. Here's a guide on how to prepare your business for a term loan:
Assess Your Financing Needs: Determine how much funding your business needs and what specific purposes the loan will serve. Consider factors such as the amount needed, the purpose of the loan, and the desired repayment term.
Review Your Credit Profile: The lender will review the business’s credit profile and personal credit profile of the guarantors. To prepare, obtain a copy of your business credit report and review it for any errors or discrepancies. Be prepared to address any issues that may negatively impact your credit score, such as late payments or high debt utilisation.
Organise Financial Documents: Gather all necessary financial documents, including financial statements, bank statements, tax clearance certificates, and any other relevant financial records. Having these documents organised and readily available will streamline the loan application process.
Strengthen Your Financial Position: Take steps to improve your business's financial health, such as increasing profitability, reducing expenses, and maintaining positive cash flow. Lenders will evaluate your business's financial stability and ability to repay the loan.
Develop a Business Plan: Not all lenders will require a business plan but a business plan is useful for a business to complete regardless. It serves as a roadmap for the business, outlining its goals, objectives and strategies for achieving success.
Consider Collateral Options: Determine whether you have assets that can be used as collateral to secure the loan. Collateral can provide additional security for the lender and may help you qualify for a lower interest rate or higher loan amount. Not all lenders will require collateral based on the term loan size.
Prepare Loan Application Materials: Complete the lender's loan application form and gather any additional documentation required for the application process. Be thorough and accurate when providing information to the lender.
Address Potential Red Flags: Anticipate any potential concerns or questions that lenders may have about your business, such as past credit issues or fluctuations in revenue. Be prepared to address these issues proactively and provide explanations or mitigating factors.
Disadvantages of a term loan
Fees: As with other loan types, there are fees associated with business term loans. The business must be aware of all of the fees associated with the loan charged by the lender. Fees may include: origination fees, application fees, early repayment fees or loan completion fee. At Santiago SME Finance, we charge an application fee and there are no fees for early repayment.
Eligibility: Start ups or younger companies may not be eligible for term loans. Many lenders will only lend term loans to companies that have an established trading history. At Santiago SME, we can only lend to companies that are trading for at least 1 year.
Credit Impact: Defaulting on a term loan or making late payments can have a negative impact on the borrower's credit score and creditworthiness. A damaged credit history may make it more challenging to obtain future financing or secure favourable terms from lenders.