Business Loans For Architects
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Why an architect might need a business loan
If you’re running an architectural practice, there are many reasons you may be considering a business loan. Like any small business, you need to keep your cash flow steady and meet your ongoing costs as they fall due, even when your income fluctuates.
As an architect, a short term business finance can help you ensure you have the working capital to pay expenses such as wages for your team, rent and utilities for your studio, CPD training, tax, and professional indemnity insurance.
Cash flow issues can bring down an architectural practice of any size, especially if projects overrun or clients take longer than expected to pay their invoices, and having a back-up facility can help your practice stay viable.
If you’re considering expanding your architectural practice, a business loan could give you the funds to make a strategic acquisition, or buy into or out of a practice.
You could also use the cash injection to grow your practice or reputation, for example by hiring new staff, acquiring new premises, funding research and development, or running a marketing campaign to attract new clients.
What are the requirements for getting a business loan?
Getting a business loan can be easier than you think.
While you can still expect to be knocked back by the big banks unless you have a solid trading history, a top-rate credit rating and collateral to offer, there are plenty of alternative lenders out there willing to offer business loans for architectural businesses.
Each lender will have their own criteria when it comes to things like credit rating, how long you’ve been in business, and how high your turnover is. If you’re higher risk (e.g. if your credit score is low) you may still be able to get a business loan, although you can expect to pay a higher rate of interest to compensate for that risk.
The most important factor ALL lenders will look at is your capacity.
Lenders need to know that you will have enough cash – after all your expenses – to cover your loan repayments.
How to apply for a business loan
- Personal and business ID documents
- 6 – 12 months bank statements
- Evidence that you’ve been in business for the lenders’ minimum period
Grow your architectural practiceSee if you qualify
What options are available to architects?
There are several types of small business loans you could consider, to support or grow your architectural practice.
Unsecured small business loan
A short-term option, unsecured business loans are usually for between 3 months and 2 years.
You can use the funds for any purpose. Many lenders will let you set a repayment schedule to suit your trading patterns.
A specific-purpose business loan secured on the equipment you are buying.
The term will often be tied to the lifespan of the equipment. You will not be able to sell or upgrade the equipment until you have repaid the equipment finance.
There are several types of business car finance you can use to buy vehicles for business use, including car loans, hire purchasing and leasing.
While your work vehicles are under finance you will not be able to sell or upgrade them.
Business line of credit
A business line of credit is similar to an overdraft facility, giving you access to cash up to an agreed limit, often with the right to draw, repay and redraw funds as you need them.
You only pay interest on what you borrow, but there are often set up and admin fees.
Business credit card
Business credit cards are great for covering day-to-day expenses and making purchases, but unless you clear the balance each month the cost can be extremely high.
Before entering in to any business loan agreement, be sure to seek professional advice. It’s also important to ensure you understand all of the costs (including all fees). You can get a head start by using our business loan calculator.