Businesses need a capital injection from time to time because of numerous factors – emergence / start up, growth, acquisitions, etc.
Structure of business loans provide companies with an immediate injection of capital whilst deferring the repayment over an extended term. This ensures that cash flow is not strained and defeats the purpose of the injection.
The requirement for security for a business loan will vary depending on the underlying request and strength of the business itself. A formal charge over the applicant company is required as a minimum and may also include additional collateral security requirements.
A secured business loan can be an integral part of an acquisition of another business via asset sale, goodwill or share sale agreement. This ensures that the incoming owners retain proceeds or conserves cash for immediate working capital purposes.