Partnership Business Loans
If you’re currently in a partnership or you’re looking to buy into a partnership, you might be considering partnership financing options. Here, we’re exploring what financing options are available to your partnership and helping you weigh the advantages and disadvantages of those options.
- Compare a wide range of lenders and rates
- Check your eligibility in minutes
- Find out how much you could borrow
It's fast, free and won't affect your credit score
- What is a partnership business loan?
- Small business loans for partnerships
- What can I use my partnership business loan for?
- Am I eligible for a partnership business loan?
- Can I get a business loan for a GP partnership?
- Advantages of a partnership business loan
- Disadvantages of a partnership business loan
- How can I apply for a partnership business loan?
- Why compare partnership business loans?
What is a partnership business loan?
It’s a business loan for people in partnerships. Whether you want a business loan to buy into a partnership or increase working capital in your current business, they can provide partners with the funds they need to help support partnership growth.
Partnerships (particularly those that don’t have limited liability because there’s less financial transparency and less complex debt recovery from a business rather than an individual) pose a higher risk than limited companies, which can mean financing options are slightly more limited for these types of businesses.
Small business loans for partnerships
You’ve got a few options when it comes to finding a small partnership loan. You can apply for either an unsecured business loan or a secured business loan for your partnership firm.
Secured business loans
If you’re happy to put high-value assets on the line, you can enjoy lower interest rates and higher loan amounts (in excess of £2 million) with a secured loan.
Unsecured business loans
If you’d prefer to lessen your risk, an unsecured loan can mean you access up to £500,000 and see funds in as little as 48 hours. Although you don’t risk any assets directly, the lender might want you to sign a personal guarantee.
Which option is right for you depends on what you want to use your loan for. If you need considerable partnership investment — for example, to increase your stake in the partnership — you might need to apply for a secured loan to access a larger sum of money.
What can I use my partnership business loan for?
You can use your partnership business loan however you want. Most borrowers use it to buy into a partnership, to increase their stake in an existing partnership or to increase working capital in their own partnership. If you’re using your loan to fund your partnership, you can spend it on marketing campaigns , purchasing new stock, exploring new markets, paying bills, hiring staff and more.
Am I eligible for a partnership business loan?
It’s important to note that all lenders have different eligibility requirements, but if you meet the basic criteria below, there’s a good chance you’ll find a suitable loan product:
- Over the age of 18
- Your business is registered in the UK as a partnership, sole trader or limited company
- Have been trading for at least three months
- Suitable high-value assets (for a secured loan)
- A good credit rating (for an unsecured loan)
Improve your chances of being accepted for partnership finance
- Improve your credit score. Improving your credit score gives you more financing options. Improve your credit rating by paying invoices on time and consider consolidating your debt into one manageable payment to reduce the chances of missed or late payments.
- Sign a personal guarantee. By signing a personal guarantee, you take personal liability for loan repayments if your business fails to make them, which helps reduce risk to the lender.
- Offer collateral to secure the loan. Risking a high-value asset, which the lender can seize should you fail to make repayments, lessens the lender’s risk and increases your chances of favourable loan terms.
Can I get a business loan for a GP partnership?
Yes, you can. If you’re looking to buy into an existing GP practice, for example, you might buy out a retiring partner, you can use a partnership loan or a “partner equity loan” to fund the purchase.
Lenders might have slightly different requirements than those with typical secured or unsecured loans. The lender might require details of the buy-out, such as the stake you’re buying into and a personal financial profile including income, assets and liabilities.
Advantages of a partnership business loan
Better manage cash flow
Accessing finance for your business can help you easily manage cash flow. With money in the bank, you can confidently pay bills, wages, invest in stock and more without worrying about finances.
More growth opportunities
With excess funds, you can take advantage of growth opportunities without worrying about making ends meet. Invest in marketing campaigns or explore a new product line without depleting essential funds.
There are plenty of loan options
We help make lending as accessible as possible to small businesses. Our lenders offer various loan products suitable for different types of credit scores (i.e. if you have bad credit) or if you’re a brand new business. Alternative finance providers are unlike typical high street lenders — they assess loan needs on a case-by-case basis.
Disadvantages of a partnership business loan
Can become trapped in a debt cycle
If you take on too much debt, you can find yourself stuck in a debt cycle, which means paying it all back can easily become overwhelming. Although our lenders will lend responsibly, make sure you can comfortably afford repayments before signing on the dotted line.
You can lose your assets
If you apply for a secured loan, you’ll put up a high-value asset as collateral, i.e. commercial property. And if you apply for an unsecured loan, the lender might ask you to sign a personal guarantee, which can jeopardise your home or other personal assets, should you not be able to fulfil your financial obligations.
Borrowing can be expensive
Remember, it’s not just the partnership loan you’re repaying, it’s the interest rates and any fees, too. It’s a good idea to use a loan calculator to understand roughly how much you can expect to repay.
How can I apply for a partnership business loan?
Applying for a partnership loan is quick and simple. Start by filling in our short quote form and share basic details, including how much you want to borrow, and we’ll instantly show you eligible loan products from our panel of UK lenders.
Expand each loan offer to learn more about the terms and conditions, i.e. total repayable and interest rates. If you find a loan you like, continue with your application by clicking through to the lender.
Why compare partnership business loans?
Comparing your options puts you in the best position to choose the most suitable loan for your business needs. Whether that’s finding one with flexible repayment terms or lower interest rates, using our free comparison tool empowers you to make informed business funding decisions (without trawling the internet looking for lenders!).
Adrian T
5/5
Amazingly fast, efficient service, minimal paperwork. So much faster than my business bank of twelve years.
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