Business Loan

A business loan is a loan which is secured against the business assets with no property security being taken. In the case of a newsagency business loan, the lender would take as security the newsagency assets including the goodwill, stock, fixtures & fittings, and vehicles.

If the business is being purchased by a sole trader or partnership, the bank secures the loan with a Traders Bill of Sale over the newsagency plus the support of personal guarantees. If a company is purchasing the newsagency, then the lender secures the business by taking a charge or mortgage over the company which is buying the newsagency supported by directors guarantees. It is important to note that banks usually require that the term of a business loan does not exceed the term of the premises lease. It is therefore necessary in some cases with shorter leases, that the business loan needs to have a balloon amount owing at the end of the loan term to keep the repayments at a manageable level. This balloon amount is then rewritten over an extended period on renewal of the premises lease. With newsagencies, the maximum that can be borrowed against the value of a newsagency is between 50% and 60%.