Business Benefit

One form of business funding is a guaranteed loan. Some people may misunderstand what the word “guaranteed” means in this context, though. It does not mean that there is a guarantee that the loan will be made, no matter what.

What the word “guarantee” means here is that the loan is backed by government funding so that the lending institution will be fully or partially reimbursed if the loan is not repaid. It’s kind of comparable to when your parents may have co-signed a car loan for you when you were young and had no credit history yet; they were agreeing to assume responsibility in the event that you ended up unable to pay.

This is an indirect kind of government business grant, in a way. The government backing means that the lender will make loans to businesses that would normally not meet their lending standards. It also may mean that the interest rate is kept at a reasonable level even for riskier loans.

So, thanks to the government money that is used to back these guaranteed loans, that helps your business get approved to borrow money at an affordable interest rate, so you can help your business grow.

Also, getting the chance to show that you can make loan payments responsibly will improve your credit rating and enable you to get future business loans more easily and with your own established, solid credit history.