In recent decades Santander have become one of the leading high street banks in the UK, offering a range of financial solutions for both business and personal accounts.
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|Reviewed by Expert Market & Independent Researchers:||11/09/2016|
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The sheer volume of funding options that Santander provides is almost unique in the banking sector, leading to Santander becoming a major provider of loans to British businesses in the 21st century.
Some of the most popular Santander loans include:
- Small Business Loans
- Corporate Business Loans
- Invoice Finance
- Asset Finance
- Small Business And Corporate Overdrafts
- Enterprise Guarantee Scheme
- European Investment Bank Funding
- Corporate Credit Cards
Santander’s small business loans are fairly standard in regards to limits and practice. Borrowing begins at £1,000, with a maximum of £25,000, which can be paid off between 1 and 5 years. All interest rates are fixed for the entirety of the loan, ranging from 7.9% to 12.9%, depending on the value and length of the loan.
While we believe the process is uncomplicated, the rates are set quite high at the bottom end of the loan and there is a costly arrangement fee on top, £100. This can be off-putting for some, but whereas other provider interest rates can reach over 20%, the maximum interest rate this loan incurs is just 12.9%. This may make the shorter termed Santander loan more cost-efficient compared to other providers.
Santander’s corporate loan, which is anything over £25,000, is designed to contain the flexibility to suit each business and they also provide a supportive role in the management of your finances should you require it.
Fixed and variable interest rates are available and the term of the loan can be stretched as far as 25 years, depending on a variety of circumstances. Interest rates can, therefore, vary wildly depending on whether the loan is secured, where assets up to the value of the loan as used as collateral, or unsecured.
Usually only available for businesses with high enough income, over £250,000 per annum, invoice financing is a convenient way to free up cash flow and allow a business to invest, pay off costly debts or manage predictable downtimes.
Santander will buy up to 85% of the value of any outstanding invoices owed to you.
This can be a cost and time efficient way of helping a company reach its potential quickly and expand beyond what would otherwise be possible.
Similar to invoice financing, where you are essentially cashing in on future funds, asset financing is a low cost way of providing finance to allow the use of large apparatus, typically vehicles and industrial equipment.
Rather than owning the asset, you can essentially hire it, cutting down on costs in the short term. Hire purchase options are also available, but this does mean you will not be able to access newer equipment at the end of the contract. Leasing also means lower monthly costs and no up front payments. For each version of asset financing Santander are partnered to two specialists in the field, LeasePlan Go and Macquarie.
One of the simplest options to provide peace of mind in the day to day running of your business is an overdraft. Much like those used in personal accounts, these allow some degree of leeway when encountering unforeseen costs and as it is an evergreen loan, one which has no set repayment term and can therefore be re-borrowed as needed, it does not require re-application.
Another bonus of this type of loan is that you only pay for what you use. This can work out as being expensive should you struggle to stay on top of the overdraft, but when managed properly, it can be a cost-efficient method of funding.
Small businesses can access an overdraft of up to £25,000 and interest rates are variable at around 5-6%. Should you go over your limit, however, it can be as high as 25% on the corporate level amounts and rates vary, depending on a number of factors. Both versions incur an annual fee in relation to the value of the loan, which will be at least £50.
The Enterprise Guarantee Scheme is a government backed system to help provide finances to small and medium sized businesses who might otherwise be unable to access funding. Term lengths range from 3 months to 10 years.
Funds as high as £1.2m are made available through this scheme, with the government backing 75% of its value. The borrower remains 100% liable for the loan and secured and unsecured versions are available. Secure loans can be easier to access, but carry the risk of you losing the asset put up as security, which is typically your home. For this reason you should always think carefully before committing to any secured loan.
Also known as EIBF, this is a loan option for small to medium sized businesses that offers competitive rates and vital funding to companies that may otherwise struggle to access funding. Working with the European Investment Bank, Santander are able to offer affordable loans that support many UK businesses.
Generally a long term loan, this loan holds a minimum term of 2 years; funds of up to €12.5m are made available to any company with fewer than 250 employees for investment and growth. Funds are not made available to restructure or pay off existing debts.
Corporate credit cards are a great way to simplify your spending while allocating expenses. The Santander Corporate Card Compact presents more than just convenient funding, it allows for the administration of expenses from travel to general day to day expenses.
There is a 56 day interest free repayment window and they also provide some security on purchases made with the card. On the down side credit cards are one of the most expensive methods of financing and, should you be unable to make your monthly payments, it can cripple your company with enormously high interest rates.
Other Loan Types
Personal loans are some of the most highly competitive loans that Santander offer, with interest rates starting from just 3.5% APR, which is available for loans of over £7,500. For smaller loans the rate can increase to over 20%. The maximum value for this type of loan is £20,000.
Although Santander credit card interest rates are relatively low when compared to some, they are still an extremely expensive method of financing, with interest rates as high as almost 20% incurred after the initial period. It is therefore important to avoid using credit cards unless you are sure you will be able to keep up with the monthly repayments.