Everything You Need To Know:
Microbusiness Loans Running A Microbusiness
Microbusinesses encompass start-ups with high potential for growth, and businesses that have been successfully trading for several years. The definition of a microbusiness is one with 0-9 employees, operating on a very small scale. In recent years, microbusinesses have been increasingly recognised as a distinct business group with unique needs.
Filing Microbusiness Accounts
Companies House refer to microbusinesses as micro entities. Their definition of a micro entity is a business that meets the following conditions:
- Average number of employees does not exceed 10
- Annual turnover less than £632,000
- Balance sheet not exceeding £316,000
Simplified filing requirements apply for microbusinesses / micro entities. Unlike larger companies, these businesses are only required to prepare:
- Accounts that meet statutory minimum requirements
- Their balance sheet to send to Companies House
Profit and loss accounts, the directors’ report and auditors report are all optional additions. Most microbusinesses can generate their balance sheet using a bookkeeping software, enabling them to save money on paying for an accountant.
Microbusinesses In The UK They're Role In The Economy
In 2018, there were an estimated 5.4 million microbusinesses in the UK, accounting for 96% of all businesses. Despite making up the majority of businesses, in that year microbusinesses only accounted for 33% of employment and 21% overall turnover across the UK. With this being said, they have a vital role maintaining the economic viability of many regions across the UK – particularly in deprived urban and rural communities.
Issues Facing Microbusinesses
Microbusinesses face very different obstacles to larger businesses, which is why more effective government policies have been tailored to support this important section of the economy.
A survey carried out by London Assembly – The Employment Committee, found that there were issues preventing microbusinesses from existing sustainably with room to develop and grow:
- Difficulty expanding into new markets
- Problems attracting more customers
- Income volatility (predominantly caused by late payments)
- Lack of easy access to business support
- Anxieties over affordable and suitable future work/retail space
- Access to finance
Surprisingly, many small businesses are not familiar with the term micro-business, which means that they aren’t able to benefit from protections in place available for them. Due to the fact there it little research published online in regard to microbusinesses, it can be difficult to find details of the financial issues microbusinesses face, including that of energy debt.
There is surprisingly little published research on small and microbusinesses, and hardly any information that covers in detail the financial issues that these type of businesses face, including problems like debt.
The Business Debtline receives four times the number of calls reporting problems with their energy bills since they did in 2010. Sadly the increase in energy costs and business expenses have left many microbusiness owners unable to keep up with payments. Run by the Money Advice Trust, Business Debtline provides free advice over the phone and online to help small businesses deal with their finances and debts.
Ofgem & Energy Consumption
Ofgem defines microbusinesses in terms of their size and energy consumption. Non-domestic customers are defined as microbusiness if they annually:
- Consume less than 100,000 kWh of electricity
- Consume less than 293,000 kWh of gas
Excluding VAT and Climate Change levy, these businesses should only expect to pay between £10,000 and £12,000 annually each for fuel.
Access To Microbusiness Finance Is Your Business Eligible For A Microbusiness Loan?
Getting access to finance remains a high concern for microbusinesses. Many microbusiness owners feel that the existing financial resources available mostly target high-growth businesses and aren’t appropriate for their micro entity. There remains scope for improvement in the funding opportunities that exist for micro businesses, and these avenues will not only benefit these small businesses, but the British economy as a whole.
Financial Support For Microbusinesses
The Start Up Loans Company was established in September 2012. Since launching, it has lent a total of £25 million to micro and small businesses in the North East of England.
An aspiring hub of entrepreneurs, over 4,000 businesses in the North East have received funding and the average loan in the area totals at £7,000.
Is Your Business Eligible For A Microbusiness Loan?
SME Loans can provide finance to microbusinesses through:
For microbusinesses, our simple requirements are as follows:
- Registered and trading in the UK
- For business loans, a minimum monthly turnover of £5,000
- For merchant cash advance, minimum monthly average card sales of £5,000
- Actively trading for 6 months
- Business owner / director is over the age of 18
There’s no need to be intimidated by SME Loans application process, we’re on hand to guide you through it. If you want to find out more about whether your microbusiness is eligible to apply for finance, please get in touch at 020 3475 9213.
The Application Process
Step 1: Complete our 1-2-page online application form. As well as being asked for your personal information, we will also want to understand more about your microbusiness, including how much funding your seeking and how you plan to use your loan.
Step 2: Within hours of submitting your application form you will be matched by us to the most suitable lender for your microbusiness, and you will receive the lender’s full terms of agreement regarding your microbusiness loan.
Step 3: Once you have carefully read through the lender’s terms, you will need to sign and agree to them. After the agreement has been returned to your lender, the loan amount will be deposited to your account within just 48 hours.
Excluded business types:
- Chemical manufacture
- Banking and money transfer services
Microbusiness Loans FAQs Frequently Asked Questions
If you still have unanswered questions about microbusiness loans, then make sure to checkout our FAQs below for more information.
What are microbusiness loans?
Microbusiness loans are a form of finance dedicated to funding businesses with a small workforce such as startups that have been trading for a few years. A microbusiness loan is often unsecured. A merchant cash advance is an alternative funding option for microbusinesses.
How can I get a microbusiness loan?
In order to be eligible for a microbusiness loan you must complete an online application form. Within this form you will need to meet some basic business requirements such how long the business has been trading for. Furthermore, you will need to fill in some personal information and contact details in order to be accepted for financing. Importantly, you need to choose how much you want to borrow and for how long.
Once the online application has been submitted and is deemed successful, a broker will be in touch with you to discuss the terms of your loan.
Why choose SME Loans for a microbusiness loan?
We recognise that it can be difficult for microbusinesses to find financing for their business to develop and expand. That’s why we apply our experience of working with a panel of top UK lenders to help find competitive funding that a microbusiness needs. Our online form is quick and simple, and no fees are charged for applying.