Guarantor loans are a type of unsecured loan and they can enable you to borrow from £500 to £10,000. They are a relatively recent innovation in the UK unsecured loan market, with the first lender appearing in 2004.
They differ from normal unsecured loans in that they do not require someone to be credit scored before they’re considered for a loan. With traditional unsecured loans, a lender will make a decision as to whether to offer a loan based on the applicant’s credit history and their current credit score.
Not so with a guarantor loan. The lender says if the applicant can offer someone to guarantee the loan, then the so-called guarantor clearly believes that the borrower will repay the loan.
A recent study by UHY Hacker Young accountants found that bank lending in the UK is still stalling, down 2.2% in real terms last year, with smaller businesses being hit hardest, as funding problems continue despite the recovery.
Demand for loans is increasing, but the banks are generally not granting new requests unless they are from existing customers with a good track record and security. Many smaller businesses that have struggled through the recession but are now on a more stable footing are still being left out in the cold.
Guarantor lending is about “trust” and so it’s a good idea to use your social network to find your guarantor. It’s crucial that you look for someone you know well and who trusts you.
By offering themselves as your guarantor they are potentially exposing themselves to the risk of you not repaying the loan, in which case, the lender can require the guarantor to repay it. Whoever you want to act as a guarantor will also need to meet certain financial criteria. Consider family members, relations, close friends, work colleagues and business mentors.
These vary by lender, but in general:
No. Even though lenders want to lend and even if you satisfy the criteria above, lenders are – quite rightly – required to abide by a responsible lending policy.
Copyright © 2014 David Silverman. David Silverman is managing director of www.CompareGuarantorLoans.com.
Enterprising university students who enter the StudentshIP Enterprise Awards 2014 could win funding for their projects thanks to a competition launched in October, but the deadline for entry is fast approaching.
The StudentshIP Enterprise Awards 2014 will provide funding worth between £10,000 and £100,000 for projects that “bring together enterprising students, businesses and their local community to work on innovative projects. In-house projects or collaborations with other universities or businesses that create, manage or exploit intellectual property will all be considered.”
The awards encourage the practical application of intellectual property (IP) skills by higher education students working in collaboration with higher education institutions and/or businesses. The main purpose is to recognise and reward “student-centric projects that support the use and understanding of IP in student enterprise activities”.
Minister for IP, Baroness Neville-Rolfe, says: "This new competition will encourage enterprising students and academics to collaborate, so that their ideas for creating and exploiting intellectual property can be turned into reality."
The competition is open until 12 December 2014. Finalists will be announced in January and the winners declared in March 2015. An application form can be downloaded from the Gov.uk website, as well as guidance and terms and conditions.
“More than ever, students go to college [university] because they want to get jobs – good jobs,” states Navneet Kapur (“Product Innovator, Higher Ed Data Vigilante at LinkedIn, San Francisco Bay Area”), writing on the LinkedIn Official Blog. “To that end, students and parents want to know which schools give them the best chance at getting a desirable job after graduation. This is where we can help.”
He continues: “By analyzing employment patterns of over 300 million LinkedIn members, we figured out what the desirable jobs are within several professions and which graduates get those desirable jobs. As a result, we [can] rank schools based on [graduate] career outcomes.”
Kapur goes on to define a “desirable job” as a “job at a desirable company for the relevant profession. We let the career choices of our members tell us how desirable it is to work at a company.”
According to LinkedIn’s UK University Rankings, if someone wants to become an investment banker, they will greatly improve their chances if they study at the LSE (London School Economics and Political Science, which, perhaps somewhat less predictably, also comes out on top for wannabe marketers), UCL (University College London), Cambridge, Oxford or Warwick universities.
If they dream of working in finance, getting on a relevant course at the LSE, UCL, Cambridge, Imperial College London or the University of Warwick would be a wise first step. And, for a career in the media, best head for the universities of Leeds, Oxford, Nottingham, Cardiff or Durham.
No doubt LinkedIn has the very best of intentions with their university rankings, but they ignore two key points. Firstly, many graduates build great careers after taking positions with small businesses, where they can also find (equally if not more) “desirable” jobs. Secondly, UK universities are now a fertile breeding ground for enterprise, with starting a business continuing to prove an irresistible attraction for many students.
“Many of our graduates welcome the opportunity of working for smaller businesses,” says Hannah Newmarch, head of employer partnership services at the University of the West of England (UWE) in Bristol. “We support SMEs in our region that want to recruit graduates and we help to fill hundreds of vacancies each year.”
Not all UWE graduates are attracted by the prospect of working in London, either, as Newmarch explains. “Each year, about half of our graduates stay in the West of England region, which is home to almost 37,000 SMEs; there are far fewer large corporate employers here. Many graduates make their decision based on the role and not necessarily just company size. Many end up at small firms doing exciting, innovative work in sectors that are buoyant in our region, such as media and engineering.”
Choosing to work for a smaller business can offer many benefits, she says. “In an area such as Bristol, where many SMEs are highly successful, students recognise that opting to work for a small business can bring them more responsibility, greater experience and other career opportunities sooner. Many students now recognise these benefits. Earlier this year we held an SME-only employer fair and more than 700 students attended.”
As Newmarch also stresses, enterprise culture is thriving at UWE and other UK universities. “In 2013/2014, 241 UWE students/graduates set up their own business. It remains a challenge, of course, but we provide a ‘safe place to fail’, so students can test and develop their ideas with mentoring and support from our staff.
“As well as learning about enterprise, they can develop their networks and hone skills such as leadership, commercial awareness, personal branding, etc. They might not set up a business on graduation, but they may start up after gaining experience by working for someone else.”
Newmarch says the last thing many graduates want is to end up a very small cog in a large wheel. “Running their own business gives many people more autonomy and greater opportunity to pursue their passion, using knowledge and experience gained at university. Some of our former students who are now successful entrepreneurs return to give inspiring talks to our students.
“Whether working for a large or small business, not everyone wants to live in London. Bristol was recently voted the best place to live in the UK. It has one of the largest economies in the UK and there are exciting opportunities for growth here. Why would you want to go anywhere else?”
Blog written by Start Up Donut editor and freelance SME content writer Mark Williams.
According to its organisers: “Global Entrepreneurship Week is the world’s largest campaign to promote entrepreneurship. Each year, it plays a critical role in encouraging the next generation of entrepreneurs to consider starting their own business.”
This year, Global Entrepreneurship Week runs from 17-23 of November and it will seek to inspire “people everywhere through local, national and global activities designed to help them explore their potential as self-starters and innovators. These activities, from large-scale competitions and events to intimate networking gatherings, connect participants to potential collaborators, mentors and even investors – introducing them to new possibilities and exciting opportunities.”
In the UK, GEW is hosted by Youth Business International (a “global network dedicated to helping young entrepreneurs get started in business”) in partnership with Barclays.
Last year in the UK, more than 6,000 GEW events took place, reaching “more than 300,000 entrepreneurial people across the country”. Global Entrepreneurship Week started in the UK as Enterprise Week in 2008, but it has since grown into a global campaign that takes place simultaneously in more than 140 countries, involving more than 33,000 activities worldwide.
This year, the organisers are inviting participants to “Get Connected!” by “turning your ideas into something amazing”. They add: “For many people, the thought of starting up their own business is overwhelming, and many entrepreneurs don’t make it to the next stage because they don’t make the right connections. Our research shows that aspiring entrepreneurs and start-ups are eager to access practical support and networks through Global Entrepreneurship Week.
“But Global Entrepreneurship Week is more than just an awareness campaign supported by world leaders and celebrity entrepreneurs. It is about unleashing ideas and doing what it takes to bring them to life – spotting opportunities, taking risks, solving problems, being creative, building connections and learning from both failure and success. It is about thinking big and making your mark on the world – doing good while doing well at the same time.”
A sudden increase in demand can happen for many reasons and it may seem like great news at first. But sometimes it can have a negative effect on a business.
‘Overtrading’ happens when a business struggles to find the resources or cash necessary to service a customer before the business is paid. It’s a common problem and often affects start-ups and small firms that are trying to expand rapidly.
Overtrading can have many negative effects. Not only can it place a strain on finances and cause unnecessary stress, it can also damage the business’s reputation if quality dips or the business fails to deliver on its promises. Invoice finance and asset finance can offer solutions to cashflow issues caused by overtrading.
Aldermore Bank has produced the infographic below about overtrading and the cashflow issues it can create for small firms.
There are 10 key strategic imperatives every business needs to understand if it’s to be successful.
In all of your marketing material, emails and social media, clarity is the foundation of selling. Avoid jargon, speak in simple language and don't assume that your prospects have an encyclopedic knowledge of industry terms. Be concise; get to the point and be relevant. Speak in terms of the prospects’ needs.
To people who find your message relevant, you can be a godsend. They need you and they want what you're offering. To everyone else, you're spam. For example, if you're selling car wax, people who own luxury cars will probably be glad to hear from you. But those who drive cheap cars just to get to work probably don't spend a lot of time waxing them. Know your customers and where to find them.
The best sales people qualify their prospects and only sell to people who are ready to buy. This is more specific than just finding the right market. You're looking for people within that market who need precisely what you're offering.
Make promises that you can deliver on more often than not and...
A business that delivers on its promises will thrive without having to spend millions on advertising. Playing it straight with your customers' expectations isn't just ethical – it's also profitable.
This will allow you to find out what you're doing right so that you can keep doing it – and what you're doing wrong so that you can make changes where necessary. If you're not going to make the necessary changes – don't bother gathering data in the first place.
Growing as a small business doesn't mean opening additional premises you can't afford. Growing means improving profitability, for example, by exploring an untapped market or discontinuing unpopular products. When you think of growth, think strictly in terms of profit margins and customer satisfaction.
If your business is costing you more than it earns or if it's just breaking even, it's not a business, it's a hobby. Taking out a second business loan and maxing out your credit cards is not cashflow. Be realistic about how much you need to stay in the black and how you're going to keep that money coming in.
Where are your shortcomings in terms of skill level, experience, customer service, marketing, etc? Spend some time thinking about what you could be doing better and how to improve on it. That could mean improving your knowledge when you have time or (if you can afford it) hiring someone who can bridge that gap for you while you get up to speed.
Successful entrepreneurs build something bigger than themselves. Building a business takes a lot of work; it can be both exhilarating and exhausting. Almost nobody has the energy to work for years without having a day off. So, one of your goals – and something that you should write into your business plan – is an opportunity to take some time to yourself. Whether your aim is a month-long vacation or selling the business, you need your business to be able to run without you.
Whenever you're faced with a decision in your business, double-check the 10 points above. With enough experience and education, you'll absorb these imperatives. They'll become second nature. Until then, whenever you feel uncertain about a business decision, check back and make sure that your ideas are financially and strategically sound.
Copyright © 2014 William Buist. William Buist is the owner of Abelard Collaborative Consultancy and founder of the exclusive xTEN Club. He is also the author of At your fingertips and The little book of mentoring.