Why I chose a small business loan

Arguably the most stressful part of starting a business is working out how you’ll fund it. Here, one business owner explains why she went for a small business loan over other options.
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Maxine Thompson, founder of PolkaPants, explains her journey to starting the women’s chefwear brand.

‘When I moved to London from Australia, I didn’t have the savings I needed to launch a business, nor was I fully sure about what the business environment was like in the UK. 

‘Taking a job as a chef – with a good salary and set working hours – allowed me some stability. It meant that I could start saving up to keep that research and development process ticking in the background, and it also meant that I had the time to find a loan that worked for me. 

‘Once we had finished product development, I applied for a small business loan to start building the company. The loan scheme that I was accepted on to connected me with specific mentors who could help me build skills where I had weaknesses, like a financial accounting mentor.

‘Getting a loan felt much more low risk than using personal savings or family money. I was less likely to judge myself harder, and there was a lot less pressure riding on the business, because it didn’t feel like I was blowing through money that I had saved up. My loan is also easy to pay back in direct instalments. 

‘There’s still risk involved in getting a small business loan, so make sure that you read the applications carefully, either with an accountant or a personal connection who understands the ins and outs of interest rates and payment terms. You need to understand exactly what you’re getting into.’

This article was first published in How to Start a Business 2021. To become a subscriber or purchase our newest guide, head to our webshop.

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