TSB Business Loans Review

TSB are one of the largest high street banks in the UK and as such offer an enormous amount of banking and funding options for businesses and individuals alike. Despite being a well-established name in the UK, with hundreds of years of history, it has only existed in its current form since 2013 as such offers an innovative alternative to some of the more traditional banking models.

Loans on offer

TSB business loans are structured slightly differently to most other high street banking loans, which can be a little confusing for those with business loan experience. These alternatives to the mainstream loan systems can come with some advantages, however, while still offering the same support and funding as other banks. Whilst there are some notable omissions, such as invoice and asset financing, they still provide a wide range of options, the most notable loans include:

• Base Rate Loans
• Fixed Rate Loans
• Business Overdrafts
• Enterprise Finance Guarantee
• Commercial Mortgages
• Business Credit Cards

Base Rate Loans

Base rate loans are similar to a small business loan but do not carry the same maximum limits that these normally implement. The minimum amount is £1,000 and the loan term can be set for as long as 25 years, which is much longer than most small business loans.

The most attractive component of the Base Rate Loan is the interest rate can be reduced by 1% due to the fact it is part of the “Funding For Lending Scheme”, a government backed initiative to encourage affordable loans for small and medium sized businesses (SME).

The interest rate is based on The Bank Of England’s bank rate and up to 1.5% fee on the value of the loan can be incurred, dependent on how much is borrowed. Security may be required to access the loan and as you are 100% liable for non-payments, you could lose this security, which is often your home, as a result. For this reason you should think carefully before committing to any large value secured loan.

Fixed Rate Loans

Somewhat comparable to the large business loan, the TSB fixed rate loan is available for values of up to £100,000 and can be spaced out over a period of 1 to 10 years. As a maximum limit this is relatively small, also reflected in the shorter loan term offered, but it does come with some advantages.

The fixed rate over 10 years is often preferable as you always know how much each repayment will be. Also part of the Funding For Lending Scheme, interest rates are reduced by 1%, which can be sizeable for higher value loans.

Both secured and unsecured loans are available and capital repayment holidays, where repayments can be suspended for a period of time, may also be provided. Although large scale loans are typically only available to well-established businesses, particularly loans where you are not required to put assets up as security (unsecured loans), these options can make them unsuitable for startups and smaller enterprises.

Business Overdrafts

Much like a personal account overdraft, the business overdraft offers a company the peace of mind to cover unforeseen expenses in their monthly expenditures. The advantage of this type of loan is that you only pay for the funds you access and as it is an evergreen loan, one which is ongoing, you do not need to reapply each time you need to re-borrow.

TSB interest rates on business overdrafts are generally affordable, a maximum of 1.5%, but should you go over the maximum limit set, which can be negotiated to suit your particular needs, a 26.4% charge will be implemented. This in turn can lead to enormous problems keeping up with payments and cause the debt to spiral.

Enterprise Finance Guarantee

Another government backed scheme to encourage further lending from the high street banks, this scheme allows for loans of over £25,000 to be paid back over the course of 1 to 10 years. In this way it is similar to the standard fixed rate loan mentioned earlier, but made available to business who might otherwise find it difficult to access such funds.

Another difference is that variable rates can be used as well as fixed rates, although the 1% reduction of other loans is included in that. Early repayment fees do apply, as does a 1.5% arrangement fee on the value of the loan. It should also be noted that any secured loan can result in the loss of your home if it is put up as collateral, so it pays to think carefully before committing.

Commercial Mortgages

Commercial loans fall under two categories, loans which are taken out in order to buy property, perhaps for larger premises, and remortgages that are used to access the value of property you already own in order to invest elsewhere in the business.

Loan terms can be as long as 25 years and start from £25,000. TSB offer up to 70% of the value of the property, which is slightly lower than some, but interest rates do take advantage of the 1% reduction that many of their other funding options provide.

Commercial remortgages are secured loans and come with the risks associated with that, but a repayment holiday of up to 2 years (taken in blocks of three months) provides some degree of flexibility, which can be particularly helpful at the start of the loan.

Business Credit Cards

Potentially one of the most expensive methods of loans, credit cards also provide some degree of security and convenience. TSB offers one option that can be utilised in millions of places worldwide.

45 days of interest free credit is manageable for most businesses and there is some flexibility in regards to repayments. On the down side, should you be unable to keep up with the monthly payments, there is a huge 22.4% fee that can make it very difficult to stay on top of. It should be mentioned that this is relatively low when compared to most other credit card fees.

Other loan types

TSB personal loans are a little more stringent than many of the other providers. A maximum limit of £25,000 may be enough for most, but is considered comparatively low. What’s more, the interest rate is quite high, as much as over 26.4%, for all but the largest of loans. The quicker the repayments terms are set, however, the better value it provides. This can make it particularly helpful for high value loans as the interest can drop as low as 3.88%.