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0800 086 9404What is an SME?
SME Advantages & Disadvantages
What Can I Use an SME Loan For?
What is an SME?
SME stands for small and medium-sized enterprises. They are also sometimes referred to as SMBs - which replaces "enterprises" with "businesses".
SMEs can be split into different categories: micro, small and medium. A micro-business employs less than 10 people and turns over less than £2m yearly. A small business has under 50 employees and turns over less than £10m yearly. Finally, a medium business has under 250 employees and turns over less than £50m yearly. In contrast, a large business employs 250+ people.
SMEs account for 99% of the UK's business population, and 96% of firms are small businesses.
SMEs are pivotal to the UK economy - they contribute to around half of the private sector's turnover. They have a high rate of innovation, and create more jobs per head than large businesses. In addition, 60% of all employment in the private sector comes from SMEs.
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Small businesses make up a large percentage of England's business population.
Advantages of Being an SME
One significant advantage of running an SME is that you can be more agile than a large business. You can change your plans and strategies quickly to take advantage of new opportunities, or respond to changes in the marketplace.
You also have the opportunity to build close relationships with your customers and employees, leading to raised levels of customer satisfaction and loyalty, as well as employees who feel valued and invested in the company.
SMEs tend to be more innovative than larger businesses. There is less bureaucracy, allowing you to implement new ideas quickly. And because they are smaller, they can be more nimble and adaptable to change.
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Setting up and running an SME can be very rewarding for a range of reasons.
Problems That Come With Running an SME
It can be difficult operating as an SME as you can be much more susceptible to fluctuations in trade and profits. You may also have limited resources. This can make it difficult to compete with larger businesses with more money to invest in marketing, R&D or new technology.
Another challenge is that you may not have the same level of brand recognition as a larger business, making winning new customers and contracts harder.
And finally, because SMEs are often owner-operated, there can be a danger of becoming too reliant on the owner/founder. If they leave the business, it can be challenging to continue without them.
Of course, there are also many advantages to running an SME, including being your own boss, having more freedom with your work/life balance and being able to offer a more personalised service. But if you're not prepared for the challenges that come with running an SME, it can be tough.
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Running an SME can be challenging but hopefully, the positives outweigh the negatives.
Getting an SME Loan
If you're considering starting or expanding an SME, you may need to take out a loan. But what exactly is an SME loan?
An SME loan is a loan that's specifically designed for small and medium-sized businesses. Businesses can use them for a variety of purposes, including buying new equipment, expanding their premises, or hiring new staff. The advantage of an SME loan is that You can access the money you need quickly and easily, without going through a lengthy application process.
There are a number of different types of SME loans available, depending on your needs. For example, you could take out a term loan, which you repay over a set period of time; a line of credit, which gives you access to funds up to a certain limit; or an invoice finance facility, which allows you to borrow against outstanding invoices.
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An SME loan can be beneficial for the health of your small business and allow you to keep operating at full capacity without damage to your cash flow or working capital.
The rates on an SME loan will vary depending on the type of loan and the lender. However, keep in mind that the interest rate is only one factor to consider when taking out a loan. The fees, repayment terms and overall cost are some more factors to consider.
Getting a loan from a broker like Love Finance, which is an SME itself, works well as we know the intricacies of small business. We specialise in fast, small business loans and understand both the highs and lows you can face.
What Can I Use an SME Loan For?
You can use an SME loan for any purpose in your business. This includes:
- Buying new equipment
- Refurbishing your premises
- Hiring new staff
- Paying for marketing or advertising campaigns
- Consolidating existing debts
Apply Today
Love Finance offers SME loans from £2,500 up to £250,000. We only offer unsecured loans, meaning that your assets are always protected. And because we're an online lender, we can provide fast decisions and quick funding.
Simply complete our short online form to apply for an SME loan with Love Finance. We provide super-fast approvals; quotes are always free and will not harm your credit score, and if you decide that you no longer want to proceed with funding, then there is no obligation once you have received the quote.
