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What level of interest should I expect to pay on a bank loan?
This will depend on how the lender assesses a number of factors affecting the business. Relevant factors might include the purpose of the loan, the strength of the borrowing proposition, the nature and level of risk involved, the amount of security the business can offer, whether the business has other sources of finance to draw on and the strength of the management team. Generally you should expect to pay base rate plus a margin for the bank (around 2.5% assuming a low risk venture), plus an additional premium based on the specific circumstances of the business proposition. It is advisable to shop around to find the best and most appropriate deal. You should consult your local Business Link, accountant, or existing personal business adviser, to present your application in the best possible way.
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