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Medium to long-term business loans

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Find out if medium to long-term loans are the right type of borrowing for you

What are medium to long-term business loans?

Medium to long-term business loans allow you to borrow funds to help you build your business. Medium-term loans can be repaid in monthly instalments over one to five years, while long-term loans can range anywhere between five years up to 30 years in some cases.

What are the advantages of a medium to long-term business loan?

If you’re thinking about taking out a large business loan, it’s best to consider your options carefully before applying. It’s important to make sure you’ll be able to repay the amount you borrow and have a plan in place in case of any unforeseen changes in your financial circumstances.

Here are a few reasons why you might want to consider a medium to long-term business loan:

  • With a long-term loan, the monthly instalments tend to be smaller and more manageable than with a short-term loan as you have longer to pay it back
  • You may be charged a lower business loan interest rate compared to a short-term loan

Do businesses receive business funding when they need it?

Data sourced from the Genesis Initiative, based upon the views of those representing 250,000 businesses by completing their own survey, accurate as of 2018.

What are the disadvantages of a medium to long-term business loan?

It’s also important to think about the drawbacks that come with taking out a long-term business bank loan:

  • Although your repayments can be lower with a long-term loan, keep in mind that you’ll usually end up paying more in interest overall
  • A long-term loan could restrict the monthly cash flow of your business as you could be repaying the amount borrowed over several years
  • It can be more difficult to be approved for a long-term loan as lenders need to be sure you can comfortably repay the loan and the application process will be more thorough
  • Some long-term loans are secured loans that are linked to high-value assets such as property or stock. If you’re unable to keep up with the repayments, there’s a risk you could lose these assets

Do businesses receive business funding when they need it?

Data sourced from the Genesis Initiative, based upon the views of those representing 250,000 businesses by completing their own survey, accurate as of 2018.

What kind of businesses might benefit from long-term business loans?

Certain businesses may be able to benefit more from a long-term loan than others:

  • A new business start-up may have the most to gain from a long-term business bank loan. With start-up expenses being notably high, a long-term loan can give you access to the funds you need, while being able to repay what you owe in manageable monthly repayments
  • A business wishing to expand can also benefit from a medium to long-term loan as it can help finance longer-term projects

What alternatives are there for large business loans?

There are a number of alternative options to borrow funds for your business:

Business account overdraft: An overdraft on your business account can be useful if you want to borrow money over a short period of time or in an emergency. Check interest rates carefully though as they can be high.

Credit card: You could also consider a business credit card if the credit limit stretches far enough. You can often borrow more with a business card than a personal credit card as it will be based on your business income.

Some business credit cards may allow you to spend interest-free for a set time (although 0% deals are usually much shorter than with personal credit cards), but once the 0% deal is up you’ll start paying interest. Alternatively, you may be able to benefit from cashback or rewards.

Representative Example: If you spend £1,200 at a purchase interest rate of 24.9% p.a. (variable) your representative rate will be 24.9% APR (variable).

Before taking out a business credit card, it’s important to check the interest rate charged as well as whether there are any annual fees.

Invoice financing: This form of lending is based solely on invoices and usually involves a bank buying up your unpaid invoices or lending you money against the value of the accounts receivable. This can help your business continue to provide services or goods, while you hand these invoices to the bank and your business is paid a percentage.

What percentage of business invoices are paid on time and outside of terms?

Data collected from 1,500 businesses in the UK, data sourced from UK Finance, accurate as of March, 2019

How to get a business loan

There are a few steps you can take to improve your chances of being accepted for a business loan:

  1. If your business is just starting out, your lender will look at your personal credit rating to get an idea of your financial situation, so take a look at these tips to improve your credit score
  2. Make sure your business credit rating is up to scratch by filing your accounts before the deadline, paying invoices on time and keeping customers, suppliers and directories up to date with any changes to your business
  3. When comparing loans, make sure you’re eligible by familiarising yourself with the lender’s requirements
  4. It’s a good idea to calculate how much your monthly loan repayments will be ahead of time to make sure you’ll be able to afford them alongside your regular business expenses
  5. Have all the required documents to hand before you apply, including your business and personal tax returns, bank statements, financial statements and legal documents

Compare loans

The best way to find competitive long-term loans is to compare your options using the MoneySuperMarket comparison tool.

We’ll give you a list of deals from a wide range of providers so you can make an informed decision. You’ll be able to compare loans and receive quotes with our partner Funding Xchange. You can get the process started by answering a few questions about your business, what you plan to use the funds for and information on your business revenue. We’ll then be able to give you a tailored list of quotes for you to consider.

All loans, overdrafts and credit cards are subject to status and terms and conditions. Over 18s, UK residents only. Terms and conditions apply. See for further information.

MoneySuperMarket is a credit broker - this means we'll show you products offered by lenders. We never take a fee from customers for this booking service. Instead we are usually paid a commission by the lenders - though the size of that payment doesn't affect how we show products to customers.