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Available to businesses trading for a minimum of 18 months and with a turnover of at least £80,000
A business loan can offer an affordable way to borrow funds to help you build your business. With a loan you can spread the repayments over a term that suits you and your business needs.
Business finance may be suitable if you’re running a start-up and need some working capital, you want to invest in new equipment, or you need a cash injection to improve cashflow.
Business loans work in a similar way to other types of loan where you borrow funds upfront and pay them back over time with interest
Compare available deals to get the lowest rates and most suitable terms for your business.
Once happy with your choice, you can apply online to your chosen lender in just a few minutes.
Once approved the funds will be released to you. You then start monthly repayments including the agreed rate of interest.
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Unsecured loans. Provide a lump sum of capital with a fixed repayment schedule over a specified term
Secured loans. Also provide upfront capital but the company has to put down a valuable asset such as property as security
Peer-to-peer loans. Involves borrowing from individuals or groups willing to fund business initiatives rather than banks
Startup loans. Specifically designed for new businesses, allowing entrepreneurs to launch and establish their ventures
Asset finance. A way of funding expensive equipment or machinery through purchase or leasing without a large upfront payment
Invoice financing. Borrowing against unpaid invoices to improve cash flow and meet immediate financial obligations
For your company to be eligible for a business loan it will have to meet the finance provider’s criteria. This will differ from lender to lender, but examples include:
Being UK based: You may need to show you are a domestic company and have a right to trade in the UK
Business history: Lenders may require the firm to have been operating for a minimum number of years to qualify for a loan
Meet affordability criteria: You may need to show a minimum turnover and profit margin to prove you can meet repayments
Provide security: Some types of loan require your company to put down collateral that can be seized if you default on repayments
You may be able to get a business loan through the Government depending on the status of your business and what you are looking for.
The UK government supports various loan schemes, including its Start Up Loan scheme that offers companies an unsecured personal loan of up to £25,000. Successful applicants can also get up to 12 months of free mentoring.
A medium to long term business loan has several advantages over short-term borrowing. But there are some pitfalls to consider:
Gives you the financial flexibility to invest in your business
Interest rates on long term loans could be lower than short term loans
Monthly instalments can be smaller than with short-term loans
You’ll usually end up paying more in interest overall versus a short term loan
It could be more difficult to be approved for a long term loan
Some long term loans are secured against high-value assets such as property or stock
The amount you can borrow with a business bank loan in the UK varies widely, ranging from a few thousand pounds to several million, depending on factors such as your business's financial health, its credit rating, and the type of loan.
Lenders will always carefully assess individual cases to determine a suitable loan amount.
There are a few steps you can take to improve your chances of being accepted for a business loan:
If your business is just starting out, your lender will look at your personal credit rating to get an idea of your financial situation. Have a look at our tips to improve your credit score.
Make sure your business credit rating is up to scratch by paying invoices and filing accounts on time, and keeping customers, suppliers, and directories up to date.
When comparing loans, check the lender’s eligibility requirements before you apply. This may include being a UK business that has traded for a minimum period.
Have all the required documents to hand before you apply, including your business and personal tax returns, bank statements, financial statements, and legal documents.
While you will need a proven track record to be approved for some business loans, other lenders specialise in supporting start-ups with funding, including government-backed loans for new companies.
The good news is that often these are unsecured loans, meaning the start-up does not have to put down security. But there will be criteria to meet, including having an approved business plan to show repayments are affordable.
Comparing business loans through MoneySuperMarket and our partner Think Business Loans is straightforward:
We’ll ask a few simple questions about how much you want to borrow, your business, and what the money will be used for.
We’ll show you a list of potential deals including the interest rate and how much your monthly repayments might be.
Once happy with your choice, you can click through to apply quickly and easily online. Then wait for your funds to arrive.
Available to business trading for a minimum of 18 months and with a turnover of at least £80,000.
The term on your business loan will vary depending on the lender and the loan deal you choose. But long-term business loans could range anywhere from around five years to 30 years. A longer term can bring the cost of your loan down – but remember you’ll pay more interest overall. It’s important to select the loan deal that best suits the needs of your business.
You can choose either an unsecured or secured business loan. With a secured loan you will need to offer security to the lender. This can usually be in the form of business assets, such as property or equipment. Secured loans are less risky to the lender so you should be able to get a lower interest rate. But your assets are at risk of repossession if you can’t keep up with your loan repayments.
Before applying for business finance, assess your financial needs, repayment capability, and credit rating.
You'll also need to make sure you understand the terms, interest rates, and fees associated with the loan and ensure your business can handle the additional debt.
Then when you're ready, you can compare lenders and choose one that provides the best loan for your needs.
The time to approve a business loan in the UK varies, ranging from a few days to several weeks. It depends on factors like the lender's processes, the complexity of your application, and the type of loan.
Secured loans will take longer to approve than unsecured loans, but have all required documentation to hand for a faster approval process.
Interest rates for business loans represent the cost of borrowing and vary based on factors such as your credit score, type of loan, loan period, and the current economic conditions.
Lenders set rates as a percentage of the loan amount, and businesses pay this interest along with the capital repayments. Interest rates can be fixed or variable and loans may be structured so this changes over the time.
While there are similarities in how the loans may be set up, business loans are designed for commercial purposes, providing capital for business needs like expansion or equipment.
Personal loans are for individual use, considering personal credit history, and are often unsecured.
If you don’t want to take out a long term business loan, there are other ways to borrow funds to support your business. These include:
Business account overdraft. Useful if you want to borrow money over a short period or in an emergency, but interest rates can be high.
Credit card. You can often borrow more with a business credit card than a personal credit card as it will be based on your business income.
Invoice financing. Often involves a bank lending you money against the value of the accounts receivable. This works as a cash advance.
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