Compare Business Loan Providers
Our business loan comparison and guides highlight direct lenders and credit brokers that can source the best interest rates and terms for business looking for credit funding.
|Business Loan Provider/Broker||How much can you borrow?||How much does it cost?||More Info|
|Funding Options work with over 200 business loan providers. There is no commitment or fee for loan quotes and there is no mark left on credit files.||Business loans are generally available with interest rates between 5% for secured and 25% for unsecured.||See Deals|
|Capital On Tap provides instant decisions on credit lines of between £1,500 and up to £50,000 in minutes via their online platform.||Interest is charged monthly from 9.9% APR, however, rates can be considerably higher for shorter-term small credit lines.||See Deals|
|With iwoca you can borrow from £1,000 up to £200,000 in short term business loan finance. Over 50,000 have borrowed through iwoca so far||iwoca is expensive as it is primarily a short term finance solution, not a long term loan provider. Rates can be as high as 5% per month.||See Deals|
|Linear Business Finance||Linear Business Finance combine their funds with those of a mix of over 50 other institutions and can lend on an unsecured basis up to five years.||Interest rates are dependent on the length of the loan, secured or unsecured, and purpose of the loan. Request a quote to compare rates.|| |
|raising.finance are able to source all types of finance for businesses. From business loans to acquisition finance to asset finance||raising.finance work with lenders to secure the best rates. They may charge a success fee of up to 1%.|| |
|Market Finance||Market Fiance offer business loans from £25,000 to £250,000 with funds available within as little as 48 hours.||Market Finance business loan interest rates start from 8.99% APR, but do rise based on circumstance.|| |
What is a business loan and where can you get one?
Businesses need finance to grow and become a success. Both start-ups new to business and established companies could benefit from an injection of cash to fund expansion, cover short term cash flow issues or to refinance borrowing at a better rate.
Many lenders can offer small business loans, but in most cases, people will go directly to high street banks for their borrowing.
This can be a mistake and mean you may miss out on the cheapest borrowing for your business.
Our comparison can show you the lenders which could offer a loan to your business and the rates at which you could borrow.
As well as conventional loans, there are a new breed of business lenders to consider. Peer-2-peer business loans make accessing capital for businesses a lot easier and faster. Funding Circle for instance that has £2.5bn of SME loans under management and are in the process of listing on the LSE.
Who offers the best business loans types?
Types of business loans
The array of financing products can be confusing, but the business owner should first consider if they need short, medium or long-term finance, then plan accordingly. Here are some business loan examples.
Short-term business loans
This would include current account features like an overdraft facility, which could be perfect if you’re waiting on invoice payments. You could also use bridging finance for capital while you wait for cheques to clear or for longer-term finance.
Overdrafts normally have a cost attached and can incur interest and charges each time you use them.
Medium-term business loans
Standard business term loans, with fixed or variable interest rates, usually up to seven years. These are ideal for property or equipment expansion.
Leasing and asset finance, where the lender purchases new equipment, and you effectively lease it from them for a set period.
Long-term business loans
Apply for a commercial mortgage for larger loans up to 15 years. It’s ideal for a business property purchase.
Meanwhile, fixed asset loans can be taken out against expensive pieces of equipment, repayable up to ten years.
How much can you borrow with a business loan?
Factors include security for the lender and the performance and credit history of the business. Most lenders have an online business loan calculator so you can get a rough guide.
Start up businesses may find it more difficult to get approved to borrow because the absence of a credit score can mean lenders consider you more of a risk than a well established business with lots of credit history.
Business loan advantages and disadvantages
Sensible business funding is an important part of financial planning. It allows for growth opportunities and convenience but does saddle the business with debt, which has to be repaid, affecting your cash-flow.
Your business is also in danger if you default.
How to get a business loan
It’s simplest to approach your bank, especially if you have a good working relationship already. Otherwise, there are numerous places online specialising in business finance.
Getting a business loan quickly
How fast you get a business loan depends dramatically on what type of business you are in and how establised and profitable you are. However, there are a few ways you can speed up the process to get a business loan quickly.
- Try your bank - it may seem old fashioned but despite the bad reputation bank have for lending to businesses at the moment. They ofter offer very good terms if you have run your account well.
- Go with an SME finance broker - using a broker to get a business loan is actually quick and easy and usually, there are no additional costs. Brokers earn their money by referring business borrowers to lenders so it should not cost you any more than borrowing direct. On rare occasions, if you have bad credit or a risky business you may have to pay a setup fee, but this should only be on completion.
- Online-only lenders - fintech has enabled most lending processes to be automated and the need for sending in company accounts and documents has lessened significantly. Most online lenders can lend £10k and under automatically, whereas for more they may require a bit more information. However, their entire business revolves around doing things quickly, so if you don't want to get a business loan broker to do the hard work for you look at our comparison table of business loan providers.
How long does it take to get approved for a business loan
Should you choose a Peer 2 Peer Business Loan?
Even more non-traditional are peer-2-peer business loans. Peer-2-peer loans are made from a pool of investors, looking to make a return on their money, rather than a single institution like a bank. Remember to do your research and seek professional financial advice if necessary.
Business Loan FAQs
What is a business loan?
A business loan is just that, a loan intended for business purposes. They are typically either secured or unsecured and like all loans it will accrue interest that has to be repaid alongside the outstanding debt.
Can a personal loan be used for business?
A personal loan can be spent however you see fit.
However, you may wish to err on the side of caution as you will be held personally responsible for the loan’s repayment, regardless of what you spent the money on.
Also personal loan lending limits tend to be lower than that of a business loan and the interest rates are higher.
What do I need to qualify for a business loan?
There are no hard and fast rules as to what you need to do to qualify for a business loan.
But you can help yourself by:
- Building up your credit score.
- Understanding and matching the lenders qualifications and requirements.
- Having all of your financial and legal documents sorted.
- Developing a strong business plan and providing collateral.
Do business loans require down payment?
Down payments for business loans vary depending on the type of business loan, the purpose of the business loan and the borrower’s profile.
Why do businesses need loans?
The reason a business borrows money will be unique to that business, however most businesses require a loan to:
- Expand operations
- Purchase new equipment to encourage growth
- Purchase inventory
- Increase their working capital to manage day to day operations
How do I get a business loan from the bank?
To get a business loan from the bank have all your ducks in a row:
- Create a serious business plan including a strong financial plan.
- Be clear what you want the money for.
- Know how much money you want.
- Get your credit score above 700.
- Keep proper and accurate financial records.
Do I need to be the owner of a company to get a business loan?
You do not have to be the owner of a company to get a business loan, you have to at least be the registered company director.
You don’t need to incorporate your company either (if you’re a sole trader) to get access to finance. However, as a sole trader you will be personally liable for any debt you incur, whereas you can limit your liability if your company is incorporated.
What is a director's personal guarantee?
If your company is newly formed or has limited assets, the bank or creditor will require some assurances, when you apply for a loan, that you will be able to pay it back.
These assurances could include being asked (as the company director) to give a personal guarantee that you will repay the loan, should the business default on its obligations.
Do I need a business bank account for a business loan?
This depends on the type of business loan you are looking to get and what the lender requires of you.
Most high street banks advise you to get a business account with them if you wish to access finance, as it allows you to build up credit history for your business.
What happens if your business cannot pay back a loan?
If your business cannot repay its loan, you will typically be given a time period to make up missed repayments.
After that time you could be hit with additional fees, fines and administration costs. Your personal and business credit scores will take a hit, making it harder to access credit in the future.
If the credit provider has to take legal action to recoup costs, it could result in you filing for bankruptcy.
Could I lose my home if my business defaults?
This depends on the type of loan you have, whether it is secured i.e. you have put up collateral (your home), or whether you have signed a director’s personal guarantee.