Given the massive difference interest rates can make over the course of loan term it is very important to compare small business loan rates and lenders. Don’t just go to your own bank or the popular high street names. 

To assist you in securing your business finance, we’ve compiled data from around the UK to bring you the best business loans for small businesses. You’ll get a valuable quick-reference guide of their business type, loan amounts, interest rates and many other essential factors.

Loans to businesses in the UK have grown steadily in the last three decades, with around £58bn of SME loans issued in 2018, a growth of around 34% from ten years prior. The UK business loan market is expected to sustain this growth, with projections that SME loans could total £77.2bn by the mid-2020s assuming a steady pattern for GDP growth over the next decade. 

But before we delve into data so you can compare the business loans yourself, it’s important to understand the different types of providers. In the UK, there are four distinct options available to business owners:

Banks offer both secured and unsecured business loans, with their unsecured loans generally coming at higher interest rates. Since the GFC, banks have been stricter when it comes to lending out money and will run detailed checks on your business to ensure you can service the loan. That aside, banks remain a viable option for many business owners.

Alternative or Specialist lenders compete with banks to offer an alternative in the business loan market. Typically, they offer short-term, unsecured loans. Their interest rates can be higher than the banks; however, the lending criteria may not be as strict. Specialist lenders can prove valuable for business owners wh

Peer-To-Peer (P2P) lending, also known as social lending or crowdfunding, is a newer form of finance which emerged in 2005. P2P enables business owners to source funding directly from a pool of individual investors without the need for a financial institution in the middle. Some P2P lenders have come under scrutiny from the FCA in recent times, to ensure that investors are fully aware of the risks involved. P2P websites can offer unsecured business loans with terms of up to 5 years. They may offer lower rates than offered through the banks, although there can be other fees involved during the process. 

Government Loans are offered to a wide variety of businesses across different industries. With loans available for start-ups as well as existing businesses, government loans can provide funding without some of the strict criteria associated with banks or specialist lenders. And while the government application process can be lengthy – the rates are often very competitive.  
  • Available Terms: 1 to 10 years with fixed monthly repayments. You can defer your first repayment for three months
  • Decision Speed: Instant online pre-approval via its eligibility checker
  • Available Amounts: From £1,000 up to £25,000
  • Minimum Turnover: No published minimum, a maximum annual turnover of £2 million
  • Interest Rate: 7.4% (APR representative)
  • Fees: £100 ‘competitive arrangement’ fee, and an early loan repayment fee equal to 1 calendar month and 28 days’ worth of interest. No fees for extra repayments
  • Eligibility: UK-based small business with an annual turnover of less than £2 million (larger companies can apply for a Flexible Business Loan)
  • How To Apply: Existing HSBC customers can apply via their online banking portal. New customers can apply via HSBC’s online application form, phone, or in-branch

About HSBC Business Loans

HSBC is one of the world’s largest banking organisations, with 1.5 million business customers spread across 53 countries. HSBC works with sole traders up to large multi-nationals, offering a selection of business loan packages to suit individual needs. It offers fixed-rate small business loans of up to £25,000, which can be paid off over up to 10 years. These loans are available for SMEs with a turnover of up to £2 million per year. There are no charges for additional repayments, and customers can manage their loans via the HSBC online banking portal.

For larger businesses looking to borrow more than £25,000, HSBC also offers a Flexible Business Loan with payment terms of up to 20 years. For more information about eligibility for HSBC business loans, visit the business borrowing guide on the HSBC website.

  • Available Terms: Secured and unsecured loans from 1 to 25 years, depending on the loan type
  • Decision Speed: Instant online approvals for loans up to £10,000
  • Available Amounts: Between £1,000 and £500,000, depending on the loan type (Base, Fixed or Commercial Rates).
  • Minimum Turnover: Not published
  • Interest Rate: 9.3% APR representative (based on example £8,000 loan)
  • Fees: No fees on loans up to £25,000. An arrangement fee of up to 1.5% is applied to loans over £25,000
  • Eligibility: For their base, fixed and commercial rate loans you need to be a sole trader, partner or director with the authority to borrow on behalf of your business. Lloyds Bank has an online eligibility checker (used as a guide only)
  • How To Apply: Instant online quotes for loans up to £25,000 are available through the Lloyds Bank website

About Lloyds Bank Commercial Business Loans

Lloyds Bank offers financial services to individuals and businesses all over the UK. Lloyds Bank claims to approve 9 out of 10 business loans and overdrafts, which includes three different business loans, depending on your company size and the amount you wish to borrow. Lloyds Bank offers secured and unsecured loans, for amounts as low as £1,000 up to £500,000. There are instant online approvals for loans up to £10,000.

Depending on the loan package, repayment terms are between 1 and 25 years.

Lloyds Bank offers a sample interest rate of 9.3% APR Representative, based on an £8,000 loan paid back over five years. There are no fees on loans up to £25,000, and a maximum arrangement fee of 1.5% applicable to larger loans.

  • Available Terms: 1 to 5 years
  • Decision Speed: Automated online approval within 48 hours
  • Available Amounts: £10,000 and £150,000
  • Minimum Turnover: No minimum, maximum £5 million per year
  • Interest Rate: Listed between 3.5% p.a and 19.75% p.a (Representative 10.2% APR on unsecured loans up to £25,000)
  • Fees: No fees for online loans, and no fees for early repayments
  • Eligibility: A limited company operating in the UK for at least 18 months, with 12 months of financial records and an annual turnover of less than £5 million
  • How To Apply: Instant online application form via the Yorkshire Bank website

About Yorkshire Bank Business Loans

Established in 1859, Yorkshire Bank is a subsidiary of Clydesdale Bank and has a strong focus on business customers. Yorkshire Bank offers business loans for SMEs between £10,000 and £150,000, all available via a 10-minute online application. Funds are then approved and available within 48 hours. Loans can be repaid over up to 5 years, with no additional fees for early payments.

For UK businesses that have traded for more than 18 months and have an annual turnover of less than £5 million, Yorkshire Bank offers competitive business loan rates with the backing of a strong financial group.

  • Available Terms: 1 to 10 years
  • Decision Speed: Automated online approval within 48 hours
  • Available Amounts: £1,000 and £50,000
  • Minimum Turnover: No minimum, maximum £2 million per year
  • Interest Rate: Representative APR of 10% on £25,000 loan
  • Fees: No arrangement or early repayment fees
  • Eligibility: Must be the director of the applying company, and never previously declared bankrupt or issued with a CCJ.
  • How To Apply: Online application form via the Royal Bank Of Scotland website

About Royal Bank Of Scotland Small Business Loans

The Royal Bank Of Scotland (RBS) has roots dating back to Edinburgh in 1727. Since then, it has become a significant financial group encompassing many banks and lenders. RBS offers competitive business loans for SMEs up to £50,000, with terms of between 1 and 10 years.

RBS offers fixed-rate loans, repaid in monthly instalments. You do not need to be an existing RBS customer to apply, and online applications are available through the bank’s website. Approvals are generally granted within 48 hours, with funds accessible shortly after.

Best business loans offered by peer-to-peer lenders

  • Available Terms: 6 months to 5 years
  • Decision Speed: Approval within five days and financed within four weeks
  • Available Amounts: £25,000 to £350,000, both secured and unsecured
  • Minimum Turnover: £150,000 per year
  • Interest Rate: Average interest rate of 12.4% (for A-rated businesses). The investors funding the loan set the final interest rates
  • Fees: 5% of the total loan amount. Other fees may apply for admin and security costs. No fees for early loan repayment (excluding final interest payment)
  • Eligibility: Must be a profitable, VAT registered business that has operated for at least two years, with a turnover exceeding £150,000. Directors or partners must be UK residents. Limited companies, LLPs, PLCs, and social enterprises are eligible
  • How To Apply: Online application form available on the Rebuilding Society website

    About Rebuilding Society Business Loans

    Rebuildingsociety.com is a peer-to-peer (P2P) financing platform that allows business owners to source funds from an online community of individual lenders. The company has facilitated over £15 million in loans to over 250 SMEs throughout the UK.

    Loan applicants are connected to a pool of stakeholders who can fund their loans, investing in the long-term success of their business. The lenders set their own rates of interest, which is paid back directly to them over the life of the loan. Rebuildingsociety.com operates with maximum transparency, allowing open communication between business owners and lenders throughout the funding and loan process. 

     Via its online community, business owners can secure amounts of £25,000 up to £350,000. Loans can be taken out as either secured or unsecured and paid back over between 6 and 60 months. The average interest rate is listed as 12.4% for A-rated businesses, and interest rate discounts can be offered in exchange for additional security.

  • Available Terms: 6 months to 5 years, paid monthly
  • Decision Speed: Approval within 24 hours, and funds delivered within a few business days
  • Available Amounts: Unsecured loans range between £10,000 and £1,000,000. Tenants are limited to £50,000 for unsecured loans
  • Minimum Turnover: Not published
  • Interest Rate: Starting from 1.9% per year. Individual rates are available via an online application form
  • Fees: 1.5% to 10% of the total loan amount, depending on the method of application. There are no fees for early repayments or paying out the loan in full before the loan term
  • Eligibility: Must be a UK resident with a UK-registered office, trading for more than two years. Directors and shareholders must have no connections to any previously liquidated businesses or any CCJs issued against them in the last 12 months
  • How To Apply: An online application form is available on the Funding Circle website

About Funding Circle Business Loans

Funding Circle claims to be the largest peer-to-peer financial institution in the UK, having lent £5.4 billion to 52,000 small businesses in the UK. Through its online platform, businesses are connected to individuals and organisations looking to invest in business loans. All interest paid is returned directly to investors, with Funding Circle collecting a fee of between 1.5% and 10% of each loan. Funding Circle performs credit assessments on applicants and manages returns for investors, acting as a facilitator for both parties.

Funding Circle offers unsecured business loans starting at £10,000, all the way up to £1,000,000. Loans can be taken out between six months and five years and can be repaid early with no additional fees. Funding Circle has a pool of around 92,000 investors, ranging from individuals to large institutions such as the government-owned British Business Bank.

Best business loans offered by alternative & specialist lenders

  • Available Terms: 6 to 12 months, paid daily or weekly
  • Decision Speed: Condition approval is granted within minutes via Capify’s online application form. Funds are typically released within a few business days
  • Available Amounts: £5,000 to £150,000. Businesses can borrow up to 75% of their average monthly turnover
  • Minimum Turnover: £10,000 per month
  • Interest Rate: Not published
  • Fees: Capify’s loan fee is 3% of the total borrowed amount. There is also a £295 loan processing fee and a £25 monthly service fee
  • Eligibility: Borrowers must run a UK-based business operating as a limited company, with at least 12 months of trading history
  • How To Apply: An online application form is available on the Capify website

About Capify Business Loans

Capify is an alternative finance provider for limited companies which has been operating since 2008. Based in South Manchester, Capify has funded thousands of businesses across the UK with loans ranging from £5,000 up to £150,000 and more. Capify’s focus is on agility and convenience, with fast loan approvals and flexible repayment terms. With a small minimum loan amount, businesses can use Capify to buy equipment, place large stock orders, improve cash flow, or hire additional staff.

Capify specialises in short-term loans that span between 6 and 12 months. Businesses can borrow up to 75% of their average monthly turnover, with repayments made daily or weekly to avoid monthly lump-sum payments. For limited companies turning over at least £10,000 per month, and which have operated for 12 months or more, Capify offers a competitive funding alternative to the traditional banks.

  • Available Terms: No fixed payment schedule, repayments are made via ongoing credit card sales (typically 5%-17% of transactions)
  • Decision Speed: Instant online approvals via an application form, funds released within a few days
  • Available Amounts: £5,000 to £200,000
  • Minimum Turnover: £5,000 per month in card transactions
  • Interest Rate: Not published
  • Fees: Loan presented as a single, all-inclusive cost
  • Eligibility: Business operating for more than six months, with a minimum of £5,000 per month in credit card transactions
  • How To Apply: Online quote form available on 365 Business Finance

About 365 Business Finance Business Loans

Presenting a unique alternative to traditional bank loans, 365 Business Finance offers an SME financing model that deducts repayments directly from credit card transactions. The loans are especially suited to retail, cafes, restaurants, bars, and any other business with recurring credit card payment. Cash advances are available between £5,000 and £200,000, with fast online approvals and funds released within a few business days. 365 Business Finance offers a flexible repayment model and is available to any UK business six months or older, processing more than £5,000 a month in credit card transactions.

365 Business Finance has received extremely positive reviews, with an average rating of 4.9 out of 5 from over 150 customers on Trustpilot.

  • Available Terms: Unsecured loans between 1 and 24 months, paid monthly
  • Decision Speed: Within one working day
  • Available Amounts: £50,000 to £350,000
  • Minimum Turnover: At least £500,000 per year
  • Interest Rate: Listed average yearly interest is 22.8% APR, including interest and fees. More details available via online business loan calculator
  • Fees: Loan arrangement fees between 2.0% and 2.5%. No fees for early repayments or early loan settlements
  • Eligibility: Must be a UK-based business operating profitably for more than three years, with consistent revenue for the last 12 months
  • How To Apply: Apply online via the Spotcap website

About Spotcap Business Loans

Spotcap entered the alternative lending market in 2014 and provides SMEs in the UK with unsecured business loans. Headquartered in Berlin, and with offices in London, Madrid, and Sydney, the company now has over 1,000 customers around the world and has raised more than £90 million in funding. Spotcap has consistently received positive reviews, holding a score of or4.9 out of 5 on Trustpilot from over 100 customers.

Spotcap offers unsecured business loans between £50,000 and £350,000, which can be repaid over terms of up to 24 months. Applicants are not required to submit personal guarantees or capital but must have run a UK-based business for at least three years with an annual turnover exceeding £500,000. Loans are approved within one working day and can be managed through Spotcaps paperless, online portal.

  • Available Terms: 1 month to 2 years, available as a credit card or loan
  • Decision Speed: Online application and funding within 10 minutes
  • Available Amounts: Up to £50,000
  • Minimum Turnover: £24,000 per year
  • Interest Rate: Not published
  • Fees: No monthly or annual fees
  • Eligibility: Must be a UK-based business, with no CCJ’s against you or your business in the last year
  • How To Apply: Online application form via Capital On Tap website

About Capital On Tap Business Loans

Capital On Tap is a specialist lender that has financed over £1 billion to more than 65,000 businesses across the UK. The company offers business loans of up to £50,000 in the form of either a credit card or an online loan, or both. Loans can be taken out between 1 and 24 months, via a 10-minute online application process. Capital On Tap is a finance option available to almost all SMEs; you need to be a UK-based business in good financial standing, with a turnover exceeding £2,000 per month. Whether the money is to boost cash flow, finance a business expansion, or for other reasons, Capital On Tap is a simple and easy way to secure extra funds.

Capital On Tap has received stellar online reviews, currently holding a score of 4.8 out of 5 from over 5,000 reviewers on Trustpilot.

  • Available Terms: Unsecured loans between 4 and 18 months, repaid daily
  • Decision Speed: Approvals within 24 hours, funds available within two business days
  • Available Amounts: £3,000 to £500,000
  • Minimum Turnover: £70,000 per year
  • Interest Rate: Boost Capital lists an example annual rate of 47.9%, representative APR. Boost Capital also has an online loan calculator.
  • Fees: There are no application fees. Early repayment of the loan is possible, but Boost Capital does not specify on its website if this carries an additional fee or not
  • Eligibility: Applicants must have a minimum of three years of trading history with £70,000+ annual turnover
  • To Apply: Apply using the online form on the Boost Capital website
About Boost Capital Business Loans Boost Capital is an alternative business lender that was founded in 2002. Since then, it has issued more than 22,000 unsecured business loans to SME customers across the UK, US, and Canada. Loans are available for amounts between £3,000 and £500,000, with terms between 4 and 18 months. Unlike some providers that take repayments monthly or even weekly, Boost Capital uses a daily repayment schedule to assist business owners in managing their cash flow. Boost Capital has received overwhelmingly positive reviews on Trustpilot, with an average rating of 4.9 out of 5 from over 450 customers. To be eligible for a Boost Capital loan, applicants must have run a UK business for at least three years, with an annual turnover of at least £70,000. The Boost Capital website has a simple online application form in which business owners can apply for a loan and receive an approval within 24 hours.
  • Available Terms: 1 day to 5 years (depending on loan type)
  • Decision Speed: Instant online approvals, and funds available within 24 hours
  • Available Amounts: £1,000 to £250,000, depending on the loan type
  • Minimum Turnover: £150,000 per year
  • Interest Rate: 14.9% representative APR on small business loans, 49% representative APR on credit lines (up to 12 months)
  • Fees: No fees on credit lines, small business loans carry a 6% up-front fee
  • Eligibility: Must have UK-based limited company trading for two years, with minimum £150,000 annual turnover
  • How To Apply: Online application forms are available on the iwoca website

About iwoca Business Loans

iwoca is an alternative lender that was founded in 2011. Headquartered in London, iwoca has lent over £900 million to over 50,000 SME customers. The company presents itself as a smart and friendly alternative to banks, with lower fees, greater transparency, and more straightforward access to small business funding.

Iwoca offers two packages for SMEs: a flexible credit line of up to £200,000 with a term of up to 12 months and a small business loan of up to £250,000 over a term of up to 5 years. The interest rates can vary, depending on the amount of money borrowed and the length of the term. iwoca offers fast and straightforward online approvals for their loans, and you can be approved for a loan and have access to new funds within just 24 hours. iwoca has received very positive online reviews, with more than 3,600 5-star reviews on Trustpilot.

  • Available Terms: Up to 24 months unsecured, or 48 months secured
  • Decision Speed: Online approvals and access to funds within 48 hours
  • Available Amounts: £5,000 to £500,000
  • Minimum Turnover: £5,000 per month
  • Interest Rate: 42.2% representative APR on £12,500 loan repaid over 15 months
  • Fees: No application or setup fees, and no fees for early repayments
  • Eligibility: At least six months of trading with a monthly turnover of £5,000 or more
  • How To Apply: Online application forms available on the Fleximize website

About Fleximize Business Loans

Fleximize is a UK-based alternative lender that was founded in 2014. Since then, the company has facilitated loans to over 3,000 UK businesses. The company offers business loans between £5,000 and £500,000, both secured and unsecured. Payments terms can vary depending on the type of loan but can be arranged for up to four years with monthly repayments. Any business with at least six months of trading history and a monthly turnover of more than £5,000 is eligible to apply. Approvals are easy and fast, with funds generally approved and deposited within 48 hours.

Fleximize is an award-winning lender and was named the UK’s Best Business Finance Provider at the British Bank Awards in 2018. The company also holds an average rating of 4.8 out of 5 on Trustpilot.

  • Available Terms: Up to 18 months
  • Decision Speed: Same-day approval, loans disbursed the following day
  • Available Amounts: £2,000 to £50,000
  • Minimum Turnover: £75,000 per year
  • Interest Rate: Not published
  • Fees: 2%-3% based on business rating. 2.5% origination fee for new loans
  • Eligibility: Own and operate a UK-based business for more than 12 months, with an annual turnover exceeding £75,000
  • How To Apply: Online application forms available on the Ferratum Business website

About Ferratum Business Loans

Ferratum Business is part of the Ferratum Group, a publicly-traded company operating in 24 countries. With UK offices in Perth and Liverpool, Ferratum Business offers loans of up to £50,000 over 18 months. The loans are unsecured and feature fixed monthly repayments.

Ferratum’s loans are available to a broad range of businesses, provided they have been operating in the UK for more than 12 months, with an annual turnover greater than £75,000. The company has a fast online application process, with most approvals granted within 24 hours, and funds released the following day.

Ferratum Business has received positive reviews, with an average score of 4.5 out of 5 on Trustpilot.

Best business loans offered by government business lenders

  • Available Terms: 1 to 5 years, repaid monthly
  • Decision Speed: Not published
  • Available Amounts: £500 to £25,000 per owner or partner, up to £100,000 per business
  • Minimum Turnover: Not published
  • Interest Rate: Fixed rate of 6% per year
  • Fees: There are no application or setup fees, and no early repayment fees
  • Eligibility: Borrowers must be UK residents that are starting a new UK-based business or have operated an existing one for less than two years
  • How To Apply: An online application form is available on the Start Up Loans website

About The Start Up Loans Company

A subsidiary of the British Business Bank, the Start Up Loans Company provides government-backed unsecured loans for individuals to start or expand a UK business. Since its launch, the company has lent almost £500,000 to a total of 60,000 people. With loans as small as £500 and scaling up to £25,000, individuals can access start-up business finance, which may not have been possible via traditional banks. Loans come at a fixed interest rate of 6% per annum and can be repaid over 1 to 5 years.

In addition to business finance, the Start Up Loans Company provides 12 months of free mentoring for approved business owners. It also offers business plan templates, start-up guides, and a host of other online tools designed to benefit individuals looking to thrive in the business world.

For further information about government business loans available in your area, search the UK government finance registry.

FAQs

Poor credit will limit the choice of lenders that will accept you, but there are still options available. You may be able to secure invoice financing or a cash advance, as these present a lower risk for lenders. Some specialist online lenders will consider you even with bad credit, especially if your business is consistently delivering positive financial results.

In short, yes. Just as lenders will look at both your business and personal credit history when assessing a new loan, that loan also has the possibility of affecting your personal credit score down the road. This is particularly true for sole traders whose business and personal finances are essentially the same. If your business runs into financial difficulty with you as an owner or director, this will have a bearing on your credit score when it comes to borrowing more money in the future.

Each lender will have their own criteria, with banks often having the strictest rules. Lenders will look at a host of factors, including the type of company you operate, the number of years you have been running, your annual turnover, your profitability, and your personal financial history as an owner or director. 

These and other factors will impact who you can borrow money from, how much you can borrow, the rate of interest, and the repayment terms. The lower the financial risk you present to lenders, the more flexible they will be with their loan offerings.

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