Whether you need £20,000 up-front or to slowly grow your business over time, there’s a range of business finance options that could help. Here, we run through some of the most popular options available.
If you’re looking for a lump sum to be paid up-front, your options include (but aren’t limited to):
If you’re looking for ongoing access to business credit, you may wish to consider the following options:
Access a lump-sum of funding upfront for a fixed cost and then repay when your customers pay you.
Boost your spending power, track employee spending and enjoy perks and rewards with a business credit card.
Depending on a lender’s assessment of your circumstances, you may be required to secure the loan. With a secured loan, you’ll put a business or personal asset up as collateral. If you fail to repay, the lender can recoup its losses by selling the asset.
With an unsecured loan, you don’t have to offer any collateral. That makes for a speedier process, but your business will need good credit and a healthy outlook.
Secured and unsecured business loans
A personal guarantee is a contract stating that you’ll be personally responsible for paying back a loan if your business is unable to do so. This is usually offered as an alternative to a secured loan.
Personal guarantees for business loans
| Interest rate of 5% fixed p.a. | Interest rate of 10% fixed p.a. | Interest rate of 20% fixed p.a. | |
|---|---|---|---|
| 2-year loan | Monthly: £877.43 Overall: £21,058.27 | Monthly: £922.90 Overall: £22,149.56 | Monthly: £1,017.92 Overall: £24,429.99 |
| 3-year loan | Monthly: £599.42 Overall: £21,579.05 | Monthly: £645.34 Overall: £23,232.37 | Monthly: £743.27 Overall: £26,757.78 |
| 5-year loan | Monthly: £377.42 Overall: £22,645.48 | Monthly: £424.94 Overall: £25,496.45 | Monthly: £529.88 Overall: £31,792.66 |
Here are some of the key factors to consider:
Eligibility terms will vary from lender to lender, but you can boost your chances of being approved for a loan by demonstrating:
First and foremost, any lender will want to make sure that the monthly repayments would be comfortably affordable for the business, given its normal income and outgoings.
“Matching services” are able to almost instantly check which lenders would offer you a £20,000 loan, saving you valuable time and stopping you from damaging your credit score via multiple failed applications.
Many brokers and matching services charge referral fees from lenders they refer customers to, so for the most part, they’re free for businesses to use.
However, this means they rarely have access to the full market – they’ll only refer you to lenders who have agreed to pay these referral fees. That means you may not be offered the very best deal you’re eligible for.
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Use our business loan calculator to find out your monthly cost and total repayable amount.
See how to get a business loan as a limited company in the UK, and how much you can borrow.
Find out how to get a loan if you work for yourself, including which lenders offer business loans for sole traders.
Learn about government support and alternative options for businesses needing finance to help deal with the impact of coronavirus.
Find out if a business loan is considered income and what you can claim as a tax deduction when taking out a loan.
Businesses all over the UK face financial instability daily, which often requires outside funding. We have looked into how the state of borrowing for these businesses differs between the industry, over the years, and for the size of the business.
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