Representative example: When you spend £1,200 at a purchase rate of 35.15% (variable) p.a., your representative rate is 35.2% APR (variable). Optional upgrade to Business Rewards (£99 per year). Terms apply.
The lenders shown above are promoted picks, which means they’ve been chosen from among the partners we work with and are based on factors that include special features or offers and the commission we receive. Further down the page in our table, you can compare the full range of lenders we cover on our site. Keep in mind that our promoted picks may not always be the best fit for you – it’s important to compare for yourself and find a platform that works for your situation.
Compare business loans
Table: sorted by loan terms, promoted deals first
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More often than not, you need money in order to make money. A business loan can give a company the capital it needs to get off the ground or to get to the next stage of its evolution. That might require just a few thousand pounds or hundreds of thousands, for a couple of months or a couple of decades. There’s a range of lenders out there to cater to the full spectrum of what you need.
Companies usually apply for a business loan when they need to borrow cash or capital from a bank. The amount is repaid with interest and fees may apply. Government-backed start-up loans are also available.
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Compare business loans without impacting your credit score with Tide.
Merchant cash advance
Access a lump sum of funding upfront for a fixed cost and then repay when your customers pay you.
Up to 10,000 bonus points when you spend £5,000 in 3 months
Unlimited free company cards for employees and partners
Up to 56 interest-free days on purchases each billing cycle
Representative example: When you spend £1,200 at a purchase rate of 35.15% (variable) p.a., your representative rate is 35.2% APR (variable). Optional upgrade to Business Rewards (£99 per year).
There are different types of business loans that work in different ways. What type you opt for can depend on what stage your business is at, amongst other things.
Much like an individual, a company has a credit record and credit score. The healthier these are, the easier it will be to secure finance. A new business is obviously not going to have much in the way of credit history, so a lender will either want to start small, or will need some form of security. Loans for launching a new business or for a business which has just launched are often referred to as “start-up” loans. These are typically available over terms of one to five years, and can be government-backed.
More mature businesses have a variety of loan options, thanks to a credit history, a few years of accounts and an established turnover. These are in addition to other types of credit available such as business credit cards or factoring. Let’s take a look at some of the main loan options available in a little more detail.
Pros and cons of business loans
Business loans can be a good option if you’re looking to borrow a large amount of money over a longer period and at a lower price than a business credit card. However, this isn’t the most flexible option and it can sometimes be hard to qualify for the eligibility criteria.
Pros
Large borrowing amounts are available and you’ll typically receive the money upfront, great for a big or one-off project, like expanding your business or hiring new staff.
You’ll know how much you’ll pay in interest and how much your monthly repayments will be from the get-go.
Lower rates than a business credit card (subject to status).
Good option for borrowing long term. Some lenders may allow you to borrow over up to 25 years.
Cons
Not very flexible – you need to know how much you’ll need to borrow when you apply.
The minimum loan amount may be more than you need to borrow.
Potential early repayment charges.
Some lenders have strict eligibility criteria based on revenue, credit score and the type of business.
Lenders may require collateral and a personal guarantee.
There are better solutions for cash flow issues.
Not all lenders are transparent with their rates upfront.
How can I find the best business loan for my company?
Here are some of the key features to consider when comparing business loans:
Amounts available. Having set out your business plan, you should know how much you need to borrow, and one of the first things to look at when evaluating a loan is whether or not it can offer you the sum that you need.
Terms available. You may have a fairly clear idea of the length of time you want or need to borrow for, or this factor may be dictated by the size of the monthly instalments.
Eligibility. Never apply for a loan without checking that the business is eligible for it. It’s a waste of time and demoralising – and the rejection could be visible to future prospective lenders.
Security required. It’s not unusual for lenders to ask for a personal guarantee – meaning an individual will be personally responsible for the loan. Security can also take the form of a company’s realisable assets, such as a property, vehicles or equipment. Where no assets are available, it may be necessary to secure the loan on a director’s own property.
Total costs. It can be easy to obsess over APRs (rates), but perhaps more importantly, consider how much the loan is going to cost overall. When you’re trying to identify the best business loan, the loans that are cheapest overall are naturally a good place to start.
Interest rates. Is the rate offered variable or fixed? Is it competitive?
Fees. Look out for “product” or “set-up” fees as well as any annual/monthly account charges. Lenders sometimes offset an attention-grabbing low rate with product fees, so it’s crucial to also keep an eye on the total amount payable.
Repayment holidays. Repayment holidays are set periods when you don’t have to make any repayments. This might be, say, the first three months of a loan. This can give your company an opportunity to get back on its feet financially, but will usually extend the term of the loan by the same number of months, pushing up the overall cost of the loan.
Early repayment terms. It’s hard to predict what’s around the corner, let alone three or four years down the line. If the option to repay early is important to you, you’ll need to check the early repayment (or overpayment) terms of the specific product or products you’re considering. It’s important to note that “No early repayment fees!” does not necessarily mean that repaying early will save you money on interest.
This really depends on the loan you opt for, and the efficiency of the lender’s systems and processes. Some lenders claim to be able to issue a small business loan in a matter of hours, but more commonly the minimum turnaround time is likely to be a couple of working days. If quick access to funds is crucial for your situation, factor this into your comparison.
Yes, as far as the lender is concerned, they have given you the full amount for an agreed period. In contrast, a revolving line of credit, like a business credit card or an overdraft on your business account, will only charge interest on the outstanding balance.
Once you have applied for a loan, the lender will assess your business finances including:
Credit rating
Profitability
Desired loan
Loan risk
The lender will use these assessments to determine how much they’re willing to loan and at what interest rate. The representative APR you see before you apply is offered to at least 51% of all applicants. This means that there is a chance that you may not be offered the representative APR or desired terms.
Having a poor credit rating may make it difficult to get a business loan, but not impossible. Here are some things you can do in this situation:
Consider a specialist lender. There are some lenders who specialise in business loans for bad credit. Typically, they will request to see that your company is growing and can afford to repay the loan.
Improve your credit score. Giving your credit score a boost could make it easier to receive a business loan. However, keep in mind that lenders will look at more than just your credit score when considering your application. Read our full guide on how to achieve this.
Consider a secured loan. Using an asset or a personal guarantee as security can lessen some of the risk for a lender. If you’re considering a secured business loan, use our guide to see if it’s the right option for your business and compare a range of secured business loans available.
To learn more about getting a business loan with a bad credit rating, read our guide.
Medium to long-term business loans allow your business to pay back a loan over a longer period of time compared to short-term loans. These loans offer more flexibility and control since you can spread the repayments over a term that suits the needs of you and your business. Compare medium to long-term business loans.
Medium to long-term loans often require a history of positive cashflow and responsible borrowing to be approved. Many lenders will require that your business has been active for at least 6 months before considering your application. However, there are some lenders who have designed loans specifically for start-ups. Compare business loans for startups on Finder.
How much you can borrow will depend on the lender’s assessment of your business. You could borrow from as little as £1,000 to £20,000,000, if you meet the requirements of the lender. Use our comparison table to see loans with a range of amounts and terms.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
Emily Herring is a Publisher at Finder specialising in credit-based products including credit cards and business and personal loans. Emily has recently joined the Investments team. She has a Masters in Creative Writing & Publishing and a Bachelor of Arts in Communication & Media. See full bio
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Emily has written 133 Finder guides across topics including:
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