Business loans are designed to suit the needs of a business, rather than an individual. If your business needs money to help with cash flow or to help with growth, a business loan could help.

A business loan is a way to borrow a set amount of money, which the business would would have to pay back to the lender with interest.

Use our comparison table to compare business loans. We've included loans which offer borrowing from 500 to 5 million, and repayment periods from one month to 30 years.

Secured vs. unsecured business loan

A business loan can be unsecured or secured.

Unsecured business loans, UK wide, are loans where you borrow money for the business, without using its assets as security.

A secured business loan is when you borrow money for the business using one of its assets as security for the lender. This could be property, stock or machinery. It is important to remember that if you don't pay back the loan, the lender can sell the secured assets to get their money back.

Sometimes, lenders offer an unsecured business loan where the company director has to give a personal guarantee. That means they personally agree to pay the loan back if the business can't.

Some lenders only offer business loans to specific types of businesses. That's why you might see small business loans, start-up business loans and quick business loans, for example.

Some business loans are just for businesses that meet certain criteria, such as those with a turnover of at least 75,000. When you compare business loans using the table above, you'll be able to see the criteria in the small print under each lender. This'll give you an idea of which might be the best business loan for your company.

How to get a business loan, UK wide

Before you start looking for the best business loans for your company, there are a few things to think about. These include:

  • how much you want to borrow through your business loan

  • how long you need to repay your business loan

  • what type of business loan is right for your company

  • the interest rate or APR (the percentage rate at which you'll repay the loan)

  • any conditions attached to the business loan, such as a personal guarantee.

Like all loans, business loans are given based on affordability and a credit check. Lenders will look at your business's credit rating to decide what interest rates to offer you. The business loan rates you're offered will affect how much your loan costs to repay.

When you're thinking about business loans, remember that there are several options for a business that wants to borrow money. These are described in the loan type section of the business loans comparison table above. The types include:

Bank loans: These are offered by banks and building societies and can be up to 250,000 over one to 15 years. They're usually unsecured loans.
Short-term loans: These are offered over a few weeks or months, and go up to 200,000. They have higher interest rates than other types of borrowing.
Peer-to-peer loans: These are when your business borrows money from investors instead of a bank. Some investors loan up to 1 million. Here's how peer-to-peer lending works.
Invoice finance: This is when a lender buys your outstanding invoices, releasing the money you're owed by your customers. You can find more information on invoice financing in our guide on how business loans work.
Cash advance loans: These are when you borrow money against your business's future debt or credit card sales. They come with set fees rather than an interest rate.

When you've decided on the best business loan for your needs, you can do a loan comparison using the table above. Then you can choose a lender and apply for your loan online.

How much do you need to borrow through your business loan?

To find the cheapest business loans, it's important to know how much you want to borrow.

Every loan company gives different limits on how much they can lend. So if you want to borrow a large amount, your choices for a lender might be limited.

Very few lenders offer business loans over 250,000. But you can find a few that lend up to 1 million. It's good to only borrow what you need at the best business loan rates available to you, so you don't pay back more than you have to.

Our business loan comparison table shows how much each company will lend your business so just compare the ones that offer the amount you need.
Be careful to only ever get a loan your business can afford to repay. If you're unable to repay your loan, it can impact your business's credit rating and affect future borrowing.

How long do I need to repay my business loan?

Business loans can have a short repayment period like a month, or a longer term of up to 15 years.

When you're deciding how long you need to repay your loan, be realistic about what you can afford to pay each month.

With a short-term loan, you'll find your repayments are a bit higher but overall you'll pay back less interest.

With a long-term loan, you'll have lower repayments, but you'll pay back more interest overall.

Here are two examples of a fixed rate loan. They assume you don't miss any payments, make any overpayments or underpayments, or have to pay any additional fees.

Example one:

If you borrow 7,500 over five years at an APR of 3.7%, you'll pay 714 interest on top of your business loan amount. Your monthly repayments will be 136.90 and your total loan repayment will cost 8,214.

Example two:

If you borrow 7,500 over 10 years at an APR of 3.7%, you'll pay 1,458 interest on top of your business loan amount. Your monthly repayments will be 74.65 and your total loan repayment will be 8,958.

Using our loan repayment calculator is a good way of finding cheap business loans available to you.

How do I know what business loan rate I'll get?

The interest rate you're offered on your business loan is based on a financial assessment of your business by the lender. They'll decide whether to offer you the business loan, and what interest rate to offer you, based on:

  • your business's credit rating

  • how much money you're asking for

  • what repayment term you want

  • your business's age

  • how profitable your business is.

If the lender thinks your business loan is low risk, you'll be offered a lower interest rate. If they think your loan is high risk, you'll be offered a higher interest rate.

The advertised APR that you see before you apply is the rate offered to at least 51% of applicants. That means almost half of those offered that business loan might be offered higher loan rates than what's advertised.

What is APR?

APR (Annual Percentage Rate) is a type of interest rate offered by lenders and banks. It includes the interest rate of the product, but also takes into account any fees. Therefore it is generally best to look out for the advertised APR when comparing, so that you know exactly what you will be earning or paying.

APR must include all mandatory fees, however it does not include voluntary ones, even if they require an opt-out.

Unsecured term loans

The average business loan rates on unsecured term loans in our comparison can be seen in the table below.

Business loan lenderBusiness loan amountBusiness Loan interest rate (representative APR)Business loan repayment term
Esme Business Loan10,000 to 150,0009.51%12 months to 60 months
Yorkshire Bank Online Business Loan10,000 to 150,0006.96%12 months to 60 months
Alius Finance Business Loan10,000 to 1 million11.28%3 months to 60 months
Bizl Business Loan5,000 to 500,00021.44%3 months to 60 months

Remember that the interest rates on other kinds of business funding explained in this comparison can differ a lot. So don't forget to do your research when you're looking for the best business loan rates for you.

Other ways of borrowing money for business

A business loan isn't the only way of securing finance for your business.
Other options include:

Credit cards: Some business credit cards come with deals for 0% interest on purchases for a set period. Others offer rewards like air miles or cashback. A business credit card is good for day-to-day transactions and expenses, plus several members of staff can have a card. But remember that they're not great for longer-term borrowing. That's because most charge a high interest rate on purchases once the introduction period's over. Find out more about business credit cards. Find out more about business credit cards.

Crowdfunding: This is when you pitch your business idea online and offer perks or rewards to investors if your target's met. It's sometimes called donation or reward crowdfunding. Crowdfunding can be a good alternative to start-up business loans for new business ventures. But remember getting the amount you need can be a slow process. Find out more about how crowdfunding works.

Government grants: These are designed to help new businesses. They can also help businesses in certain sectors, or businesses in specific areas of the UK. The good thing about grants is that you don't have to pay the money back, and you keep full ownership of your business. Each grant has different criteria, so the finance isn't ever guaranteed. Search for business grants in your area.

You might find these six ways to get finance for your business helpful. Some of the other options might be good certain types of business. But, if it's quick business finance you're after, a business loan might still be the best option.

You've also got the option of using a combination of several types of funding for your business. That way, you can get the most value out of each type without relying on any one source.

Business loans for limited companies

A Limited Company is a business that's 'limited by shares' or 'by guarantee'. Limited by shares companies are usually profit-making. They:

  • are legally separate from the people who run them

  • have separate finances from personal ones

  • have shares and shareholders

  • can keep any profits they make after paying tax.

Limited by guarantee companies are usually 'not for profit'. They:

  • are legally separate from the people who run them

  • have separate finances from your personal ones

  • have guarantors and a 'guaranteed amount'

  • invest profits they make back into the company.

Some lenders will only give business loans to limited companies which have a specified minimum annual turnover.

If you're a limited company and you have a good credit rating, lenders might be more likely to offer you a business loan.

Small business loans

If you're a small business and you need funding, there are lenders which specialise in small business loans.

To apply for a small business loan, you don't need a minimum turnover and you don't need to have been trading for a long time.

A small business loan can help your company grow by giving you the freedom to:

  • hire more staff

  • buy new equipment

  • move to larger premises

  • buy more stock

  • pay for other business services.

Start-up business loans

If you're a new company, getting a business loan might be difficult. That's because lenders usually want to see how you've handled borrowing in the past and, if your business is new, you won't have much history.

If your business doesn't meet the credit score requirements, you might not qualify for a business loan. But you might be able to get one of the UK Government's start-up business loans. Start Up Loans is a UK Government-backed scheme supported by the British Business Bank. It gives start-up loans and support to small businesses in the UK.

Another option is to take out a personal loan to set up your business, and then apply for a start-up business loan when your company's more established. You can compare start-up business loans in our comparison table. Our finance comparison guide is a quick way to see if you can save money when running your new business.

Pros and cons of business loans


  • Access to funding for expansion

  • Can be helpful during temporary cash flow problems

  • Can help those without sources of capital get funding to start a business.


  • Can be difficult to qualify for

  • Repayments can eat into cash flow

  • Repayments can be costly for business with low credit scores.

Business loan FAQs


Do I need a business account for a business loan?


It depends on the loan you choose and the lender. Some banks may require you to have their business current account before offering you a loan.


Do I need to be the owner of a company to get a loan?


No, most loans can be applied for by a registered company director.


Can I get a secured business loan?


Yes, you can secure against your business assets, like your property, stock or machinery. Your assets will be at risk if you do not keep up your repayments.


Can my small business get a loan?


Yes, but the type may depend on the size and finances of the business. For example, only new businesses can get government start up loans.


Does my business have a credit record?


Yes, and it may affect whether or not your loan application will be accepted. You can find the credit score for your business on the Experian website.


Could I lose my home if my business defaults?


It depends on the type of loan you choose, whether it is secured and if you sign a director guarantee. Always check the terms and conditions carefully.

About our loans comparison


Who do we include in this comparison?


We include business loans available directly from lenders and through brokers on our panel. Here is more information about how our website works.


How do we make money from our comparison?


We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

You do not pay any extra and the deal you get is not affected.

Last updated: 14 April, 2021