Business loans are designed to work for the needs of a business rather than an individual.

If you need funds to ease cashflow or to help your business grow, a business loan could offer the solution you need.

Business loans are similar to personal loans in that you borrow a fixed amount of money and pay it back to the lender with interest.

The business loans in our comparison table offer:

  • Borrowing between 500 and 5 million

  • Repayment periods from 1 month to 30 years

Business loans are either:

  • Unsecured: This means your business can borrow money without having to use the business assets as security.

  • Secured: This means your business can borrow money using an asset such as property, stock or machinery as security. It is important to remember that if you do not pay back the loan, the lender can sell it to get their money back.

Sometimes, lenders will offer an unsecured loan with the condition that the director of the company must give a personal guarantee. This means they are liable to cover the cost if the business fails to pay back the loan.

Some lenders will only offer business loans to specific business types such as small business owners or for business that meet certain criteria such as those with at least 75,000 turnover.

The criteria is indicated within the small print under each lender in our comparison table and will give you an idea of which business loan is more suitable for your company.

How to get a business loan

To find the best business loan for your business, think about:

  • How much you want to borrow

  • How long you need to repay the loan

  • Which type of loan is right for your business

  • The interest rate or APR, which is the percentage rate at which you will repay the loan

  • Any conditions which might be attached to the business loan such as a personal guarantee

Like personal loans, business loans are subject to affordability and credit checks. Lenders will look at your businesses's credit rating to determine the business loan rate offered to you.

The rate you are offered is a key factor in how much your business loan will cost to repay.

There are different options available when borrowing money for business and these are described in the loan type section on our comparison table:

  • Bank loans are offered by banks and building societies, and some can lend you up to 250,000 over a term of 1 to 15 years. These are usually unsecured loans.

  • Short term loans are offered over a few weeks or months, and you could borrow up to 200,000. They come with higher interest rates than other types of borrowing.

  • Peer to peer loans are when your business borrows money from investors rather than a bank, and some offer loans of up to 1 million. Here is how peer to peer works.

  • Invoice finance is when a lender buys your outstanding invoices, releasing the money you are owed by your customers. Find out how invoice finance works here.

  • Cash advance loans are when you borrow money against your business' future debit or credit card sales, and they come with set fees rather than an interest rate.

This comparison includes all of these business loan types.

Once you have decided on an affordable business investment loan, you can use our comparison table to choose a lender and apply online for your company loan.

How much do you need to borrow?

Each loan company offers different limits on how much they can lend, so your choice may be limited if you want to borrow more than a certain amount.

For example, not many lenders offer loans over 250,000, but some can lend you more than 1 million. Only borrow what you need, to avoid repaying more than you have to, and at the cheapest loan rate available to you.

This comparison shows how much each loan company can lend you, so only compare the ones that can offer the amount you need.

You should only borrow money that your business is able to repay. If you are not able to fulfil the repayment agreement this can reflect negatively on your business' credit rating and affect future borrowing.

How long do you need to pay it back?

You can get business loans for a short repayment period such as one month, or
a longer term of up to 15 years.

When choosing your term, it is important to be realistic about how much your business can afford to pay back each month.

With a shorter term loan your monthly repayments might be higher but overall you will pay back less interest on top of your business loan.

With a longer term loan your monthly repayments might be lower but overall you will pay back more interest on top of your business loan.

For example:

  • If you borrow 7,500 over 5 years at an APR of 3.7% you will be paying 714 interest on top of your loan. This means your monthly repayments will be 136.90 and your total loan repayment will be 8,214.

  • If you borrow 7,500 over 10 years at an APR of 3.7% you will be paying 1,458 interest on top of your loan. This means your monthly repayments will be 74.65 and your total loan repayment will be 8,958.

This is assuming that you pay the same fixed interest rate for the entire repayment period and that you don't miss any payments, make overpayments or underpayments, or have to pay any additional fees.

Use our loan repayment calculator to help you work out the best cheap business loans available to you.

How do I know what business loan rate I will get?

The exact business loan interest rate you will be offered is determined by the individual assessment of each lender.

The factors below can affect whether you will be offered a business loan and the business loan interest rate you will get:

  1. Business credit rating

  2. Business loan amount

  3. Business repayment term

  4. Business age

  5. Business profitability

If a business loan is considered low risk by the lender, it will have a lower interest rate.
If a business loan is considered high risk by the lender, it will have a higher interest rate.

Financial lenders display an advertised APR that is offered to at least 51% of applicants. This means that almost half of those offered a business loan may be offered a higher business loan rate than advertised.

Unsecured term loans

The average business loan interest rate UK on unsecured term loans in our comparison can be shown 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

The business loan interest rates on the other types of business funding explained in this comparison can differ significantly, so it is important to do your research when looking for the best business loan rate for you.

Other ways of borrowing money for business

A business loan is not the only way of securing finance for business.

Other options include:

  • Credit cards: Some business credit cards offer 0% interest on purchases for set periods while others offer incentives like air miles, cashback and rewards. Business credit cards are good for day to day transactions and expenses and can be issued to several members of staff. But they may not be good for longer term borrowing as most will charge a high interest rate on purchases once the introduction period is over. Find out more about business credit cards

  • Crowdfunding: This works by pitching your business idea online and offering perks or rewards to investors if your investment target is met. It is also called donation or reward crowdfunding. It can be a great way to raise money for a new business venture or project, but it can be a slow process to get the money you need. Find out more about how crowdfunding works

  • Government grants: Government grants are designed to support new businesses, those in certain sectors of the economy, or specific areas of the UK. The big advantage of grants is that you do not have to pay the money back and you keep full ownership of your business. Each grant has different criteria for the businesses they are willing to fund, so the finance is not guaranteed. Search for business grants in your area

For more help, use these six ways to get finance for your business.

These other options may work better for specific business types, but for quick business finance, a business loan could be a better option.

You may also want to consider using several sources of funding for your business so that you can get the most value out of each without relying on one.

Loans for limited companies

A Limited Company is defined by GOV.UK as a company 'limited by shares' or 'limited by guarantee'.

Limited by shares companies are usually companies that make a profit. This means the company:

  • is legally separate from the people who run it

  • has separate finances from your personal ones

  • has shares and shareholders

  • can keep any profits it makes after paying tax

Limited by guarantee companies are usually 'not for profit'. This means the company:

  • is legally separate from the people who run it

  • has separate finances from your personal ones

  • has guarantors and a 'guaranteed amount'

  • invests profits it makes back into the company

Some lenders will only provide business loans for limited companies with a specified minimum annual turnover and trading period.

If you are a limited company you may have built up a credit rating which shows lenders how you have handled borrowing in the past. Depending on your credit score, this might mean lenders are more likely to offer you a business loan.

Find out more about limited companies on GOV.UK.

Help grow with a small business loan

If you are a small business looking for a business loan, there are lenders who specialise in small business loans.

To apply for a small business loan you do not need to have a minimum turnover or to have been trading for a long time.

You can use business finance to help your company grow by:

  • Hiring more staff

  • Buying new equipment

  • Moving to larger or new premises

  • Buying more stock

  • Paying for other business services

Compare business loans for small businesses here.

Start up business loans

If you are a newly formed company looking for a new business loan, you may find borrowing for business more difficult.

This might be because most lenders will want to see how you have handled borrowing in the past.

If your business does not meet the credit score set by individual lenders, you may not qualify for a business loan but you may be eligible for a UK Government start up loan.

If you are a start up looking for a business investment loan, Start Up Loans is a UK Government-backed scheme supported by the British Business Bank. Start Up Loans provides funding and support to small businesses in the UK.

You can compare start up business loans on our comparison table here

To see if you could save money when running your business, our finance comparison guide could help with quick business finance advice.

You may be able to take out a personal loan to set up your business and apply for a business loan when your company is more established.

Business loan FAQs

Q

Do I need a business account for a business loan?

A

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.

Q

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

A

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

Q

Can I get a secured business loan?

A

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.

Q

Can my small business get a loan?

A

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.

Q

Does my business have a credit record?

A

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.

Q

Could I lose my home if my business defaults?

A

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

Q

Who do we include in this comparison?

A

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

Q

How do we make money from our comparison?

A

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.