A secured business loan means you need to provide assets as security to cover the amount being borrowed. Assets can include property or company shares.
Specific eligibility requirements will vary depending on the loan provider you choose.
However there are some general eligibility requirements. You'll need to be:
18 or over
A UK resident with a UK registered business
Able to pass relevant credit checks
In addition to these, most business loan providers will want to look at your business plan. The more detailed your plan is - with your business objectives, business type, strategy, market analysis and financial forecasts - the better your chance of approval.
It will also help if you have relevant documentation to hand too, such as statements and a balance sheet if applicable. This will save you a lot of time when it comes to the application process.
It’s important to check the specific terms and conditions for each loan to make sure your business fits the criteria.
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A business loan is much like a personal loan. You complete an application for a specific sum of money and you pay it back, with interest, over a defined period of time.
Unlike with a personal loan, a business loan must be used for business purposes, for which there are many. But you might decide you need a loan to:
take control of your business' cash flow
pay for stock or equipment
expand your business
launch your business
pay off other debt
launch a marketing campaign
Business loans are a versatile and common form of borrowing for small businesses, though depending on the type of loan the application process can be complex.
A secured business loan means you need to provide assets as security to cover the amount being borrowed. Assets can include property or company shares.
A startup loan works in the same way as a business loan but is specifically for funding a new business or one that has been trading for less than 36 months.
Business vehicle finance helps you borrow money to purchase new vehicles for your company, turning what would be an up-front cost into a monthly cost.
Invoice finance helps your business maintain a healthy cash flow, allowing you to access money which is owed by your customers without waiting for the payment to arrive.
Asset financing allows your businesses purchase, or hire, assets such as equipment, vehicles, or machinery through instalments without investing large amounts of capital up front. The finance your borrow is secured against the asset itself.
A loan of this type makes it possible for your business to borrow money without having to offer any assets (including real estate) as security.
The Start Up Loan scheme from the government aims to help small businesses via a loan of £500 to £25,000. You can repay the loan over a period of one to five years on a fixed interest rate of 6% per year and there’s no application fee.
Formerly the Recovery Loan Scheme, the Growth Guarantee Scheme comes with the same terms. It allows lenders to provide loans that are partially government backed to struggling businesses. If your business meets the relevant criteria you could borrow between £25,001 and £2m in the UK to help with rising cost pressures.
A secured business loan means you need to provide assets as security to cover the amount being borrowed. Assets can include property or company shares.
A startup loan works in the same way as a business loan but is specifically for funding a new business or one that has been trading for less than 36 months.
Business vehicle finance helps you borrow money to purchase new vehicles for your company, turning what would be an up-front cost into a monthly cost.
Invoice finance helps your business maintain a healthy cash flow, allowing you to access money which is owed by your customers without waiting for the payment to arrive.
Asset financing allows your businesses purchase, or hire, assets such as equipment, vehicles, or machinery through instalments without investing large amounts of capital up front. The finance your borrow is secured against the asset itself.
A loan of this type makes it possible for your business to borrow money without having to offer any assets (including real estate) as security.
The Start Up Loan scheme from the government aims to help small businesses via a loan of £500 to £25,000. You can repay the loan over a period of one to five years on a fixed interest rate of 6% per year and there’s no application fee.
Formerly the Recovery Loan Scheme, the Growth Guarantee Scheme comes with the same terms. It allows lenders to provide loans that are partially government backed to struggling businesses. If your business meets the relevant criteria you could borrow between £25,001 and £2m in the UK to help with rising cost pressures.
You will need a variety of documents to get a business loan.
These include financial statements, personal tax returns, business tax returns, business bank statements and company director proof of address and IDs.
If you would like a loan for your business then the first step is applying for one with a suitable lender. You’ll need to tell them what it’s for and illustrate your current financial situation so that they can see how you’ll repay the loan.
During the application process you’ll also need to decide how long it’ll take to repay. This can range from one year to 30 years, depending on whether you choose a short, medium or long-term loan.
The longer your loan term, the lower your monthly payments will be, but you'll pay more in interest overall. Our loan repayment calculator can help you determine how long you need to repay your loan based on how much you can afford to pay every month.
A business credit card is good for day-to-day transactions and expenses, plus several members of staff can have a card. They might not be a great option for long-term borrowing though as many charge a high interest rate once the introduction period ends.
Invoice finance can help you maintain a healthy cash flow for your business. It allows your business to access any money you're owed by customers without waiting for the payment to arrive. Invoice financing can really help if your business struggles with cash flow, or if you're looking to seize new opportunities for growth.
Government grants 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.
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 and can be a helpful way to raise funds that you can repay over a longer period of time.
Crowdfunding is when you pitch your business idea online and offer perks or rewards to investors if your target is met. It can be a good alternative to startup business loans for new business ventures as there's less risk to your credit score and you typically don't need to repay the funding you've raised.
A business credit card is good for day-to-day transactions and expenses, plus several members of staff can have a card. They might not be a great option for long-term borrowing though as many charge a high interest rate once the introduction period ends.
Invoice finance can help you maintain a healthy cash flow for your business. It allows your business to access any money you're owed by customers without waiting for the payment to arrive. Invoice financing can really help if your business struggles with cash flow, or if you're looking to seize new opportunities for growth.
Government grants 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.
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 and can be a helpful way to raise funds that you can repay over a longer period of time.
Crowdfunding is when you pitch your business idea online and offer perks or rewards to investors if your target is met. It can be a good alternative to startup business loans for new business ventures as there's less risk to your credit score and you typically don't need to repay the funding you've raised.
In terms of whether you need a business account for a business loan, it depends on the loan and lender. Some banks may insist that you have a business current account with them before they will accept you for a loan.
No, you don't need to be the owner of a company to get a loan. Registered company directors can apply for most business loans.
Yes, small businesses can get loans, but you may be offered different ones depending on your firm's size and revenue. For instance, only new businesses can get government start-up loans.
Yes, your business does have a credit record 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.
You could lose your home if your business defaults. It all depends on the type of loan you choose, whether it is secured against your home and if you sign a director guarantee. Always check the terms and conditions carefully before agreeing to any loan.
The length of time to be approved for a business loan depends on the provider, the checks they carry out, the information they need to see and how quickly you're able to provide it. It also depends on the type of loan - for example secured loans can have longer approval times.
If you experience financial difficulty during the term of your loan, you may be able to request a payment holiday. This is where repayments are paused for a period of time.
You'll need to speak to the loan provider in the first instance - and you should do so as soon as you experience any financial difficulty.
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