Which are the best business loans in the UK right now? Use our comparison to find out how small business loans work and the best options for fast funding.<\/p>\n\n
From government business loans like Start Up Loans to backing from private banks, you can get help funding your business. But remember, a business loan may not always be the best option as it means taking on debt and interest charges. Make sure you research thoroughly \u2013 and weigh up alternative options \u2013 before taking one out.<\/p>\n\n
We\u2019ve only compared a few of the business loans available. There are other providers and you should do your own research before making a decision. This article is intended as a guide and not financial advice and you should always seek the help of a professional if you\u2019re not sure of anything.<\/p>\n\n
Taking out a business loan means borrowing money for business purposes. The type of business loan you apply for is likely to depend on your business circumstances and why you need the money.<\/p>\n\n
If you\u2019re thinking of applying, use our six tips for a successful small business loan application<\/a> to boost your chances.<\/p>\n\n You can apply for a start-up loan to help get your business off the ground, a short-term loan to help ease cash flow issues, or a long-term loan to fund the expansion of your business, for example.<\/p>\n\n Almost a quarter (23 per cent) of businesses are seeking finance through a bank loan, according to our SME Insights Report<\/a>.<\/p>\n\n Our data shows 33 per cent of businesses need a cash injection of up to \u00a320,000, while 25 per cent want to raise between \u00a350,000 and \u00a3100,000.<\/p>\n\n Despite the high proportion of businesses that are looking for funding, it can be difficult to get. A quarter of businesses said a lack of funds and access to credit is a key concern for 2023.<\/p>\n\n Acknowledging the problem, the Treasury Committee has launched an inquiry into funding for small and medium-sized businesses<\/a> (SMEs). The call for evidence, which closes on 13 August, is asking businesses to share their finance challenges as well as the impact of coronavirus loan schemes.<\/p>\n\n Whether you can get approved for a business loan depends on the criteria of the lender. There\u2019s some funding available for businesses that are just starting out (see the sections on Start Up Loans and Virgin’s early-stage business loan below).<\/p>\n\n For other loans, you\u2019ll need to have been running your business for a certain amount of time. Contact the lender if you\u2019re not sure.<\/p>\n\n There are several decisions you need to make when you\u2019re looking for a business loan, and lots of new information to understand. Below are some of the key points to consider.<\/p>\n\n If you have a loan with a variable interest rate, the rate can go up and down, whereas a loan with a fixed rate means your repayments tend to be predictable. Most small business loans are fixed rate loans.<\/p>\n\n A secured loan is backed by an asset (property, machinery, or a vehicle, for example), which means the lender can claim ownership of the asset if the loan isn\u2019t repaid. Unsecured business loans aren\u2019t backed by an asset, but the lender may ask for a \u2018director\u2019s guarantee\u2019 instead, which means they may go after the director for repayment if the loan isn\u2019t paid off.<\/p>\n\n Whether you\u2019re offered a secured or unsecured loan may depend on how much money you want to borrow. Large loans will usually need to be secured, whereas lower amounts are often unsecured. Unsecured loans may have higher interest rates, as they\u2019re riskier for the lender.<\/p>\n\n You\u2019ll also need to make a decision about your loan term, which is the length of time that you have the loan for. This is likely to depend on what you need the loan for, and how quickly you think you\u2019ll be able to repay it. Different lenders have different minimum and maximum loan terms, and the term you\u2019re offered may depend on your circumstances.<\/p>\n\n Compare business loans and you\u2019ll soon work out the categories and types of funding available, from government-backed Start Up Loans, to loans from peer-to-peer platforms, to options from high street and big-brand banks.<\/p>\n\n We\u2019ve compared a few of the business loans available in 2023, looking at factors like loan amounts, eligibility criteria, minimum business loan interest rates, and application process.<\/p>\n\n It\u2019s important to understand this is only a guide \u2013 the loan you\u2019re actually offered will depend on your circumstances and the details of your business.<\/p>\n\n It can be tricky to get approval for a business loan, and the lender will ask for lots of paperwork as part of the application process, including business plans and accounts.<\/p>\n\n Bear in mind that, as well as the eligibility criteria mentioned for specific loans below, most business loans require you to be at least 18 years old, a UK resident, and not bankrupt or in a debt management scheme.<\/p>\n\n Whether a business loan is right for you depends on your circumstances. Remember that interest rates can be high and there are penalties for missed payments, so make sure you can afford the loan before you take it out.<\/p>\n\n Our quick list is in no particular order, but gives you a starting point for what\u2019s available in 2023.<\/p>\n\n Virgin\u2019s StartUp Loan is aimed at new or early-stage businesses and entrepreneurs, looking to scale or get started. The maximum loan size is \u00a325,000 for each co-founder, although you can apply for as little as \u00a3500. Successful applicants also get full access to exclusive business support, as part of The Funded Club.<\/p>\n\n Loan amount:<\/strong> \u00a3500 to \u00a325,000 for each co-founder.<\/p>\n\n Interest rate:<\/strong> There\u2019s currently a fixed annual interest rate of six per cent.<\/p>\n\n Loan term:<\/strong> One to five years.<\/p>\n\n Fees:<\/strong> No set-up fee or early repayment penalties.<\/p>\n\n Eligibility:<\/strong> Your business must be under three years old, and you\u2019ll need to be a UK resident and your business must be registered in the UK.<\/p>\n\n How to apply:<\/strong> Head to Virgin\u2019s StartUp Loan application page<\/a>.<\/p>\n\n The Start Up Loans Company provides government-backed unsecured loans to people who are starting or growing a business. Technically, these are personal loans, granted for business purposes. Successful applicants also receive 12 months of business mentoring.<\/p>\n\n Loan amount:<\/strong> \u00a3500 to \u00a325,000.<\/p>\n\n Interest rate:<\/strong> Fixed rate of six per cent a year.<\/p>\n\n Loan term:<\/strong> One to five years.<\/p>\n\n Fees:<\/strong> No set-up or early repayment fees.<\/p>\n\n Eligibility:<\/strong> You need to be planning to start a UK-based business, or have a UK-based business that\u2019s been trading for less than three years. You\u2019ll also need to be a UK resident.<\/p>\n\n How to apply:<\/strong> Complete the Start Up Loans registration form online<\/a>. Later on in the application process, you\u2019ll need to provide documents like a business plan and a cash flow forecast, but you\u2019ll be given help to get these together.<\/p>\n\n\n NatWest emphasises the flexibility of its loans, ranging from small, short-term cash injections to bigger, long-term loans. Up to 10-year terms may be available to some businesses, but security and\/or a director\u2019s guarantee can be required.<\/p>\n\n Loan amount:<\/strong> \u00a31,000 to \u00a350,000.<\/p>\n\n Interest rate: <\/strong>Fixed. The rate depends on your circumstances and loan amount, but using a slider on the website, you can see an example of how much you may need to repay. The representative APR ranges from 11 per cent to 16 per cent.<\/p>\n\n Loan term: <\/strong>Up to 10 years.<\/p>\n\n Fees: <\/strong>No arrangement fee or early repayment charges.<\/p>\n\n Eligibility: <\/strong>You\u2019ll need to be a director of the business to apply. If you\u2019re in a trading partnership, limited liability partnership (LLP) or limited company you\u2019ll need to provide additional information.<\/p>\n\n How to apply:<\/strong> You can make a business loan application on the NatWest website<\/a>.<\/p>\n\n HSBC offers loans with a fixed interest rate and the option to defer your first repayment for three or six months. There\u2019s also the option for a January payment holiday, where no repayments are made in January for the lifetime of the loan. Sustainable businesses can also benefit from a cashback fund if the loan supports an eligible purpose.<\/p>\n\n Loan amount:<\/strong> \u00a31,000 to \u00a325,000.<\/p>\n\n Interest rate:<\/strong> Fixed. The website gives a representative APR of 7.1 per cent.<\/p>\n\n Loan term:<\/strong> 12 months to 10 years.<\/p>\n\n Fees:<\/strong> An early repayment interest charge may apply, but there are no charges for additional repayments.<\/p>\n\n Eligibility:<\/strong> There\u2019s an eligibility checker on the HSBC website<\/a>.<\/p>\n\n How to apply:<\/strong> If you\u2019re an HSBC business banking customer you can apply online via your internet banking portal<\/a>. Otherwise, you can apply by phone.<\/p>\n\n Lloyds Bank presents businesses with options including fixed rate and variable rate loans. You can usually get an online quote for loans up to \u00a325,000.<\/p>\n\n Loan amount:<\/strong> \u00a31,000 to \u00a350,000.<\/p>\n\n Interest rate:<\/strong> This will depend on the loan option you go for \u2013 the website currently shows 11.8 per cent APR on loans up to \u00a325,000.<\/p>\n\n Loan term:<\/strong> One to 25 years.<\/p>\n\n Fees:<\/strong> There are no early repayment fees or arrangement fees.<\/p>\n\n Eligibility:<\/strong> Borrowers must be at least 18 years old, and be a sole trader, partner, or director of the business.<\/p>\n\n How to apply:<\/strong> On the Lloyds Bank website<\/a>, or through online banking if you\u2019re an existing customer.<\/p>\n\n Barclays offers unsecured and secured business loans, allowing borrowers to set their own repayment terms. Its business loan calculator allows you to get an instant quote on an unsecured loan up to \u00a325,000.<\/p>\n\n Loan amount:<\/strong> Unsecured loans up to \u00a3100,000 and secured loans for more than \u00a3100,000.<\/p>\n\n Interest rate:<\/strong> Representative APR of between 10.4 per cent and 12.3 per cent, depending on your unsecured loan amount and repayment term.<\/p>\n\n Loan term:<\/strong> Unsecured borrowers can choose their term, secured borrowers can choose their term up to 25 years.<\/p>\n\n Fees:<\/strong> It\u2019s not clear from the Barclays website whether borrowers need to pay early repayment or arrangement fees.<\/p>\n\n Eligibility:<\/strong> To get a loan from Barclays, your business will need to be based in the UK. On application, you\u2019ll also need to provide your trading accounts, business plan, profit and loss details, plus details of how you plan to use the loan.<\/p>\n\n How to apply: <\/strong>Business account holders can apply for Barclaysa loan online<\/a> . If you\u2019re a new customer, you\u2019ll need to contact them by phone.<\/p>\n\n Challenger bank<\/a> Starling offers a business loan to customers for up to \u00a3250,000 with fixed monthly payments. Starling says that each loan application is individually reviewed and priced by a specialist team.<\/p>\n\n Loan amount:<\/strong> From \u00a325,001 to \u00a3250,000.<\/p>\n\n Interest rate:<\/strong> Repayments will be fixed, but the interest rate isn\u2019t clear from Starling\u2019s website.<\/p>\n\n Loan term:<\/strong> Between one year and six years.<\/p>\n\n Fees:<\/strong> There are no fees for early repayments but there is a one-off loan arrangement fee of four per cent.<\/p>\n\n Eligibility: <\/strong>Your business must have been running for at least two years and must be based in the UK. If you\u2019re not a Starling customer, you\u2019ll need to open an account to apply for a loan.<\/p>\n\n How to apply: <\/strong>You can submit your application for a loan through the Starling Bank website<\/a>.<\/p>\n\n As well as traditional lending from high street banks, there are other types of loans for small businesses such as bridging loans<\/a> and peer to peer lending<\/a>.<\/p>\n\n Bridging loans are designed to give access to short-term finance while a business is waiting for money to be paid to them. Peer to peer lending uses an online platform to match businesses with investors willing to give them funding.<\/p>\n\n If a business loan isn\u2019t right for your business, there are some other ways you can get a cash injection, from small business grants<\/a> to investment<\/a>.<\/p>\n\n The types of investment range from crowdfunding<\/a> and venture capital<\/a>, to the Enterprise Investment Scheme<\/a> and angel investment<\/a>.<\/p>\n\n A business grant is money you don\u2019t have to pay back. And while you may not have to pay back private investment, it\u2019s likely you\u2019ll have to give away a stake of your business in exchange for funding.<\/p>\n\n Small business owners and consumers have been warned about the dangers of individual voluntary arrangements (IVAs).<\/p>\n\n An IVA is an agreement between someone in debt and their creditors. The person in debt makes payments to an insolvency practitioner, which manages debt repayments to creditors.<\/p>\n\n Using an IVA could impact an individual or business\u2019s credit score<\/a>, and there are often high upfront fees to pay.<\/p>\n\n Read more about the \u2018hidden debt scandal<\/a>\u2019 on the Citizens Advice website and visit our cost of living hub<\/a> for information on the help available to you if you\u2019re in financial difficulty.<\/p>\n\n What\u2019s your experience of small business borrowing? Tell us in the comments.<\/strong><\/p>\n\n As one of the UK’s biggest business insurance<\/a> providers, we specialise in public liability insurance<\/a> and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?<\/p>\n\n\n\t\t\t\t\tChallenges for businesses seeking funding<\/h3>\n\n
When to get a business loan<\/h2>\n\n
Understanding business loans<\/h2>\n\n
Fixed rate vs. variable business loan<\/h3>\n\n
Unsecured vs. secured business loan<\/h3>\n\n
Long term vs. short term business loan<\/h3>\n\n
Business loan comparison<\/h2>\n\n
Business loans: 2023 eligibility criteria<\/h2>\n\n
Compared: 7 of the best business loans in the UK<\/h2>\n\n
1. Virgin StartUp Loan<\/h3>\n\n
2. Government-backed Start Up Loan<\/h3>\n\n
3. NatWest Small Business Loan<\/h3>\n\n
4. HSBC Small Business Loan<\/h3>\n\n
5. Lloyds Bank Business Loans<\/h3>\n\n
6. Barclays business loans<\/h3>\n\n
7. Starling Business Loan<\/h3>\n\n
What are the alternatives to a business loan?<\/h2>\n\n
Watch out for misleading debt help schemes<\/h2>\n\n
More guides for small business owners<\/h3>\n\n
Ready to set up your cover?<\/h3>\n\n