Business Loans
Whether you are a sole trader, a start-up, or a small to medium-sized enterprise (SME), it is highly probable that at some point in your business journey, you will require additional funds to drive growth.
British Business Funding will compare the market for you, with our expansive network of finance and loan providers, we can get you the best rates in the market.
Let’s get your business funded with the best deals on the market
Opting for fast and cost-effective business loans can be a smarter alternative to seeking cash investors. From acquisitions to debt reduction and maintaining solid working capital, waiting for slow cash flow or investors to expand is no longer necessary. You can accelerate your company’s growth by obtaining a purpose-built loan that caters to your business requirements.
No matter if you’re a sole trader, a start-up, or an SME, it’s likely that at some point in your business’ life, you’ll need extra funds to power growth. Acquisitions, debt reduction, solid working capital. Boost your company’s growth with a loan that’s purpose-built for business needs.
With our network of government backed loan and finance providers we can get you preferential rates and the best deals in the market.
Use the funds for…
Business Expansion
Provide the cash injection needed to enable business growth
Start a Business
Start a business with facility aimed at early stage entrepreneurs
Improve Cashflow
Maintain a healthy cash reserve by taking a loan and ironing out the peals
Purchase Stock
Maintain sales growth by replenishing stock levels
Vehicle Finance
Find the most suitable way to purchase assets like cars and vans to keep your business moving
Property Finance
Access commercial mortgages, bridging and development finance via a network of lenders
Import/Export Finance
Release cash from unpaid invoices to help fund your business
Debt Refinance
Reduce your current rate, or find a better repayment structure for your business
Acquire a Business
Enable growth and diversification by acquiring a new business or competitor
What is a business loan?
A business loan is a type of financing that is designed specifically for businesses. It is a sum of money that is borrowed from a lender, such as a bank or a financial institution, with the intention of helping a business cover expenses, invest in growth opportunities, or otherwise improve its financial position.
Business loans can come in a variety of forms, including term loans, lines of credit, and equipment financing, among others. The terms and conditions of the loan, such as the interest rate, repayment period, and collateral requirements, will depend on the lender and the specific needs of the business.
Business loans are typically used for a variety of purposes, including starting a new business, expanding an existing one, purchasing equipment or inventory, hiring new employees, or managing cash flow. They can be a useful tool for businesses looking to achieve their goals and improve their financial standing, but they do come with certain risks and responsibilities that should be carefully considered before applying.
Speak to our team today to find the right loan solutions for your business, we’ll make sure you get the best rates in the market because our connections in the industry. We already have a huge network of providers ready to finance your business with the right loan.
We’ve helped businesses from all industries get funding
Bars
Restaurants
Logistics
Construction
Manufacturing
Ecommerce
SaaS
What types of business funding are available?
There are many types of business loan. Some require the borrower to provide security (collateral) to reduce the lender’s risk, while some do not. Usually, the lump sum provided is lower and the interest rate is higher for loans where no security is provided.
Common UK business loans include:
- Bank Loan: What it says on the tin. A bank lends money for business purposes.
- Secured Loan: The borrower must provide a guarantee or collateral to protect the lender.
- Unsecured Loan: No collateral required. The loan is based on the borrower’s credit score.
- Merchant Cash Advance: Short-term borrowing to cover everyday expenses. Suitable for businesses that take card payments from customers.
- Small Business Loan: Loans for businesses with less than 25 employees.
- Invoice Finance: Funds are lent against the value of the borrower’s accounts receivable.
- Start-Up Loan: Seed cash to get a new business off the ground. Government Funds may be available for this type of loan.
- Franchise Finance: Loans to start a new franchise business or expand an existing one.
- VAT Loans: Funds to help businesses pay their VAT bill while they wait for customers to pay outstanding invoices.
- Revolving Credit Facility: Much like a bank overdraft. The borrower can dip into an open credit facility as and when funds are needed. The borrowing is repaid from incoming business receipts.
- Business Credit Cards: Credit cards for business use only. Often with higher credit limits and lower interest rates than cards for private individuals.
- Asset Finance: Large loans usually used to buy plants, machinery, and commercial property.
- Vehicle Finance: Funds to buy vehicles for business use.
- Ecommerce Finance: Funds to power online businesses.
- Working Capital Loans: Loans that pay everyday business expenses.
How does a business loan work?
Business loans can be for as low as £1,000, going all the way up to the £millions.
Repayment periods can be as little as a few months or over many years in the case of plant, machinery, and property purchases.
Interest rates and fees will vary according to the type of loan provided and the status of the borrower. Some business loans – for example, Merchant Cash Advances – may be obtained in one or two days. Other types of loan – such as Asset Finance – can take much longer to secure.
Regardless of the type of borrowing, the basic process for taking out a business loan remains the same:
- The borrower completes an application. This will usually ask for basic business information and business, bank, and tax records. The lender may also run a credit check on the business and its owners or directors.
- If collateral is required, the borrower will need to provide evidence of its value.
- If the lender is satisfied with the due diligence, they will make an offer, which sets out how much they will lend, the time-period for repayment, and what the interest rates and fees will be.
- If the borrower accepts these terms, an agreement is drawn up and after signing, the funds are either paid into the borrower’s bank account or to a third party if the funds are for something like a commercial property purchase.
Repayment terms will vary according to the type of loan. Many short-term loans, such as Invoice Financing or Merchant Cash Advances, are repaid from incoming business receipts, so they will repay quickly and automatically. Other types of loan, such as a Commercial Mortgage, may be spread over many years, with the borrower making regular monthly or quarterly repayments of capital plus interest.
Lenders will usually provide loans to businesses that show they can comfortably repay them, so risks for the borrower will be small. However, loans can be spread over years and business circumstances could change in the interim, some of which may present risk to the borrower.
Common risks include:
- Personal liability: Many loans require security in the form of collateral or a personal guarantee by the business owner or directors. In such cases, loan default could see the owners or directors lose their personal assets.
- Interest rate fluctuation: Some business loans come with variable interest rates. A sudden spike in rates could affect the borrower’s ability to repay.
- Loan default: Put simply, the borrower cannot repay the loan – an issue usually caused by a decline in business cashflow. In the event of default, the lender may recover their losses by making claim on collateral and personal guarantees.
- Too much debt: Most businesses need to borrow, and it is often productive to do so. However, sometimes, businesses can borrow too much. This can put strain on their cashflow and cause some or all of their loans to go into default.
Before you apply for a business loan, make sure you have the necessary paperwork in order:
- Most recent three-years bank and tax records.
- Cashflow forecast.
- Profit and Loss Statement and recent Balance Sheet.
- Details of any existing debt.
- List of major customers and suppliers (if B2B).
- List of any assets, such as property or inventory.
Ready to start your funding journey?
Business loan FAQs
Does applying for a business loan affect my credit score?
Possibly. Some lenders may check the credit score of the business and the business owners or directors. Too many searches on your credit report could affect your personal credit score.
Can I repay my loan early?
In most cases yes, although you may incur some early-repayment penalties and fees by doing so.
How long does it take to receive my loan?
It depends on the type of loan. Some loans, such as Merchant Cash Advances, can be agreed and paid into your bank account in one or two days. Other loans, such as Asset Financing, can take much longer.
What are business loans commonly used for?
Many business loans are used as Working Capital, to cover dips in cashflow and to pay salaries, overhead and buy inventory. Other common uses include tax payments, starting a new business, or purchasing vehicles, plant, and machinery.
Can I get a business loan with bad credit?
Possibly. Even if you’ve been turned down elsewhere, it may still be possible to find a business loan to suit your current situation.
Am I able to borrow more money?
If you are in good standing with your current loan(s) and your cashflow shows you can afford the extra repayments, you may be able to top-up your business borrowing. In most cases, the application process for a top-up will remain the same as your original loan.
Are all UK business loans secured?
Business loans can be both secured or unsecured. Unsecured business loans will typically be for smaller amounts at a higher cost across shorter repayment terms.
If your business requires a larger loan value, offering an asset as security against the loan may allow you to secure additional funding at more competitive rates.
How long does a business loan last?
Your business loan term will vary dependent on the value of your loan, what type of loan you take out and how much you are able to repay each month.
What credit score do I need for a business loan in the UK?
There is no set minimum for the credit score you or your business needs to get a business loan, this will depend on the criteria set by your lender, your loan type and loan value.
What if I've been denied a business loan in the past?
If you have previously been denied a business loan, it is important to take time to reassess your current financial situation.
Improving your credit score, and paying off any existing business debts will help you reapply for a loan.
Are there any business loans exclusively for women?
As the number of female entrepreneurs continues to grow in the UK, alternative lenders and some government backed lenders have schemes and funding solutions available specifically for women led SMEs.
Fill out our application form to see if you are eligible for same day approvals!
Fill in our application form and we will be in touch to guide you through the next steps to finding the right funding solutions for your business!
Please note:
We are an introducer of business funding & not a direct government backed lending operation or a finance association of any public body.