You usually hear about small business loans, but what about larger corporations or medium-sized businesses that want to expand?
Luckily, most finance providers could offer your company a large business loan to help you facilitate purchasing premises, equipment or hire new workers for instance.
In this guide, you’ll find out what you need to know about large business loans, including what they are and where you can find them.
Let’s dive in and take a closer look!
What’s in this guide?
Top 5 large business loan providers
Loan amount: £35,001 to £10 million
Typical APR: Bespoke
Loan term: 3 to 10 years
NatWest is one of the most well-known banks in the UK and has roots that go back centuries from the merging of two different banks called 1968 National Provincial Bank (est.1833) and Westminster Bank (est.1836), which ended up as National Westminster Bank.
They have around 33,000 employees and their parent company RBS had an operating profit of £2,239 million (2.239 billion) in 2017.
NatWest can offer businesses that turnover less than £2 million, and companies with a turnover of more than £2 million specific loans to suit your needs.
Company rating on Trustpilot: 1/5
2. Startup Loans
Loan amount: Up to £25,000
Typical APR: 6%
Loan term: 1 to 5 years
Startup Loans is a government program to help startup companies to get the necessary finance that they need, especially when banks may have rejected your application.
As long as you have a solid business plan, you could get funding of up to £25,000 to start up your brand new franchise.
This can help you well on your way to establishing your franchise, even though they don’t offer loans as large as some other companies.
Representative: Borrowing £25,000 for three years means that you will pay monthly instalments of £760.55, so in total, you will be paying back £27,379.74 which means £2,379.74 of interest.
Company rating on Trustpilot: 1/5
3. Fair Finance
Type: Alternative finance provider
Loan amount: £10,000 to £30,000
Typical APR: 1.2% to 4.2%
Loan term: 6 months to 3 years
Fair Finance has a simple mission; make finance more accessible, fairer and honest.
They believe that many are excluded when it comes to great deals and trustworthy relationships in this space, so they hope they can help customers across the UK get a fair deal.
This is why they offer low-interest rates and work with charities to provide free money advice.
Company rating on Trustpilot: 4/5
4. Funding Circle
Type: Peer-to-Peer Lender
Loan amount: £5,000 – £500,000
Typical APR: Rates start from 4.5% per year AER
Loan term: 6 months to 5 years
Funding Circle is one of the peer-to-peer lenders that have been sprouting up around the UK in the last few years.
With a peer-to-peer platform, the lenders are regular citizens that want to help their savings grow by investing in UK businesses.
For businesses, this means low AER and only a couple of extra fees.
Representative: Borrow £20,000 for 12 months with fixed monthly payments of £1,752 a month, with a completion fee of 2.5% and interest of around £526. Total amount payable is £21,026.
Company rating on Trustpilot: 5 / 5
5. Shawbrook Bank
Loan amount: £250,000 to £25 million
Typical APR: 0% to 19.9% APR
Loan term: Bespoke repayments
Shawbrook Bank offers their business customers a range of services tailored to their companies, like asset finance, working capital solutions, the point of sale finance and structured finance, as well as commercial mortgages too.
With a potentially low-interest loan available, this is perfect for customers who need a cheap business loan.
Company rating on Trustpilot: 5 / 5
The top five business loan providers take into consideration their customer reputation, the amount you can borrow and the typical APR or interest rates, to ensure that you’ll be getting the best deals for you and your company.
What is a business loan?
This is when you apply to lender like a bank to loan you some money so you can pay for things like more employees, then you pay back this money, often over a set period of time such as a few months.
A business loan can come from many different places, so as a business owner you should always try and consider as many possible solutions as possible to find the best deal.
Check out the form at the top of the page to find out about your loan options.
What is a large business loan?
A large business loan could be perfect for corporations that want to either purchase expensive new equipment, buy new premises or expand your company further.
Large business loans often allow you to borrow between £500,000 and £10,000,000 depending on the lender but remember you don’t necessarily need to borrow the full amount you can.
Typically, these types of loans will usually be fixed rate and secured, which means firstly that your monthly repayments won’t fluctuate, and secondly that you need to secure your loan with your assets.
This means that you will need to put up collateral like your home or a car, in the instance that you can’t make your repayments these assets could be repossessed, but it does allow you to borrow more.
It is rare that a finance provider will want to lend you a significant amount of money when your loan is unsecured, as it gives your lender less of a guarantee that you will pay the money back plus interest.
What’s the difference between a large business loan and small business loan?
The main difference between a large business loan and a small business loan is the typical amount that you can borrow.
A large business loan could mean an amount in the millions, while a small business loan could be as little as £1,000.
Next, smaller business loans are usually unsecured which means that you don’t have to put up any collateral, and big loans might require you to put your home or car at risk in case you don’t make your payments.
Your loan terms may vary wildly depending on your ability as a business; sometimes this might mean paying back your loan within the year, or you could borrow an amount for several years.
Finally, although you can choose between fixed or variable rate loans, it’s often preferable to have a fixed rate loan, so your repayment costs remain the same.
Who can lend me a large business loan?
Banks, alternative finance providers and some peer-to-peer lenders could offer you a large business loan.
However, you are far more likely to be able to secure very high funding from a bank than elsewhere, as they have the finances to support that size of a request.
What is an unsecured loan?
An unsecured business loan is a loan which you do not need to secure.
While some loans will require security like your home in case you don’t make payments, unsecured loans don’t.
However, because of this you usually are only able to borrow a smaller amount and for a shorter period, to lower the risk to the lender.
What is a secured loan?
Secured loans are when you take out a business loan, and you utilise your business assets to put up in the case of non-payment.
This isn’t usually the best type of loan for many businesses, as there might be upfront costs like administration fees.
However, the positives are that you can often borrow a much larger amount than unsecured loans, plus your repayments might be lower, and it’s better for those with a poor credit history.
What’s the difference between fixed and variable loans?
First, let’s start with a fixed rate loan.
Generally speaking, a fixed rate loan means that your monthly repayments will be set for a specific term, usually for the length of the contract whether that is for five years or twenty.
A variable rate loan, on the other hand, means that your repayments would fluctuate depending on the market rate.
This can mean saving on your repayments. However, it might be hard to budget when you’re unsure what your costs will be.
This is why fixed-rate loans are often more popular than variable rate loans, as you know what to expect.
- Make sure that you can make repayments
- Compare all of your options
- Does your business need this amount?
- Check that your business has the health to sustain this loan
Firstly, you need to make sure that you can make the repayments required for this loan, even if they are only for a short amount of time they could be quite high.
Another option is a large loan with a long term, which could see your repayments remaining low as you could borrow the funds for up to ten years for instance.
Consider all options
Now you need to compare all of your options.
Alternative finance providers have stepped in where banks might reject your application, giving you another option to consider.
There is also peer-to-peer lending, which is a relatively new concept which means that businesses will borrow money from typical citizens through a lending platform.
Using these platforms, millions of pounds have been lent by thousands of average people to startups and established businesses alike over the UK.
Finally, you could consider whether a government grant or loan might be your best option.
In short, the government could lend you up to £25,000 at a fixed interest rate if a smaller loan makes more sense.
Next, you need to decide whether your company needs this amount of funding.
It can seem like an attractive offer to be able to borrow up to £10,000,000, but is it necessary?
Some companies end up harming themselves by trying to borrow too much; either they are rejected, or they end up putting themselves in an awkward position by not being able to make repayments.
Finally, check that your business has the health to sustain a loan, especially if it is a large loan.
In conclusion, large business loans could be the answer you need to allow your business to expand or purchase essential equipment or premises.
Want to learn more about your finances?
Finally, check out the ExpertSure guides to find out more about loans, your finances and everything you might need for your business.