Introduction
Cash flow is often cited as the life-blood of businesses; without it, some companies might miss out on things like expansions or fund your day to day activities that can stop your business from thriving.
In this guide, you’ll find out what you need to know about business loans, including what they are, the different types and what’s on offer today.
What’s in this guide?
Top 10 business loan providers
1. Boost Capital
Type: Alternative Finance Provider
Loan amount: £3,000 – £500,000
Typical APR: 1.5% – 2.5% monthly APR
Loan term: 4 to 18 months
Boost Capital is a highly recommended alternative finance provider in the UK, with many customers giving this lender five stars on trusted websites such as Trustpilot.
They offer fast funding, with minimal paperwork, approval in 24 hours and access to your funds in around two days.
Representative: Borrow £10,000 for 12 months at 47.9% representative APR. Interest rate of 36.74% p.a. (fixed). Total amount payable is £12,100.
Company rating on Trustpilot: 5 / 5
2. Capify
Type: Alternative Finance Provider
Loan amount: £3,500 – £500,000
Typical APR: 67.89% APR
Loan term: 6 to 10 months
Capify is another highly rated lender, who has been around since 2008 and they have helped thousands of business owners to grow and sustain their business.
Focused on small to medium enterprises, they aim to give you a decision within 60 seconds and solutions tailored to your business.
Representative: Borrow £24,000 for 12 months at 67.89% representative APR. Total amount payable is £29,472.
Company rating on Trustpilot: 5 / 5
3. 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
4. Shawbrook Bank
Type: 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.
This means that for startup businesses you could finance for the road ahead with equipment and salaries, or even established companies can benefit from more substantial amounts to help you fund expansions.
Company rating on Trustpilot: 5 / 5
5. Government Startup Loan
Type: Government Loan
Loan amount: £500 – £25,000
Interest: Fixed 6% interest p.a.
Loan term: 1 year to 5 years
Government loans are loans that are funded by government-backed organisations, who usually offer either regional or national businesses different loans depending on their location.
With this loan, in particular, it is aimed at startups less than 24 months old who could benefit from not only finance but mentoring, to help your business grow and thrive.
Representative: Borrow £20,000 for 12 months with fixed monthly payments of £1,721.33 a month, with interest of around £655.94. Total amount payable is £20,655.94.
Company rating on Trustpilot: 5 / 5
6. Spotcap
Type: Alternative Finance Provider
Loan amount: Up to £250,000
Interest: 22.80%, which includes both interest and fee.
Loan term: 1 month to 24 months
Spotcap is a highly regarded alternative finance provider, who since their launch in 2014, has raised £90 million globally, 500 active partners and over 1000 customers.
Although they are a relatively young provider, they have already become a fast favourite according to their five star Trustpilot rating.
Representative: If you borrow £100,000 over 12 months at a representative rate of 24.2% APR, with an interest rate of 1.40% fixed, you will pay 12 monthly instalments of £9,111 which would mean a total repayment of £109,332.
Company rating on Trustpilot: 5 / 5
7. iwoca
Type: Alternative Finance Provider
Loan amount: £1,000 – £150,000
APR: 49% representative APR
Loan term: 0 to 6 months
iwoca prides itself on providing their customers with fair decisions, lightning-fast applications, outstanding flexibility and service.
Thousands of companies have borrowed £500 million, and they could be an excellent fit for many different businesses regardless of size.
Representative: Borrow £10,000 for 12 months at 49% representative APR. Interest rate of 40% p.a. (fixed). Total amount repayable is £12,165. Actual rate may vary based on circumstances.
Company rating on Trustpilot: 5 / 5
8. Ezbob
Type: A lending platform for banks and financial institutions
Loan amount: £1,000 – £120,000
APR: 38.9% APR
Loan term: 1 to 12 months
Ezbob is bringing a change to the way that banks and other financial institutions lend to consumers and small to medium enterprises.
They act as a middleman between banks and customers, so they can offer the excellent rates that you’d typically find when looking to borrow from a bank, but their exceptional customer service.
Representative: Borrowing £50,000 over 12 months would mean you would be repaying £58,873. These payments would be £4,166 a month plus interest on your remaining balance.
Company rating on Trustpilot: 5 / 5
9. Fleximize
Type: Alternative Finance Provider
Loan amount: £5,000 to £500,000
APR: 46.8% APR
Loan term: 1 – 48 Months
Fleximize was named best business finance provider by the British Bank Awards in 2018.
They claim to allow your business to grow at the pace it needs to, by offering relatively long borrowing terms of up to four years, and up to half a million pounds.
This could be a perfect fit for companies looking to purchase their property or vehicles.
Representative: For loans of £25,000 or below: If you borrow £12,500 over 15 months at a Representative rate of 46.8% APR and an annual interest rate of 39.0% (fixed), you will pay 15 monthly instalments of £1,066.11. The total charge for credit will be £3,491.65, and the total amount payable will be £15,991.65.
Company rating on Trustpilot: 5 / 5
10. Danske Bank
Type: A lending platform for banks and financial institutions
Loan amount: No minimum or maximum
APR: Interest is calculated daily and applied monthly.
Loan term: 12 months
Danske Bank, as the name suggests, is a subsidiary of Danske Bank Group which originates from Denmark.
They can offer their customers a bridging loan, which doesn’t have a minimum or maximum amount and can be used for things such as constructing premises, renovations or letting you close a deal without having to wait for another transaction.
Repayment is usually made in a lump sum at the end of your term.
Company rating on Trustpilot: 4 / 5
This list of the top ten business loan providers mainly takes into consideration the companies customer reputation, how much your business can borrow and the interest your lender will charge you.
FAQ
What is a business loan?
In short, it’s when you ask a lender like a bank to loan you some money so you can pay for things like more employees – in return, you will pay back this money often over a set period.
You might also have to pay a certain amount of interest.
Interest is when you have to pay back a little extra, as a sort of payment for borrowing that amount of money.
Often, 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.
When would I need a business loan?
You might need a business loan because you know that you can grow your revenue by purchasing different assets, such as a new premise.
Or, you don’t have as much capital for carrying out day-to-day operations such as paying your staff, even though you are in profit.
It depends entirely on your situation, which dictates how much of a loan you need, where you get it from and your repayment terms.
How much can I borrow?
These lenders can often offer loans that range between £1,000 and £1 million.
You should consider, however, at what point a loan amount is unnecessary.
In other words, you should only borrow what you need to keep your finances in order.
But you also don’t want to have to return to a lender in the future.
Types of business loan providers
Banks
- Banks will offer both secured and unsecured loans to potential business customers.
- Interest rates are usually higher for an unsecured loan
- Banks will often run much harder checks on your finances to make sure you can afford to repay the loan – this is known as underwriting.
- Since the financial crisis, banks are a lot tighter when it comes to lending out money.
- Some banks still offer very competitive pricing and low arrangement fees.
Peer-to-Peer Lenders
- Peer-to-peer lenders allow regular citizens to make the most out of their savings by investing in a range of different businesses.
- For businesses this can sometimes mean getting better rates than you might find with banks.
- Lends businesses money with unsecured loans with terms of up to five years.
- One of the negatives is that you may have to pay extra fees like arrangement fees.
Specialist Business Lenders
- Specialist business lenders compete with banks in this market.
- They often offer short-term unsecured loans.
- These interest rates are usually higher than with banks or peer-to-peer lenders.
- The lending criteria are usually less strict.
Government Schemes
- The government backs a wide variety of business loans for companies in different industries.
- Offers loans to both startups and existing businesses.
- Enables businesses to get loans where they may not have been able to before, for a competitive rate.
- The application process for these schemes are usually longer, but they can be an excellent option for a business that can budget in advance.
Five top tips
✔ Consider all of your options
✔ Don’t be conned by exciting numbers
✔ Leverage your assets
✔ Be honest with your lenders
✔ Ask for advice
First of all, you need to consider all your options.
This means taking a look at as many lenders as possible, to ensure that you are getting the best deal for you and your business.
Then, don’t be conned by any impressive numbers.
Sometimes you’ll see a loan that offers you excellent interest rate figures, but they don’t necessarily tell you the whole story.
This is why you need to make sure that you check every aspect of the loan, not just the flashy numbers.
It can be very beneficial for businesses to free up certain assets to be able to use funds for future investments.
One key asset, for example, invoices which can be sold for a price before they are settled by your customers.
Things like this can be beneficial when cash flow becomes a dangerous problem.
Being honest with your lenders is essential when it comes to applying for a loan.
There is very, very little to be gained from lying or twisting the truth to suit your needs, especially as it can affect whether you get a loan at all in the end.
Finally, there is the issue of getting the right advice, especially at critical moments.
There are times in business when leaders need to rely on their instincts and knowledge, but business loans are not one of those times.
Getting the advice you need can be the difference between getting a great deal and a very bad one, so you should keep that in mind.
Top ten loans
| Company Name | Loan Amount that you can Borrow |
Representative APR | Loan Lengths |
| Funding Circle | £10,000 to £1,000,000 | – | 6 months to 60 months |
| Ultimate Finance | £5,000 to £100,000 | 36.8% APR | Up to 12 months |
| Esme | £10,000 to £150,000 | 10.82% APR | 12 months to 60 months |
| Spotcap | £50,000 to £250,000 | 22.8% APR | 1 month to 24 months |
| Nucleus | £25,000 to £150,000 | – | 3 months to 3 years |
| CubeFunder | £5,000 to £100,000 | 51.45% APR | 3 months to 12 months |
| White Oak | £5,000 to £500,000 | – | 3 months to 60 months |
| Yorkshire Bank | £10,000 to £150,000 | 12.8% APR | 6 months to 60 months |
| Satago | £500 to £500,000 | – | 1 month to 4 months |
| Alius | £10,000 to £1,000,000 | 11.28% APR | 3 months to 60 months |
Conclusion
In conclusion, there are many options available for startups and large businesses.
This includes banks, alternative finance providers and peer-to-peer lenders, to name a few.
Take a look at the ExpertSure guides to find out more about business loans, which can help launch your company into profitability by funding your expansions and the equipment you need.
