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Used correctly, a business loan can help you get an idea off the ground, take your organisation to the next level, or cover a cash-flow issue.
However, picking a lender can be tricky, especially if you haven’t applied for a business loan before. That is why we have put together our top five business loan providers, as well as a detailed guide for how to apply.
Our picks for the best business loans providers are informed by what business owners chose as the most important factors when selecting a lender. That includes the flexibility of term length, the maximum amount borrowable, and the level of customer service.
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Top 10 Best Business Providers
This top ten is from 14 business loan providers that NerdWallet evaluated and reviewed. Others are available. Find out how we use ‘best’ and our guide to ratings.
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NatWest Small Business Loan
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Representative APR12.35%
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Representative Example12.35% APR representative based on a loan of £10,000 repayable over 24 months at an interest rate of 11.70% per annum (fixed). Monthly repayment of £469.33. Total amount payable £11,264.04.
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Available amounts£1,000 – £50,000
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Available Terms1 – 7 years
Pros
- Borrow up to £50,000 (small business loan), up to £10 million (fixed interest rate loan) or a potentially unlimited amount (variable interest rate loan).
- Term lengths range from a maximum of seven years (small business loans) to 25 years (fixed- and variable rate loans).
- You can access customer service online (via the automated assistant Cora and through the bank’s mobile app), as well as via telephone and at a branch.
- There are no early repayment fees if you want to pay off your small business loan before the end of your term.
- There are no arrangement fees when taking out a small business loan with NatWest.
Cons
- You can only receive a maximum term of seven years for the small business loan. Typically, traditional lenders offer at least 10 years as standard.
- On Trustpilot, NatWest, RBS and Ulster Bank all have ‘Bad’ ratings. However, it is important to note those reviews are for the brands as a whole, not just business loans.
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Lloyds Bank Small Business Loan
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Representative APR11.80%on loans of £1,000 – £25,000. APR for loans above £25,000 provided on application.
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Representative Example11.80% APR representative based on a loan of £8,000 repayable over 60 months at an interest rate of 11.20% (fixed). Monthly repayment of £174.74. Total amount payable £10,484.40.
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Available amounts£1,000 – £50,000
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Available Terms1-25 years
Pros
- You can borrow for up to 25 years with a secured or unsecured small business loan.
- Small businesses can borrow between £1,000 and £50,000.
- The lender offers web-based support via a virtual chatbot or through the Lloyds Business app, alongside help @LloydsBank on its X account (formerly Twitter).
- You won’t incur any early repayment charges if you want to pay off your loan in full before your term ends.
- Lloyds Bank has branches in England and Wales.
Cons
- There is no dedicated phone support for business loans customers.
- There are no Lloyds Bank branches in Scotland or Northern Ireland.
- You can only access a Lloyds small business loan if you have a turnover of less than £3 million.
- You’ll need to provide a personal guarantee if you’re applying as a limited company or limited liability partnership.
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Barclays Unsecured Business Loan
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Representative APR12.3%on loans of £1,000 – £25,000. APR for loans above £25,000 provided on application.
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Representative Example12.30% APR representative based on a loan of £6,000 repayable over 36 months at an interest rate of 12.30% per annum (fixed). Monthly repayment of £200.15. Total amount payable £7,205.28.
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Available amounts£1,000 – £100,000
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Available Terms1 – 10 years
Pros
- Businesses can borrow from one to 10 years with an unsecured loan, and up to 25 years with a secured loan.
- There is a wide range of customer service options, including social media, via its app or ‘help and support’ on your online account.
- Barclays has branches in England, Wales, Scotland and Northern Ireland.
- You can borrow up to £100,000 with an unsecured loan.
Cons
- General business phone lines are only open five days a week.
- You can’t apply for a Barclays business loan online if you’re a new customer.
- Unsecured loans are not available for all industries, but Barclays does not specify which industries may be excluded on its website.
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HSBC Small Business Loan
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Representative APR7.1%
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Representative Example7.1% APR representative (fixed). Based on an assumed loan amount of £13,000 over 60 months at the AIR of 7.1% p.a (fixed). Monthly repayment £256.73. Total amount payable £15,404.01.
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Available amounts£1,000 – £25,000
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Available Terms1 – 10 years
Pros
- You can borrow up to £10,000 (HSBC Kinetic Small Business Loan), up to £25,000 (Small Business Loan) or a potentially unlimited amount (Flexible Business Loan).
- You can borrow over a term of up to 10 years (Small Business Loan & HSBC Kinetic Small Business Loan) or up to 20 years (Flexible Business Loan).
- Access to customer service is via the lender’s website, phone helpline and mobile app, as well as face-to-face support in a branch.
- There is no arrangement for the HSBC Small Business Loan. However, arrangement fees may be payable with the Flexible Business Loan.
Cons
- The Small Business Loan has a lower maximum level of borrowing than comparable products from other traditional banks.
- Although you can make overpayments without a fee, you may have to pay an interest charge for early repayment in full (for the Small Business Loan), as well as a prepayment fee (for the Flexible Business Loan).
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TSB Base Rate Business Loan
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Representative APRAvailable on application
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Representative ExampleAvailable on application
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Available amounts£25,001 – £1,000,000
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Available Terms1 – 25 years
Pros
- TSB offers flexible loan terms of between one and 10 years (fixed-rate loan) or up to 25 years (base rate loan).
- You can access customer service agents over the phone or face to face in a branch in England, Scotland and Wales.
- You can borrow from £1,000 up to £1 million (fixed-rate loan), or from £25,001 to a potentially unlimited amount (base rate loan).
- Access to web-based support for some queries is via an automated chat bot in the app.
Cons
- Although TSB has a dedicated business app, customers can’t review their loan on it (this can be done via internet banking).
- TSB has no branches in Northern Ireland.
- There are no 24/7 customer service options for business loan customers.
- Break costs may be applied if you repay part of all of a fixed-rate loan before the end of the agreed term. This does not apply to base rate loans.
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Fleximize Business Loan
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Representative APRAvailable on application
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Representative ExampleAvailable on application
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Available amounts£5,000 – £500,000
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Available Terms1 – 4 years
Pros
- With Fleximize, you can borrow between £5,000 and £500,000, with unsecured loans capped at £250,000.
- Fleximize offers short- to medium-term lending, with term lengths of three to 12 months for Flexiloan Lite, and 12 to 48 months for its standard Flexiloan, capped at 36 months for unsecured loans.
- Fleximize offers business loans for newer organisations that have only been trading for six months with its Flexiloan Lite option.
- You can repay your Fleximize business loan early at no extra cost, and you will only pay interest for the time you’ve actually had the loan.
Cons
- Fleximize has limited customer service options, with only an online contact form and phone line. You can visit the company’s HQ, but this is just one location, in Ipswich.
- All Fleximize products, including secured loans, require a personal guarantee from at least one director or shareholder. Secured loans also require an equitable charge, which means the lender may claim equity in a property if the borrower defaults on the loan.
- You can only borrow a maximum of £250,000 on an unsecured Flexiloan or Flexiloan Lite if you are based in Scotland or Northern Ireland.
- Sole trader and non-limited partnership loans start at over £25,000.
- Non-homeowners can borrow a maximum of £20,000, and only as long as the business has been trading for over 36 months.
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Starling Bank Business Loans
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Representative APRAvailable on application
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Representative ExampleAvailable on application
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Available amounts£25,001 – £250,000
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Available Terms1 – 6 years
Pros
- Your business can borrow a maximum of £250,000 with a Starling unsecured loan.
- Businesses can borrow for between one and six years with a Starling unsecured business loan.
- Starling provides 24/7 customer service through live chat on the app, email and telephone support, while also responding to queries on its X account (formerly Twitter).
- There are no early repayment fees if you want to repay your loan before the term ends.
Cons
- Starling business loans are not available to sole traders.
- You are required to provide a personal guarantee when taking out a Starling business loan.
- At £25,001, the minimum amount you can borrow with a Starling business loan is much higher than most other lenders.
- There is no face-to-face support as Starling has no branches.
- If you are successful in your application, you will need to open a Starling business account and make it your primary banking service.
- Starling does not offer secured business loans.
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Funding Circle Business Loan
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Representative APRAvailable on application
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Representative ExampleAvailable on application
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Available amounts£10,000 – £500,000
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Available Terms1 – 6 years
Pros
- You can borrow up to £500,000 with an unsecured fixed-rate Funding Circle small business loan.
- You don’t need a pre-existing account with Funding Circle to get a loan.
- The minimum term length is just six months, meaning you can pay your loan off quickly if you wish.
- There are no early repayment fees for paying your loan off in full before the end of your term.
Cons
- The maximum term length is six years, which is shorter than many traditional lenders.
- While you don’t need to provide an asset as a security to get a Funding Circle business loan, you will be asked to give a personal guarantee.
- Funding Circle offers limited customer service options, with no branch or app access.
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Iwoca Flexi-Loan
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Representative APR49%
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Representative Example49% APR representative based on a loan of £10,000 for 12 months with an interest rate of 40% p.a. (variable). Total amount payable £12,294.
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Available amounts£1,000 – £500,000
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Available Terms1 day – 2 years
Pros
- You can borrow up to £500,000 with the Flexi-Loan.
- With loan terms of one day to two years, iwoca may be suitable if you are looking for short-term borrowing.
- There are no early repayment fees.
- Phone and online customer service and support is available.
Cons
- All iwoca Flexi-Loans come with a variable interest rate.
- Sole traders are not eligible for an iwoca business loan.
- Limited companies will be required to provide a personal guarantee, typically from one of the company directors.
- It has no app, so there is no app-based customer service.
- It has no branches, so there is no face-to-face customer service (though you can visit its headquarters in London).
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Metro Bank Commercial Loan
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Representative APRAvailable on application
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Representative ExampleAvailable on application
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Available amounts£25,000 – £25m+
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Available Terms1 – 30 years
Pros
- You can borrow for up to 30 years with a commercial loan.
- Customer service is available over the phone from Monday to Saturday.
- Eligible applicants could potentially borrow over £25 million with a commercial loan.
- Metro Bank has several branches in England and one branch in Wales, which are open seven days a week, for face-to-face support.
- Secured and unsecured loans are available, subject to status.
Cons
- There are no Metro branches in Scotland or Northern Ireland (and only one in Wales).
- The options for online support from a customer service agent are limited.
- You have to have a Metro Bank business account to apply for a small business or commercial loan.
Find the right Business Loan for you
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This top 10 only contains business loans providers reviewed by NerdWallet UK.
The pros and cons featured here are chosen by us based on a combination of our expert, research-based opinions and an exclusive survey of UK business owners and decision makers. The survey was conducted on behalf of NerdWallet UK in December 2022 to identify the business loan features that people feel are most important. They are unlikely to be the only product features and restrictions that you should consider. Pros and cons are subjective and you should align them to your own personal and business circumstances. Information was correct at the time of publication but may have changed since.
Top 10 Best Business Loans
This top ten is from 14 business loan providers that NerdWallet evaluated and reviewed. Others are available. Find out how we use ‘best’ and our guide to ratings.
| Provider | Star rating | Product name | Amount borrowable* | Loan term* |
|---|---|---|---|---|
| NatWest** |  | Small Business Loan | £1,000 to £50,000 | 1 to 7 years |
| Lloyds Bank |   | Small Business Loan | £1,000 to £50,000 | 1 to 25 years |
| Barclays |   | Unsecured Business Loan | £1,000 to £100,000 | 1 to 10 years |
| HSBC | | Small Business Loan | £1,000 to £25,000 | 1 to 10 years |
| TSB |   | Fixed Rate Loan | £1,000 to £1 million | 1 to 10 years |
| Fleximize |   | Flexiloan | £5,000 to £500,000 | 12 to 48 months (up to 36 months for unsecured loans) |
| Starling |   | Starling Business Loan | £25,001 to £250,000 | 12 to 72 months |
| Funding Circle |   | Small Business Loan | £10,000 to £500,000 | 6 months to 6 years |
| iwoca |  | Flexi-Loan | £1,000 to £500,00 | 1 day to 2 years |
| Metro Bank |  | Small Business Loan | £2,000 to £60,000 | 1 to 5 years |
*This table is based on the loan with the shortest maximum term, and the lowest maximum borrowable amount, out of a lender’s product offering.
** Royal Bank of Scotland (RBS) and Ulster Bank, other brands within the NatWest Group, offer similar business finance solutions to NatWest in Scotland and Northern Ireland respectively, although specific terms may vary.
This top 10 only contains business loans providers reviewed by NerdWallet UK.
Important information: Neither the review nor the star ratings considered the lender’s lending rates or representative APR, and therefore does not reflect how much they charge to borrow with them. Always check and compare a lender’s rates against others on the market when considering a loan.
What is a business loan?
A business loan is a form of finance that can be used to help support and expand your organisation.
As with personal loans, you borrow a sum of money, and pay it back, with interest.
One of the most important differences between personal loans and business loans is that with a personal loan, you will be personally liable for repaying the amount you have borrowed.
With a business loan, as long as the appropriate company structure is in place, that responsibility falls to the business instead. This will not be the case, however, if you are a sole trader, or you have secured your business loan with a personal guarantee.
You can also typically borrow more through a business loan. What’s more, the interest payments on your business loan may be tax deductible unlike payments on a personal loan.
Are business loans regulated?
Most forms of business lending are unregulated. However, if the business loan is £25,000 or less, and is for certain business types, such as sole traders, it may be regulated by the Financial Conduct Authority (FCA).
You should research the form of business finance you are interested in, and the lenders involved, to check if they are regulated ahead of applying.
How to apply for a business loan
Applying for a business loan may be easier than you think. Just follow the steps below.
- Decide how much you want to borrow and for how long. Once you’ve decided a business loan is the right option for you, it is important to consider the balance between what you can afford and what you need to help your business.
- Compare business loan lenders to find the right fit for your organisation. Shopping around might help you get a business loan that best suits your needs.
- Submit your application and all relevant documents. This may include how long you have been trading, details about your finances, and what you want the money for.
- Wait to hear back. It can take a couple of hours to a matter of weeks to hear back about your business loan application, depending on your financial circumstances and the lender in question.
» MORE: How to get a business loan
Who is eligible for a business loan?
In theory, everyone who owns a business is eligible for a business loan, so sole traders, small and medium-sized enterprises (SMEs) and large businesses may all be eligible to apply for a business loan in the UK. However, lenders will set their own criteria and determine your eligibility for a loan based on information such as:
- how long your business has been trading
- whether your business is based in the UK
- your annual turnover
- your business and personal credit history
» MORE: How do business loans work?
Types of business loans
There are a two main types of business loans:
Unsecured business loans
Unsecured business loans do not require security, though you may be required to provide a personal guarantee. These types of loans tend to have higher interest rates because there is a greater risk of the lender losing money if you can’t pay off what you owe. Unsecured business loans also require a good financial history and credit rating as evidence that the business will be able to repay the loan as there is no other guarantee in place.
Secured business loans
Secured business loans require that you put down an asset such as property as security. Secured loans often come with lower interest rates than unsecured loans as they represent less risk for the lender. They may also give you access to a larger loan amount over a longer term. However, secured loans come with the added risk that you could lose the asset you put up as security if you miss the payments.
» MORE: Types of business loans
How to choose the right business loan for you
There are a number of factors to bear in mind to help you choose the right business loan for your needs, such as the interest rate on the loan, the amount you can borrow, and any fees for taking out the loan.
Before you apply for a business loan, you should consider whether it is the best fit for you and your organisation. There are a few key questions you can ask yourself to help you decide whether a business loan could be right for you.
- How much do I want to borrow?
- When do I need to repay the loan?
- How much can I afford to repay each month?
- Am I struggling with unpaid invoices?
- Do I hold equity in a property?
- Do I need the loan to buy a specific valuable asset?
- What’s my personal and business credit rating like?
- How long has my business been operating?
- Do I need a lump sum?
Tips for maximising your business loan
Once you have your business loan, you need to make sure you use it effectively. Below are some tips on how you can maximise your business loan:
- Create tangible targets: To ensure you use your funds correctly and have something to show for it the other side, it is wise to create specific goals you want to achieve with the money you receive through the loan. Ideally, you would come up with a plan before you apply for finance.
- Detail exactly what you will spend the money on: Once you have an idea of what you want to achieve, set out exactly what the loan will be spent on, over a concrete time frame. This will help lay a path to achieving your targets.
- Consider a separate bank account: Depending on what you intend the loan to be used for, you may want to consider opening a dedicated business bank account for the funds. This will make it easier for you to review your finances and see how much you have left at any given moment.
- Regularly review your finances: The funds being in your account is only the beginning of managing your loan. Regularly review how much you have left, what it has been spent on, and how that compares to the plan you came up with before you applied. It won’t always be possible to keep on target; unexpected expenses are part and parcel of running a business. However, tracking your spending will mean you hopefully won’t veer off course.
» MORE: Try our business loan calculator
Alternatives to business loans
There are many funding alternatives to consider if you’re unsure about whether a business loan is the right option. Some of these include:
- business overdrafts
- business credit cards
- merchant cash advances
- invoice finance
- asset finance
- small business grants
- crowdfunding
- angel investors
Business Loans Methodology
NerdWallet evaluated and reviewed 14 business loans providers (a mix of traditional and online-only lenders). Collectively, these represent the largest lenders by assets and internet search traffic, along with notable or emerging players in the industry.
We considered more than 10 data points for each account, based on the criteria that matter most to users, scoring them on flexibility of term-length, customer service, and amounts borrowable, among other factors. This information was gathered from each financial institution’s website and company representatives. In addition, we regularly add new brands and our editorial team reviews them against the same criteria for consistency and accuracy.
Using the same data across all products and features we were able to create star ratings on a scale of one to five stars, where a one-star score represents ‘poor’ and a five-star score represents ‘excellent’. Please read more on our business loans methodology.
Frequently asked questions about business loans
A business loan is a source of finance for companies that need money for a variety of purposes. Below are some of the reasons you may consider getting a business loan.
- Cash flow: A business loan could help improve your business’s cash flow. However, you will need to have a strategic plan in place to overcome future cash-flow issues.
- Business growth: The money you borrow could help your business expand.
- Purchasing power: Business loans can help you buy new equipment, increase inventory or invest in office space.
- Recruitment: Money borrowed through a business loan may be used to invest in recruitment and hire new employees.
» MORE: Why do businesses need finance?
There is no fixed personal or business credit score you need in order to apply for a business loan. However, a strong credit score could increase your chances of success and potentially give you access to lower interest rates, although it isn’t the only factor lenders will consider.
For example, credit reference agency Experian’s business credit score ranges between 0 and 100. The closer your score is to 100, the less of a risk you are likely to be seen as by lenders, and therefore the better your chances are of getting a business loan.
However, bear in mind that your credit score isn’t the only factor that lenders will consider when deciding whether to offer you a business loan.
While it is not always a requirement, you may find that many lenders will not consider you for a business loan if you do not also have a business bank account. It can also make the application process simpler if you do.
In general, business bank accounts can make it easier to manage your finances and ensure that there is a clear separation between your personal and business funds. This is especially important when it comes to managing a business loan.
Review methodology
At NerdWallet Ltd UK we base our reviews & ‘Best Of’ pages’ on the results of surveys we undertook about what was important to people who use these products. This allows us to look at products impartially of any commercial arrangements we have, and fairly rate the products on the same set of criteria.
Best means ‘our best’, and is based only on what products we have aligned to our surveys and which form the basis of our reviews and ratings. This means that there will be other products on the market that we have not included in our ‘best of’ pages. Best does not mean it’s best for you, nor does it mean the ‘cheapest’.
Product details reflect the information that was available at that time but may have changed since. We strive to give you a review on as many products as possible but it is likely there are others available that we have not reviewed. The review is our opinion, but it does not constitute advice, recommendation or suitability of your financial circumstances.
You can view our full review methodology here.
About the Author
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Limited company loans offer a way for businesses to potentially get the funds they need to take their business to the next level. Loans between directors and their business are also possible, but keep a record and be aware of the tax implications.
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