Small Business Loans

Owning a business can be expensive, especially when you are just starting out, or you are looking to expand. If you cannot fund the business setup or expansion yourself then a small business loan is an appropriate alternative. Take a look at our business loan comparison chart for all the information you need to help you make an informed financial decision.

Before you apply for a small business loan double check the criteria, and see whether you could be eligible for a free grant from a local authority or the government. Otherwise, you have the following options:

Unsecured loan

Unsecured business loans are loans of up to £25000 which are offered by three different lenders: P2P, banks, and building societies. The fact that you do not have to secure any of your assets against the loan means that the interest rates may be high, as the lenders are trusting you to hold to the promise of repayment.

P2P Loan

Peer-To-Peer business loans are private loans that do not go through a bank, but are organised through a network of businesses and individuals. If you want to apply for a P2P loan then you must have a high credit score, provide signs of forward planning for your business, and provide a complete summary of the business’ financial history.

Business Loans for Bad Credit

Some banks offer bad credit loans if an owner of a business or the business itself has a bad credit history. Out of the available options there are some non-bank loans which will offer very high rates on the loan, and some bank loans which will first require a heavy assessment of the predicted income of the company before considering whether to approve the loan application. As always, be careful and make sure you can meet the repayments before applying, otherwise you risk your business’ financial collapse.

Secured Loan

When a business secures an asset, such as their property, against a loan, the bank is able to offer much higher loan amounts. With a secured business loan there are clear risks, mainly that if you cannot meet the repayments you risk losing the asset you used to secure the loan. However, the rates offered are cheaper than those of an unsecured business loan; so, if you are sure you can meet the repayments this may be a suitable option to help fund your business.

Can I apply for a Small Business Loan?

Depending on the size of your company and the duration it has been trading, the acceptance criteria for a small business loan can vary between lenders. A lender may take into account how long the company has been trading, how much the company makes per annum, or it may be a lender targeting only new businesses. VAT registration and predicted finances may also be required. What is unique about a small business loan is that it is specifically constructed for every business, and so there are no consistent interest rates, being calculated on a variety of factors including: the length of the loan, the amount of the loan, and the credit history of the company or owner.