Businesses face financial instability daily. That’s why business funding is one of the most critical factors to help build and grow an enterprise. If you need financing to grow your UK business, a business loan can provide a fast, flexible and affordable solution to help support your goals. Find the best funding options for your business and learn how to avoid costly mistakes with Cashfloat. Discover everything you need to know about small business loans in 2020.
What is a small business loan?
A small business loan is a type of low-cost financing that enables businesses to borrow money to fund business operations. This type of loan can be used for most business-related purposes, including boosting cash flow, hiring new staff, buying new equipment and paying unexpected bills.
How do business loans work?
Fill out and submit an online application form.
Get your funders lending decision (usually within 24 hrs).
Once approved, you will get same day funding into your business account.
Make your monthly repayments.
Who can apply for a small business loan?
Most businesses can apply for funding including sole traders, limited companies and SMEs (small and medium enterprises). In general, any business with under 500 employees can apply for this type of loan in the UK. So if you are looking for an SME loan, LTD company loan, or a sole trader loan and you have less than 500 employees, even if you have poor credit, you may still be eligible!
Do I qualify for a business loan?
Every business loan and loan provider is different, but here are some standard requirements all applicants will need to meet to be eligible for any small business loan in the UK:
- Live in the UK and be over 18 years
- Be registered to operate as a UK – based business.
- Your business can demonstrate its ability to repay the loan
- You have no late payments or outstanding CCJs.
Business loan rates
How much can I borrow?
You can get a business loan from £1,000 up to £500,000. A £20,000 loan is a very common amount that businesses borrow to boost their cash flow.
Small business loans are usually repaid over a short time frame – up to 3 years and are often unsecured. However, if you are looking to take out a bigger loan, you may be required to provide collateral. Since if your business were to go bankrupt and you can’t repay the loan, the lender will repossess the collateral instead of payment. Therefore, although these loans have lower interest rates, they are much riskier to borrow.
How can I use my small business loan?
A loan can be used to finance almost any
business-related purpose. You may need to move to larger premises, require a cash boost to
stock levels, hire more staff, purchase new equipment or to pay for other business
Small business funding can also be used to pay for unforeseen costs, including, economic fluctuations caused by seasonality or just another unexpected bill.
What are the best business loans available?
|Company||Loan amounts||Loan Duration||Min monthly turnover||Min time trading|
|SME Loans||1k – 500k||1 – 5 years||£5,000||6 months|
|Liberis||50k – 150k||12 – 24 months||£2,500||4 months|
|Start-up Loans||1k – 25k||1 – 5 years||–||2 years / under|
|Funding Circle||810k – 500k||2 – 5 years||–||2 years|
|Funding Options||10-30% annual TO||1 month – 5 years||–||2 years|
|Capalona||1k – 500k||1 month – 5 years||£10,000 (annual)||5 months|
Other small business funding options:
How can I get a quick loan for my business?
- Having the last three bank statements handy
- Knowing off-hand the details of when you set up your business
- Knowing your current credit score.
Once approved, many lenders will provide same day payout on your business loan.
Are business loans for women available?
What business loans are easy to get?
Is it safe to get a loan for my business online?
- If the lender is on the FCA register
- If the website connection is secure – A padlock in the URL
- Whether the application fees seem reasonable
For more information, click here to read our guide to getting online loans safety.
Warning: When looking for a small business loan provider, keep in mind that only lenders who offer loans to limited companies need to be regulated! This means that some lenders who only provide loans to sole traders may be unregulated! If you are a sole trader, we recommend that you only borrow from a regulated lender for your own safety.
Do businesses have a credit rating?
Other ways you can improve your business’ credit rating include:
- Always paying back credit that you have borrowed on time.
- Paying to have your accounts audited, it gives them more credibility.
- Filing your accounts well before the deadline.
- Filling out the Questionnaires that CRA’s send you.
- Keeping your personal credit record in good shape – this is vital if you are a new business.