Small businesses in the UK borrow over £400 billion each year.

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?

How to get a Business loan
Below is the general process of applying for any business loan:

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

Business loan rates in the UK will vary with every lender and based on the business products they offer.


Is your restaurant a popular eating spot? You might need to hire more staff. Just starting out? You’re going to need to outfit that gourmet kitchen. Business funding for restaurants can help you grow your restaurant to five-star status.


Got a very popular retail business? Built up a well liked brand name? You may be looking to expand your business, add a new product to the market or just increase your staff. A loan for retail companies can bring your company to a new level.


Is your construction company the leading enterprise in the area? You may need to hire more staff to keep up with the demand. Just starting out? You’ll need capital to get projects off the ground. Business funding for construction companies can give your company the strong foundation it needs.


Are you a successful wholesaler looking to expand your warehouses? Do you need additional trucks to transport your goods? Business funding can bring the success of your enterprise to the next level.


Got a well liked beauty parlour, spa or barber shop? You may want to attract more customers by dolling up your parlour. Looking to start out on your own? You will need capital to purchase all the equipment. Business funding for salons can help build up your company and turn your dreams of success into reality.


Are your services in high demand? You may be looking for additional capital to expand, or to employ more staff as your business booms. Small business funding can help your company become a top notch service provider.

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 invest in stock levels, hire more staff, purchase new equipment or to pay for other business services.

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:


Small business loans FAQ’s

How can I get a quick loan for my business?

There is no such thing as instant business loans; however, if you want your credit fast, you can often speed up the process by:
  • 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?

With the number of female entrepreneurs increasing in the UK, there is more small business help for women available than ever before. Women can now access working capital as well as funding from Government-backed lenders. Many alternative business funding companies have dedicated small business loans for women to help grow their business.

What business loans are easy to get?

People often look for “no credit check business loans” or “guaranteed business loans” to avoid the hassle of getting rejected by lenders. However, these are not legal in the UK. Lenders that offer these loans may not be FCA authorised and do not have your best interests in mind! So if you are looking for an easy business funding, you can apply with a broker. This will save you filling out multiple forms and provide you with a higher chance of getting accepted by at least 1 lender.

Is it safe to get a loan for my business online?

Yes, most business loans online are offered by safe and regulated lenders. The main things that you should look out for when applying with any online business lenders are:
  • 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?

Yes, all businesses have a credit record in a similar way to individuals, and it may affect your chances of getting approved for credit. If you have a LTD company, your accounts that are filed at Companies House will be included on your credit report. So make sure these are always kept full and up to date.

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.

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