Introduction
This post aims to provide an overview of the best UK business loans available in 2023, to help you make an informed decision.
The UK economy has been facing some challenges in recent years, but businesses are still looking for ways to grow and expand.
One way to do this is by obtaining a business loan. However, with so many options available, it can be difficult to know which one is best for your business.
Types of Business Loans
When it comes to obtaining a business loan in the UK, there are several options available. These include:
Bank loans: These are loans that are offered by banks and other financial institutions. They can be secured or unsecured, depending on the lender and the amount of money being borrowed.
Government-backed loans: These are loans that are backed by the government, such as the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS). They are designed to help businesses that have been affected by the pandemic.
Peer-to-peer loans: These are loans that are obtained through online platforms that connect borrowers with investors. They can be a good option for businesses that have been turned down for a traditional bank loan.
Invoice financing: This is a type of loan that allows businesses to borrow money against unpaid invoices. It can be a good option for businesses that have a lot of outstanding invoices but are short on cash.
Asset financing: This is a type of loan that allows businesses to borrow money against assets such as equipment or property. It can be a good option for businesses that need to purchase new equipment or upgrade existing equipment.
Crowdfunding: This is a type of funding that allows businesses to raise money from a large number of people, usually through an online platform. It can be a good option for businesses that have a unique product or service and want to raise money from a large number of investors.
Comparison of the Best Business Loans in 2023
When choosing a business loan, it’s important to compare the different options available. Below are some of the best business loans in the UK in 2023, along with a comparison of their interest rates, repayment terms, and eligibility requirements.
Bank loans: Interest rates vary depending on the lender and the amount of money being borrowed. Repayment terms can range from one year to several years. Eligibility requirements will vary depending on the lender and the type of loan.
Government-backed loans: Interest rates are usually low and repayment terms can be up to 10 years. Eligibility requirements will vary depending on the type of loan and the specific scheme.
Peer-to-peer loans: Interest rates can be higher than traditional bank loans, but repayment terms can be shorter. Eligibility requirements will vary depending on the platform and the type of loan.
Invoice financing: Interest rates can be high and repayment terms can be short. Eligibility requirements will vary depending on the lender and the type of loan.
Asset financing: Interest rates can be high and repayment terms can be short. Eligibility requirements will vary depending on the lender and the type of loan.
Crowdfunding: Interest rates are usually not applicable. Repayment terms are usually not applicable. Eligibility requirements will vary depending on the platform and the type of funding.
Detailed comparison of the top business loans in the UK in 2023, including:
Interest rates
Repayment terms
Eligibility requirements
Pros and cons
Comparison of the best options for different types of businesses, such as small businesses, startups, and established companies
It’s important to note that the best option for your business will depend on several factors, such as the size of your business, the type of industry you’re in, and your credit score. It’s always best to do your research and compare different options before making a decision.
Another important factor to consider is the type of business you have. For example, small businesses may benefit from government-backed loans, while established companies may prefer traditional bank loans. Startups may find crowdfunding to be a good option, as it allows them to raise money from a large number of investors.
How to Apply for a Business Loan
Once you have decided on the best loan option for your business, the next step is to apply for the loan. The process of applying for a business loan can vary depending on the lender and the type of loan. However, here are some general tips on how to increase your chances of getting approved:
Prepare a business plan: A well-written business plan can demonstrate to lenders that your business has a solid plan for growth and success.
Have all the necessary documents ready: You will need to provide financial statements, tax returns, and other documents to prove the financial health of your business.
Have good credit: A good credit score can increase your chances of getting approved for a loan.
Provide collateral: Some lenders may require collateral, such as equipment or property, to secure the loan.
The Best Business Loans Available
HSBC Small Business Loan
Available Terms: 1 to 10 years with fixed monthly repayments. You can defer your first repayment for three months
Decision Speed: Instant online pre-approval
Available Amounts: From £1,000 up to £25,000
Minimum Turnover: No published minimum, a maximum annual turnover of £2 million
Interest Rate: 7.4% (APR representative)
Fees: £100 ‘competitive arrangement’ fee, and an early loan repayment fee equal to 1 calendar month and 28 days’ worth of interest. No fees for extra repayments
Eligibility: UK-based small business with an annual turnover of less than £2 million (larger companies can apply for a Flexible Business Loan)
How To Apply: Existing HSBC customers can apply via their online banking portal. New customers can apply via HSBC’s online application form, phone, or in-branch
Yorkshire Bank Business Loan
Available Terms: 1 to 5 years
Decision Speed: Automated online approval within 48 hours
Available Amounts: £10,000 and £150,000
Minimum Turnover: No minimum, maximum £5 million per year
Interest Rate: Listed between 3.5% p.a and 19.75% p.a (Representative 10.2% APR on unsecured loans up to £25,000)
Fees: No fees for online loans, and no fees for early repayments
Eligibility: A limited company operating in the UK for at least 18 months, with 12 months of financial records and an annual turnover of less than £5 million
How To Apply: Instant online application form via the Yorkshire Bank website
Lloyds Bank Commercial Business Loan
Available Terms: Secured and unsecured loans from 1 to 25 years, depending on the loan type
Decision Speed: Instant online approvals for loans up to £10,000
Available Amounts: Between £1,000 and £500,000, depending on the loan type (Base, Fixed, or Commercial Rates).
Minimum Turnover: Not published
Interest Rate: 9.3% APR representative (based on example £8,000 loan)
Fees: No fees on loans up to £25,000. An arrangement fee of up to 1.5% is applied to loans over £25,000
Eligibility: For their base, fixed, and commercial rate loans you need to be a sole trader, partner, or director with the authority to borrow on behalf of your business. Lloyds Bank has an online eligibility checker (used as a guide only)
How To Apply: Instant online quotes for loans up to £25,000 are available through the Lloyds Bank website
Royal Bank Of Scotland Small Business Loan
Available Terms: 1 to 10 years
Decision Speed: Automated online approval within 48 hours
Available Amounts: £1,000 and £50,000
Minimum Turnover: No minimum, maximum £2 million per year
Interest Rate: Representative APR of 10% on £25,000 loan
Fees: No arrangement or early repayment fees
Eligibility: Must be the director of the applying company, and never previously declared bankrupt or issued with a CCJ.
How To Apply: Online application form via the Royal Bank Of Scotland website
Rebuildingsociety.com Business Loan
Available Terms: 6 months to 5 years
Decision Speed: Approval within five days and financed within four weeks
Available Amounts: £25,000 to £350,000, both secured and unsecured
Minimum Turnover: £150,000 per year
Interest Rate: Average interest rate of 12.4% (for A-rated businesses). The investors funding the loan set the final interest rates
Fees: 5% of the total loan amount. Other fees may apply for admin and security costs. No fees for early loan repayment (excluding final interest payment)
Eligibility: Must be a profitable, VAT-registered business that has operated for at least two years, with a turnover exceeding £150,000. Directors or partners must be UK residents. Limited companies, LLPs, PLCs, and social enterprises are eligible
How To Apply: Online application form available on the Rebuilding Society website
Funding Circle Business Loan
Available Terms: 6 months to 5 years, paid monthly
Decision Speed: Approval within 24 hours, and funds delivered within a few business days
Available Amounts: Unsecured loans range between £10,000 and £1,000,000. Tenants are limited to £50,000 for unsecured loans
Minimum Turnover: Not published
Interest Rate: Starting from 1.9% per year. Individual rates are available via an online application form
Fees: 1.5% to 10% of the total loan amount, depending on the method of application. There are no fees for early repayments or paying out the loan in full before the loan term
Eligibility: Must be a UK resident with a UK-registered office, trading for more than two years. Directors and shareholders must have no connections to any previously liquidated businesses or any CCJs issued against them in the last 12 months
Capify Business Loan
Available Terms: 6 to 12 months, paid daily or weekly
Decision Speed: Condition approval is granted within minutes via Capify’s online application form. Funds are typically released within a few business days
Available Amounts: £5,000 to £150,000. Businesses can borrow up to 75% of their average monthly turnover
Minimum Turnover: £10,000 per month
Interest Rate: Not published
Fees: Capify’s loan fee is 3% of the total borrowed amount. There is also a £295 loan processing fee and a £25 monthly service fee
Eligibility: Borrowers must run a UK-based business operating as a limited company, with at least 12 months of trading history
How To Apply: An online application form is available on the Capify website
365 Business Finance
Available Terms: No fixed payment schedule, repayments are made via ongoing credit card sales (typically 5%-17% of transactions)
Decision Speed: Instant online approvals via an application form, funds released within a few days
Available Amounts: £5,000 to £200,000
Minimum Turnover: £5,000 per month in card transactions
Interest Rate: Not published
Fees: Loan presented as a single, all-inclusive cost
Eligibility: Business operating for more than six months, with a minimum of £5,000 per month in credit card transactions
How To Apply: Online quote form available on 365 Business Finance
Spotcap Business Loan
Available Terms: Unsecured loans between 1 and 24 months, paid monthly
Decision Speed: Within one working day
Available Amounts: £50,000 to £350,000
Minimum Turnover: At least £500,000 per year
Interest Rate: Listed average yearly interest is 22.8% APR, including interest and fees. More details available via the online business loan calculator
Fees: Loan arrangement fees between 2.0% and 2.5%. No fees for early repayments or early loan settlements
Eligibility: Must be a UK-based business operating profitably for more than three years, with consistent revenue for the last 12 months
How To Apply: Apply online via the Spotcap website
Capital On Tap Business Loan
Available Terms: 1 month to 2 years, available as a credit card or loan
Decision Speed: Online application and funding within 10 minutes
Available Amounts: Up to £50,000
Minimum Turnover: £24,000 per year
Interest Rate: Not published
Fees: No monthly or annual fees
Eligibility: Must be a UK-based business, with no CCJs against you or your business in the last year
How To Apply: Online application form via Capital On Tap website
Boost Capital Business Loan
Available Terms: Unsecured loans between 4 and 18 months, repaid daily
Decision Speed: Approvals within 24 hours, funds available within two business days
Available Amounts: £3,000 to £500,000
Minimum Turnover: £70,000 per year
Interest Rate: Boost Capital lists an example annual rate of 47.9%, representative APR. Boost Capital also has an online loan calculator.
Fees: There are no application fees. Early repayment of the loan is possible, but Boost Capital does not specify on its website if this carries an additional fee or not
Eligibility: Applicants must have a minimum of three years of trading history with £70,000+ annual turnover
To Apply: Apply using the online form on the Boost Capital website
woca Small Business Loan
Available Terms: 1 day to 5 years (depending on loan type)
Decision Speed: Instant online approvals, and funds available within 24 hours
Available Amounts: £1,000 to £250,000, depending on the loan type
Minimum Turnover: £150,000 per year
Interest Rate: 14.9% representative APR on small business loans, 49% representative APR on credit lines (up to 12 months)
Fees: No fees on credit lines, small business loans carry a 6% up-front fee
Eligibility: Must have UK-based limited company trading for two years, with a minimum £150,000 annual turnover
How To Apply: Online application forms are available on the iwoca website
Fleximise Business Loan
Available Terms: Up to 24 months unsecured, or 48 months secured
Decision Speed: Online approvals and access to funds within 48 hours
Available Amounts: £5,000 to £500,000
Minimum Turnover: £5,000 per month
Interest Rate: 42.2% representative APR on £12,500 loan repaid over 15 months
Fees: No application or setup fees, and no fees for early repayments
Eligibility: At least six months of trading with a monthly turnover of £5,000 or more
How To Apply: Online application forms available on the Fleximize website
Ferrantum Business Loan
Available Terms: Up to 18 months
Decision Speed: Same-day approval, loans disbursed the following day
Available Amounts: £2,000 to £50,000
Minimum Turnover: £75,000 per year
Interest Rate: Not published
Fees: 2%-3% based on business rating. 2.5% origination fee for new loans
Eligibility: Own and operate a UK-based business for more than 12 months, with an annual turnover exceeding £75,000
How To Apply: Online application forms available on the Ferratum Business website
The Start Up Loans Company
Available Terms: 1 to 5 years, repaid monthly
Decision Speed: Not published
Available Amounts: £500 to £25,000 per owner or partner, up to £100,000 per business
Minimum Turnover: Not published
Interest Rate: Fixed rate of 6% per year
Fees: There are no application or setup fees, and no early repayment fees
Eligibility: Borrowers must be UK residents that are starting a new UK-based business or have operated an existing one for less than two years
How To Apply: An online application form is available on the Start Up Loans website
Conclusion
Obtaining a business loan can be a great way to help your business grow and expand. However, with so many options available, it can be difficult to know which one is best for your business. By understanding the different types of business loans and comparing the best options in 2023, you can make an informed decision and increase your chances of getting approved. Remember to do your research, prepare a business plan, and have all the necessary documents ready to increase your chances of getting approved.
