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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 one 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.
Top 5 Best Business Loans
This top five is from nine business loan providers that NerdWallet evaluated and reviewed. Others are available. Find out how we use ‘best’ and our guide to ratings.
| Barclays |  |
| NatWest |  |
| HSBC |  |
| TSB | |
| Lloyds Bank |  |
NerdWallet Star Rating: 4.4 stars
Promotion
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 for up to 10 years with an unsecured loan, and 20 years with a secured loan.
- It has a wide range of customer service options, including online and via an app.
- Barclays has branches in England, Wales, Scotland and Northern Ireland.
- You can borrow up to £100,000 with an unsecured loan.
Cons
- It does not have a dedicated phone helpline for business borrowing.
NerdWallet Star Rating: 4.3 stars
Promotion
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 (10 years on request)
Pros
- Loan terms from one to seven years (terms up to 10 years may be available on request), or up to 25 years with a Green Loan (loans subject to status).
- You can access customer service online, via WhatsApp, the automated assistant Cora and through the bank’s mobile app.
- 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).
- NatWest branches are available in England and Wales.
Cons
- Its website doesn’t list an over-the-phone helpline specifically for business loans customers.
- There are no NatWest branded branches in Northern Ireland, and it is in the process of closing its last five branches in Scotland.
NerdWallet Star Rating: 4.2 stars
Promotion
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 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.
- You can visit branches across the UK for face-to-face support.
- 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).
Cons
- The phone helpline is not specifically for lending queries but for all Business Banking customers.
NerdWallet Star Rating: 4.2 stars
Promotion
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 – no maximum
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Available Terms1 – 25 years
Pros
- Flexible loan terms of up to 10 years (its fixed-rate loan) or up to 25 years (base rate loan).
- Access to customer service agents is over the phone.
- You can borrow up to £1 million (Fixed Rate Loan), or a potentially unlimited amount (Base Rate Loan).
- You can access web-based support for some queries via an automated chat bot.
- TSB has branches across England, Scotland and Wales for face-to-face support.
Cons
- Although TSB has a business app, you can’t review your loan on it.
- TSB has no branches in Northern Ireland.
NerdWallet Star Rating: 4.1 stars
Promotion
Lloyds Bank Larger 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 – no maximum
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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.
- Access web-based support via a virtual chat bot or the Lloyds Business app.
- You can borrow up to £50,000 (small business loans) or an unlimited amount (larger business loans).
- Lloyds has branches in England and Wales.
Cons
- There is no dedicated phone support for business loans customers.
- Lloyds Bank has no branches in Scotland and Northern Ireland.
This top five 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.
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:
- the age of your business
- where your business is based
- 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. 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.
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 nine 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 review 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.
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.
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 that 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 forms 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 Authors
9 Types of Business Loans
‘Business loan’ is a term that covers a wide range of financing options. From secured loans to invoice financing to working capital loans, find out more about the many sources of funding that could suit your business needs.
A Quick Guide to Online Business Loans
Applying for an online business loan is now one of the most common ways your organisation can secure funding. You should make sure you go for a trusted lender and carefully compare your options before starting your application.
How do Limited Company Business Loans Work?
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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