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Business loans are available for companies of all sizes, industries, and needs. Due to the costs involved, it is always good to compare providers before applying. Compare the pros and cons of NerdWallet’s top 10 best business loans for small businesses below.
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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 a business loan before. That’s why we’ve put together this list of our top 10 business loan providers for small businesses, as well as a detailed guide on how to apply. This guide should help you compare business loans for small businesses so you can choose a product which is right for your circumstances and your small business.
Our picks for the best business loans providers for small businesses are informed by what small business owners chose as the most important factors when comparing lenders. That includes the flexibility of term length, the maximum amount borrowable, and the level of customer service.
This selection of brands has been reviewed and evaluated by Nerdwallet, but others are available in the UK market. Find out what we mean when we say ‘best’, why we are comfortable using it, and an in-depth explanation of Nerdwallet UK’s review methodology.
Provider |
NerdWallet’s Rating |
Min.Loan Amount |
Max.Loan Amount |
Min.Loan Term |
Max.Loan Term |
|
|---|---|---|---|---|---|---|
|
4.5 / 5 | £1,000 | £50,000 | 12 months | 84 months | |
|
4.4 / 5 | £1,000 | £50,000 | 12 months | 300 months | |
|
4.2 / 5 | £1,000 | £25,000 | 12 months | 120 months | |
|
4.1 / 5 | £1,000 | £100,000 | 12 months | 120 months | |
|
4.0 / 5 | £10,000 | £500,000 | 6 months | 72 months | |
|
4.0 / 5 | £5,000 | £500,000 | 12 months | 48 months | |
|
3.7 / 5 | £25,001 | £1,000,000 | 12 months | 300 months | |
|
3.7 / 5 | £1,000 | £500,000 | 1 month | 24 months | |
|
3.6 / 5 | £25,001 | £250,000 | 12 months | 72 months | |
|
3.5 / 5 | £5,000 | £750,000 | 3 months | 18 months |
*This table is based on the loan with the shortest maximum term, and the lowest maximum borrowable amount, out of a lender’s product offering.
** Royal Bank of Scotland (RBS) and Ulster Bank, other brands within the NatWest Group, offer similar business finance solutions to NatWest in Scotland and Northern Ireland respectively, although specific terms may vary.
This top 10 only contains business loans providers reviewed by NerdWallet UK.
Important Information: Our Reviews, Star Ratings and Editor’s Picks do not consider the product provider’s lending rates and therefore do not reflect how much it costs to borrow from the reviewed brand. Always compare rates from other providers when considering any type of borrowing.
12.35%
£1,000 – £50,000
1 – 7 years
12.35% 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.
With lots of variety on offer and no arrangement or early repayment fees, NatWest could interest any small business owner looking for a loan. For more details, read NerdWallet’s NatWest Business Loan Review.
NatWest loans key features:
Pros
Cons
NerdWallet has partnered with Funding Options. Check your eligibility with this lender and many others without affecting your credit score.
11.60%
£1,000 – £50,000
1 – 25 years
11.60% APR representative based on a loan of £8,000 repayable over 60 months at an interest rate of 11.00% (fixed). Monthly repayment of £173.94. Total amount payable £10,436.40.
Lloyds Bank gives you the flexibility to pay off loans in full before the term ends at no extra cost, while it also offers customers wide-ranging customer service options. For more information, check out NerdWallet’s Lloyds Bank Business Loans Review.
Lloyds Bank loans key features:
Pros
Cons
NerdWallet has partnered with Funding Options. Check your eligibility with this lender and many others without affecting your credit score.
8.60%
£1,000 – £25,000
1 – 10 years
8.60% APR representative (fixed). Based on an assumed loan amount of £13,000 over 60 months at the AIR of 8.60% p.a (fixed). Monthly repayment £265.33. Total amount payable £15,919.83.
HSBC’s loan options include a fixed-rate Small Business loan of up to £25,000, and a fixed- or variable rate Flexible Business Loan, for borrowing over £25,000. You could also be eligible for cashback on your loan if you use it for environmental purposes. To find out more, read NerdWallet’s HSBC Business Loans Review.
HSBC business loans key features:
Pros
Cons
9.90%
£1,000 – £100,000
1 – 10 years
9.90% APR representative based on a loan of £12,000 repayable over 72 months at an interest rate of 9.45% per annum (fixed). Monthly repayment of £219.00. Total amount payable £15,768.00.
Barclays offers a variety of borrowing solutions for businesses at different stages of growth and across a variety of sectors. Options include unsecured and secured business loans, as well as commercial mortgages, business overdrafts, asset finance, invoice finance, and its Barclaycard for business credit card. For further information, read NerdWallet’s Barclays Business Loans Review.
Barclays business loans key features:
Pros
Cons
NerdWallet has partnered with Funding Options. Check your eligibility with this lender and many others without affecting your credit score.
Available on application
£10,000 – £500,000
6 months – 6 years
Available on application
With an unsecured Funding Circle small business loan, you can borrow between £10,000 and £500,000 over six months to six years. Funding Circle is not a direct lender but a lending platform, using institutional investors to fulfil loan requests. Find out more by reading NerdWallet’s Funding Circle Business Loans Review.
Funding Circle business loans key features:
Pros
Cons
This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.
Available on application
£5,000 – £500,000
1 – 4 years
Available on application
Direct lender Fleximize offers customers unsecured business loans up to £250,000 and secured loans up to £500,000. Businesses must have a minimum monthly turnover of £5,000 to apply. To find out more, read NerdWallet’s Fleximize Business Loans Review.
Fleximize business loans key features:
Pros
Cons
NerdWallet has partnered with Funding Options. Check your eligibility with this lender and many others without affecting your credit score.
Available on application
£25,001 – £1,000,000
1 – 25 years
Available on application
TSB’s lending options can suit several different business needs, including fixed- and variable rate business loans for small businesses. If you want to apply, you will usually need to have a TSB business current account to take out a small business loan. To find out more, read NerdWallet’s TSB Business Loans Review.
TSB business loans key features:
Pros
Cons
NerdWallet has partnered with Funding Options. Check your eligibility with this lender and many others without affecting your credit score.
49%
£1,000 – £500,000
1 day – 2 years
49% APR representative based on a loan of £10,000 for 12 months with an interest rate of 40% p.a. (variable). Total amount payable £12,294.
iwoca gives business access to flexible loans that suit a range of purposes. This dedicated business loans provider currently offers one type of business loan: the Flexi-Loan. Find out more by reading NerdWallet’s iwoca Business Loans Review.
iwoca business loans key features:
Pros
Cons
This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.
Available on application
£25,001 – £250,000
1 – 6 years
Available on application
Starling Bank offers unsecured business loans of between £25,001 and £250,000 to small- and medium-sized enterprises (SMEs) in the UK. Businesses need to operate as either a limited company or limited liability partnership in order to be eligible, and they must also have been trading for at least 24 months. Learn more by reading NerdWallet’s Starling Business Loans Review.
Starling business loans key features:
Pros
Cons
NerdWallet has partnered with Funding Options. Check your eligibility with this lender and many others without affecting your credit score.
Available on application
£5,000 – £750,000
3 – 18 months
Available on application
With Capify, eligible limited companies can borrow between £5,000 and £750,000, while sole traders who are also homeowners can borrow over £50,000. Find out more by reading NerdWallet’s Capify Business Loans Review.
Capify business loans key features:
Pros
Cons
This product may be one of a range offered by this provider. Always check terms & conditions for suitability before applying.
This top 10 only contains business loans providers reviewed by NerdWallet UK.
The pros and cons featured with each brand 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 identified the business product features that people felt were most important. There are other pros and cons that should be taken into account before considering a financial product. Information was correct at the time of publication but may have changed since.
Nerdwallet Survey: December 2022
Small businesses in the UK can now access loans and credit facilities of up to £2 million through a new business finance scheme administered by the British Business Bank.
The Growth Guarantee Scheme, a successor to the Recovery Loan Scheme, has been designed to meet the needs of small business owners looking to invest and grow their businesses.
The scheme launched on 1 July and will run until March 2026, aiming to support 11,000 small businesses with access to finance on better terms.
Over 40 accredited lenders are offering loans, overdrafts, asset finance, invoice finance and asset-based lending as part of the scheme.
The lenders receive a 70% government-backed guarantee, which incentivises offering finance to businesses that might otherwise be deemed too risky.
The Federation of Small Businesses (FSB) said the scheme would help small businesses held back by high interest rates in a difficult borrowing environment.
Martin McTague, national chair of the FSB, said: “The Growth Guarantee Scheme will be an important part of the funding landscape for small firms, whose growth will be an indispensable ingredient in overall economic recovery in the UK.”
A business loan is a form of finance that can be used to help support and expand your small business.
As with personal loans, business loans involve borrowing a sum of money and paying 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.
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.
Applying for a business loan may be easier than you think. Just follow the steps below.
» MORE: How to get a business loan
In theory, anyone 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:
» MORE: How do business loans work?
There are two main types of business loans:
Unsecured business loans do not require the use of company assets as security, though you may be required to provide a personal guarantee. 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 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
There are a number of factors to bear in mind to help you compare business loans. It’s important to consider which loan is going to be right for your small business. Factors to compare include 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 for your small business, 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 compare business loan providers and ultimately decide whether a business loan could be right for your small business.
Once you have secured a business loan for your small business, you need to make sure you use it effectively. Below are some tips on how you can maximise your business loan:
» MORE: Try our business loan calculator
There are many funding alternatives to consider if you’re unsure about whether a business loan is the right option for your small business. Some of these include:
NerdWallet evaluated and reviewed 14 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 reviews 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.
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.
» 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.
While it is not always a requirement, you may find that many lenders will not consider you for a business loan if you do not also have a business bank account. It can also make the application process simpler if you do.
In general, business bank accounts can make it easier to manage your finances and ensure that there is a clear separation between your personal and business funds. This is especially important when it comes to managing a business loan.
At NerdWallet UK, we base our reviews and our ‘Best’ pages on the results of surveys we undertook about what was important to people who 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, which form 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’ pages. Best does not mean it’s best for you, nor does it mean the ‘cheapest’.
Our reviews may display lenders’ rates. This additional information has not been included in our evaluations but is still very important when choosing a product. Rates offered can depend on circumstances, amount and term. Always check details before proceeding with any financial product.
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 there will be products not included on the market. The review is our opinion, but it does not constitute advice, recommendation or suitability for your financial circumstances.
While we try to provide you with accurate information, the providers can change the terms of their products at any time, therefore it is advisable to check the terms before you proceed.
You can view our full review methodology here.
