Business loans UK

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Swoop is a credit broker and does not provide capital. We work with a range of companies to offer clear comparisons that allow customers to make choices on financial products & services. Swoop may receive a commission, which may vary by product but typically in the form of a fixed percentage of the loan amount. For certain lenders, we do have influence over the interest rate, and this can impact the amount you pay under the agreement.

Let’s get your business off the blocks

No matter if you’re a sole trader, a start-up, or an SME, it’s likely that at some point in your business’ life, you’ll need extra funds to power growth. Instead of seeking cash investors, fast and cost-effective business loans can be a better option. Acquisitions, debt reduction, solid working capital. Stop waiting on slow cashflow or investors to expand. Boost your company’s growth with a loan that’s purpose-built for business needs.

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What is a business loan?

A business loan is a sum of money that’s borrowed by a business entity rather than a private individual.

Business loans come in many shapes and sizes and can be used for a wide variety of commercial activities – things like inventory purchase, property and vehicle purchase, tax payments, salaries, overhead costs, business start-ups, expansion, acquisitions, franchising, and repaying more expensive short-term debt. Repayment periods and interest rates will vary according to the sum borrowed, the type of loan, and the status of the borrower.

Andrea Reynolds, CEO & Founder
Andrea Reynolds
CEO & Founder

A word from Andrea

It’s no secret that businesses need funds to grow, however cost-effective business loans can be a better option than traditional cash investors. Business loans are often non-dilutive sources of funding, which means your company gets the injection of cash it needs without you giving away control of your business.

We’ve funded businesses from all industries

What types of business loans are available?

There are many types of business loan. Some require the borrower to provide security (collateral) to reduce the lender’s risk, while some do not. Usually, the lump sum provided is lower and the interest rate is higher for loans where no security is provided.

Common UK business loans include:

  • Bank Loan: What it says on the tin. A bank lends money for business purposes.
  • Secured Loan: The borrower must provide a guarantee or collateral to protect the lender.
  • Unsecured Loan: No collateral required. The loan is based on the borrower’s credit score.
  • Merchant Cash Advance: Short-term borrowing to cover everyday expenses. Suitable for businesses that take card payments from customers.
  • Small Business Loan: Loans for businesses with less than 25 employees.
  • Invoice Finance: Funds are lent against the value of the borrower’s accounts receivable.
  • Start-Up Loan: Seed cash to get a new business off the ground. Government funds may be available for this type of loan. 
  • Franchise Finance: Loans to start a new franchise business or expand an existing one.
  • VAT loans: Funds to help businesses pay their VAT bill while they wait for customers to pay outstanding invoices. 
  • Revolving Credit Facility: Much like a bank overdraft. The borrower can dip into an open credit facility as and when funds are needed. The borrowing is repaid from incoming business receipts.
  • Business Credit Cards: Credit cards for business use only. Often with higher credit limits and lower interest rates than cards for private individuals.
  • Asset Finance: Large loans usually used to buy plants, machinery, and commercial property.
  • Vehicle Finance: Funds to buy vehicles for business use. 
  • Ecommerce Finance: Funds to power online businesses.
  • Working Capital Loans: Loans that pay everyday business expenses.

Business loan calculator – how much can you afford to borrow?

A business loan calculator is a great starting point to understanding the cost of your loan. Use our free loan calculator below to work out your average monthly interest payments and the total monthly repayment amount, as well as the total interest paid and the total cost of the loan.

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This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.

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How does a business loan work?

Business loans can be for as low as £1,000, going all the way up to the £millions.

Repayment periods can be as little as a few months or over many years in the case of plant, machinery, and property purchases.

Interest rates and fees will vary according to the type of loan provided and the status of the borrower. Some business loans – for example, Merchant Cash Advances – may be obtained in one or two days. Other types of loan – such as Asset Finance – can take much longer to secure.

Regardless of the type of borrowing, the basic process for taking out a business loan remains the same:

  • The borrower completes an application. This will usually ask for basic business information and business, bank, and tax records. The lender may also run a credit check on the business and its owners or directors.
  • If collateral is required, the borrower will need to provide evidence of its value.
  • If the lender is satisfied with the due diligence, they will make an offer, which sets out how much they will lend, the time-period for repayment, and what the interest rates and fees will be.
  • If the borrower accepts these terms, an agreement is drawn up and after signing, the funds are either paid into the borrower’s bank account or to a third party if the funds are for something like a commercial property purchase.

How do I repay a business loan?

Repayment terms will vary according to the type of loan. Many short-term loans, such as Invoice Financing or Merchant Cash Advances, are repaid from incoming business receipts, so they will repay quickly and automatically. Other types of loan, such as a Commercial Mortgage, may be spread over many years, with the borrower making regular monthly or quarterly repayments of capital plus interest.

Are there any risks involved?

Lenders will usually provide loans to businesses that show they can comfortably repay them, so risks for the borrower will be small. However, loans can be spread over years and business circumstances could change in the interim, some of which may present risk to the borrower.

Common risks include:

  • Personal liability: Many loans require security in the form of collateral or a personal guarantee by the business owner or directors. In such cases, loan default could see the owners or directors lose their personal assets.
  • Interest rate fluctuation: Some business loans come with variable interest rates. A sudden spike in rates could affect the borrower’s ability to repay.
  • Loan default: Put simply, the borrower cannot repay the loan – an issue usually caused by a decline in business cashflow. In the event of default, the lender may recover their losses by making claim on collateral and personal guarantees.
  • Too much debt: Most businesses need to borrow, and it is often productive to do so. However, sometimes, businesses can borrow too much. This can put strain on their cashflow and cause some or all of their loans to go into default.

How do I apply for a business loan?

Before you apply for a business loan, make sure you have the necessary paperwork in order:

  • Most recent three-years bank and tax records.
  • Cashflow forecast.
  • Profit and Loss Statement and recent Balance Sheet.
  • Details of any existing debt.
  • List of major customers and suppliers (if B2B).
  • List of any assets, such as property or inventory.

Find the right loan for your business

With so many types of business loan, selecting the right one for your organisation can be challenging. Register with Swoop today to find the best loan for your business needs.

Let Swoop swiftly guide you through the loan application process

Want to improve your chances of getting a loan?

The deals you can get from lenders depend on your credit score: the better your score, the cheaper it is to borrow.

Swoop has joined forces with Credit Passport to rate your business’ credit. The service is free and does not affect your credit score.

Loan finance for business (or, more broadly, lending or ‘debt finance’) is a catch-all for any type of borrowing that you pay back, with interest and/or a fee. If your business needs to raise money (capital) you can either borrow from a lender (i.e. debt financing) or sell a share of ownership in your business in return for capital (equity financing). You can of course combine the two.

The reason that people often use broader term ‘debt finance’ rather than ‘loan finance’ is because some types of borrowing (e.g. operating leases or supplier finance) are not actually loans and don’t appear on your balance sheet. Whatever stage you are at in your growth story Swoop can match you to the right lending options, whether you’re looking for startup loans, working capital loans or even a loan to cover VAT costs. Your credit score isn’t impacted when you search for lending options with Swoop.

Don’t waste time, there’s plenty of funding and saving solutions to help your business grow

Business loan FAQs

Possibly. Some lenders may check the credit score of the business and the business owners or directors. Too many searches on your credit report could affect your personal credit score. 

In most cases yes, although you may incur some early-repayment penalties and fees by doing so.

It depends on the type of loan. Some loans, such as Merchant Cash Advances, can be agreed and paid into your bank account in one or two days. Other loans, such as Asset Financing, can take much longer.

Many business loans are used as Working Capital, to cover dips in cashflow and to pay salaries, overhead and buy inventory. Other common uses include tax payments, starting a new business, or purchasing vehicles, plant, and machinery.

Possibly. Even if you’ve been turned down elsewhere, it may still be possible to find a business loan to suit your current situation.

If you are in good standing with your current loan(s) and your cashflow shows you can afford the extra repayments, you may be able to top-up your business borrowing. In most cases, the application process for a top-up will remain the same as your original loan.

Business loans can be both secured or unsecured. Unsecured business loans will typically be for smaller amounts at a higher cost across shorter repayment terms.

If your business requires a larger loan value, offering an asset as security against the loan may allow you to secure additional funding at more competitive rates.

Your business loan term will vary dependent on the value of your loan, what type of loan you take out and how much you are able to repay each month.

There is no set minimum for the credit score you or your business needs to get a business loan, this will depend on the criteria set by your lender, your loan type and loan value.

If you have previously been denied a business loan, it is important to take time to reassess your current financial situation.

Improving your credit score, and paying off any existing business debts will help you reapply for a loan.

As the number of female entrepreneurs continues to grow in the UK, alternative lenders and some government backed lenders have schemes and funding solutions available specifically for women led SMEs. 

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