Middle market loans

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Page written by Chris Godfrey. Last reviewed on March 13, 2025. Next review due April 6, 2026.

Not too big, not too small. When it comes to business financing, middle market companies may have the best of both worlds – access some of the financial perks the big guys enjoy, savor the flexibility and variety of loans that support small businesses.

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What is middle market lending?

Middle-market lending refers to financing provided to mid-sized companies. These loans can help businesses fund expansion programs, acquisitions, restructuring and more. Middle-market lenders include banks, online lenders and institutional investors. Unlike large corporate loans, middle market lending often involves customized financing solutions and more flexible terms to accommodate the unique needs of these businesses.

What can middle-market loans be used for?

Common uses include:

Business expansion – Funding for opening new locations, scaling operations, or entering new markets.
Acquisitions & mergers – Capital for purchasing other companies or merging with competitors.
Working capital – Covering day-to-day operational expenses like payroll, rent, and inventory.
Debt refinancing – Replacing or restructuring existing loans to improve financial stability.
Technology & equipment upgrades – Purchasing machinery, software, or other necessary assets.
Recapitalization – Strengthening a company’s financial structure by adjusting equity and debt.
Turnaround financing – Supporting companies facing temporary financial difficulties.

What is a middle market company?

A middle-market company is a business that falls between small enterprises and large corporations in terms of revenue, assets, and number of employees. Typically, these companies generate annual revenues between £5million and £1 billion and they play a crucial role in the UK economy, driving innovation and employment. Middle-market firms often face challenges in scaling operations, securing financing, and competing with larger firms, but they benefit from greater flexibility and growth potential than smaller businesses.

What loans are available for middle-market companies?

There are many types of middle-market loans: Popular options include:

Term Loans

Term loans are the most popular type of commercial loan. Offered by traditional banks, credit unions and online lenders, these loans are typically used for one-off investments where borrowers know exactly how much cash they need. You receive a single, lump-sum cash injection and then pay it back in regular instalments over a fixed period of up to 25 years. Borrow up to $5 million. Collateral may be required.

Equipment Financing

With equipment financing, you use the asset you’re purchasing (such as vehicles, plant or machinery) as collateral for the loan. This type of borrowing is ideal for businesses with erratic cash flow or low working capital. Use the asset as you pay for it. Spread the cost over time. The machinery acts as security for the loan. In most cases, no added collateral is required.

Commercial mortgage

Commercial mortgages can be used to buy properties that have a business function, such as factories, offices, stores, restaurants, gas stations, gyms, theatres, sporting venues, etc.

What are the pros and cons of middle-market lending?

Middle-market lending comes with advantages and disadvantages:

Pros:

Flexible financing solutions – Loans can be customized to fit the company’s specific needs.
Growth & expansion support – Helps businesses scale, acquire competitors, or upgrade operations.
Alternative to public markets – Provides funding without requiring companies to go public.
Faster approval – Compared to traditional large corporate loans, approvals can be quicker.
Diverse lender options – Businesses can choose from banks, online lenders, and institutional investors.

Cons:

Higher interest rates – Compared to large corporate loans, costs may be higher.
Stricter terms & covenants – Borrowers may face financial restrictions and reporting requirements.
Collateral requirements – Some loans require assets as security, increasing business risk.
Limited access for risky businesses – Higher-risk companies may struggle to secure favorable terms.

Where to get a middle-market business loan?

The interest rate, fees, and terms and conditions of middle-market loans can vary significantly. Shopping around before settling on a deal is essential. You can do this by approaching banks, credit unions and online lenders one by one over days, weeks, or even months, or you can use the services of a loan marketplace that can quickly introduce you to a choice of business loans from a range of lenders.

What are the alternative finance options for middle-market companies?

Other ways to obtain funds for your middle market business:

Invoice financing

Invoice financing allows businesses to borrow against the value of their unpaid invoices and is best for B2B organizations. The lender will usually provide up to 95% of the invoice value within a few days or even hours of the bill being raised. You may still be responsible for collecting the cash from your clients, or the lender (also known as the ‘factor’) may collect on your behalf. If you collect, you must repay the lender on their schedule. If they collect, they will take back their advance from the client’s payment and then pass any residual sum (after charging interest and fees) back to you.

Asset-based lending

Put the dormant value or equity in the assets your business already owns to good use. Asset-based lending allows businesses to borrow against their hard assets such as plant, machinery, vehicles, real estate, materials and inventory. Once the loan is repaid, the lender’s lien is dissolved and full title to the asset reverts to you.

How Swoop can help

Working with business finance experts can make all the difference when applying for a loan. Contact Swoop to discuss your borrowing needs, get help with your application and to compare high-quality middle market loans from a choice of lenders. Help your business grow from medium-sized to large. Register with Swoop today.

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

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