Comparing UK business lending options: a side-by-side guide
By Helm, Funding Specialist
- No single lending option is best for every business
- Speed, cost, flexibility, and eligibility all vary significantly
- Merchant cash advances offer the best combination of speed and accessibility
- Bank loans offer the lowest cost but the strictest requirements
- Comparing total repayment amounts is more useful than comparing rates
Choosing between business lending options is one of the most important financial decisions you will make as a business owner. Get it right and you have affordable capital to grow. Get it wrong and you could end up with repayments that strangle your cash flow.
This guide puts every major UK lending option side by side so you can compare them quickly and confidently.
Complete lending comparison
Here is how every major UK business lending option compares across the factors that matter most.
| Product | Speed | Cost | Collateral | PG Required | Min. Credit |
|---|---|---|---|---|---|
| Bank term loan | 2 to 8 weeks | 4% to 15% APR | Often | Yes | Good |
| Merchant cash advance | 24 to 48 hours | 1.15 to 1.50 factor | No | No | None |
| Revenue-based finance | 24 to 72 hours | 15% to 35% flat | No | No | None |
| Unsecured online loan | 1 to 5 days | 8% to 30% APR | No | Often | Fair |
| Secured business loan | 1 to 4 weeks | 3% to 12% APR | Yes | Often | Good |
| Invoice finance | 24 to 48 hours | 1% to 5% per invoice | Invoices | Varies | Fair |
| Overdraft | 1 to 2 weeks | 10% to 20% EAR | No | Sometimes | Good |
| P2P lending | 1 to 3 weeks | 5% to 20% APR | No | Varies | Fair |
Best for speed
If you need funding within 24 to 48 hours, merchant cash advances and invoice finance are your best options. Revenue-based finance is a close third. Bank loans and overdrafts are the slowest, typically taking weeks.
Best for cost
If minimising the total cost is your priority, secured bank loans and government-backed schemes offer the lowest rates. However, these take longer and have stricter eligibility requirements. Alternative options cost more but deliver significant value in speed and accessibility.
Best for bad credit
Merchant cash advances and revenue-based finance have the highest approval rates for businesses with poor credit. These products assess your card or total revenue rather than your credit score. Bank loans and overdrafts are very difficult to access with bad credit.
Best for seasonal businesses
Revenue-based lending products like merchant cash advances are ideal for seasonal businesses. Repayments flex with your daily or weekly revenue, meaning you pay less during quiet periods and more during busy times. Fixed-payment products can cause significant cash flow stress during off-season months.
How to decide
Start by identifying your top priority.
- Speed is critical: merchant cash advance or invoice finance
- Cost is most important: bank loan or secured lending
- Bad credit: merchant cash advance or revenue-based finance
- No collateral: unsecured loan, MCA, or revenue-based finance
- Seasonal business: merchant cash advance or revenue-based finance
- Large amount needed: secured bank loan or asset finance
Frequently asked questions
Which lending option has the highest approval rate?
Merchant cash advances have the highest approval rates because they are based on card revenue rather than credit scores.
Can I use multiple lending products?
Yes. Many businesses use a combination, such as a bank overdraft for day-to-day cash flow and an MCA for specific growth investments.
How do I compare costs across different products?
Focus on the total repayment amount rather than the rate. Different products express costs differently (APR, factor rates, flat fees), making direct rate comparison misleading.
Should I use a broker to compare options?
A broker can help, but you can also apply directly to providers. Direct applications avoid broker fees and give you more control.