Business loans in the UK: the complete guide for 2025
By Helm, Funding Specialist
- There are many types of business loan available in the UK
- Eligibility depends on your business type, revenue, and credit profile
- Alternative lenders often approve businesses that banks reject
- Costs vary significantly between loan types and providers
- The right loan depends on your specific needs and circumstances
Finding the right business loan in the UK can feel overwhelming. With dozens of lenders, multiple loan types, and a wide range of terms, it is hard to know where to start.
This guide cuts through the noise. Whether you are looking for a small cash injection or a six-figure facility, we cover every option available to UK businesses in 2025.
Types of business loan available in the UK
The UK market offers a wide variety of business loan products. Understanding the differences is the first step to choosing the right one.
| Loan Type | Typical Amount | Speed | Best For |
|---|---|---|---|
| Bank term loan | £25,000 to £500,000+ | 2 to 8 weeks | Established businesses with strong credit |
| Merchant cash advance | £10,000 to £300,000 | 24 to 48 hours | Businesses with card transactions |
| Unsecured business loan | £1,000 to £500,000 | 1 to 7 days | Businesses without assets to secure |
| Secured business loan | £10,000 to £2m+ | 1 to 4 weeks | Businesses with property or assets |
| Revenue-based finance | £10,000 to £300,000 | 24 to 72 hours | Businesses with consistent revenue |
| Invoice finance | Up to 90% of invoices | 24 to 48 hours | B2B businesses with outstanding invoices |
| Government-backed loan | Up to £25,000 | 2 to 6 weeks | Startups and small businesses |
How to choose the right business loan
The best loan for your business depends on several factors.
- How much you need to borrow
- How quickly you need the funds
- Whether you have assets to offer as security
- Your credit history and business track record
- How you want to structure repayments
- What you plan to use the money for
Business loan eligibility in the UK
Eligibility varies significantly between lenders and loan types. Bank loans typically require strong credit, established trading history, and sometimes collateral. Alternative lenders focus more on revenue and business performance.
Most UK business loans require you to be a UK-registered business, have at least 6 to 12 months of trading history, and demonstrate the ability to repay.
How much does a business loan cost?
Costs depend on the type of loan, the lender, and your risk profile. Here is a general guide to typical costs across different loan types.
| Loan Type | Typical Cost | How Cost Is Expressed |
|---|---|---|
| Bank term loan | 4% to 15% APR | Annual percentage rate |
| Merchant cash advance | 15% to 40% of amount | Factor rate (1.15 to 1.40) |
| Unsecured business loan | 8% to 30% APR | Annual percentage rate |
| Secured business loan | 3% to 12% APR | Annual percentage rate |
| Revenue-based finance | 15% to 35% of amount | Flat fee or factor rate |
| Invoice finance | 1% to 5% of invoice value | Discount fee |
How to apply for a business loan
The application process varies by lender, but the general steps are the same.
- Decide how much you need and what type of loan suits your situation
- Research lenders and compare offers
- Gather your documents (bank statements, accounts, ID)
- Submit your application online or in person
- Review the offer and terms carefully
- Sign the agreement and receive your funds
Bank loans vs alternative business loans
The choice between a traditional bank loan and an alternative lender depends on your priorities.
Banks offer lower costs but take longer and have stricter requirements. Alternative lenders like Helm offer speed, flexibility, and higher approval rates, but at a higher total cost. For many UK businesses, particularly those in hospitality, retail, and services, alternative options provide a faster, more practical route to funding.
Frequently asked questions
What is the easiest business loan to get in the UK?
Merchant cash advances and revenue-based finance tend to have the highest approval rates because they are based on your business revenue rather than credit scores.
Can I get a business loan with bad credit?
Yes. Many alternative lenders approve businesses with poor credit. Merchant cash advances and revenue-based finance focus on your trading performance rather than your credit history.
How long does it take to get a business loan?
It depends on the type. Bank loans can take 2 to 8 weeks. Alternative options like merchant cash advances can fund within 24 to 48 hours.
Do I need a business plan to get a loan?
For bank loans, often yes. For alternative business finance like merchant cash advances and revenue-based funding, no business plan is required.