Business loans in the UK compared by lender and cost

A £25,000 business loan over 3 years costs £2,995.60 in interest as a 7.5% Start Up Loan, £3,279.93 at Barclays’ 8.5% representative APR and £19,778.13 at iwoca's example rate. For an established small business, the bank is the cheapest published option by a wide margin, so apply there first even though it is slower.

Every rate below is from the lender's own page or the British Business Bank, checked 1 November 2026. Where a lender keeps a figure to itself, the table says Not published. This page compares loan types; for the full rate breakdown by lender see business loan interest rates, and for merchant cash advances see the business funding hub.

What a £25,000 loan over 3 years costs by loan type

Loan type	Lender	Rate used	Monthly	Total repaid	Cost of borrowing	Note
Government-backed	Start Up Loans	7.5% fixed, no fees	£777.66	£27,995.60	£2,995.60	Its own published table; businesses trading up to 60 months
Bank term loan, unsecured	Barclays	8.5% APR representative	£785.55	£28,279.93	£3,279.93	Lowest published bank APR at £25,000
Bank term loan, unsecured	Lloyds Bank and Santander	11.2% APR representative	£814.49	£29,321.47	£4,321.47	Highest published bank APR at £25,000
Asset finance (hire purchase)	Lombard	9.7% APR representative	£798.42	£28,742.95	£3,742.95	Its representative APR on a £20,800, 48-month example
Online lender, unsecured	iwoca (from rate)	1.5% per 30 days + 6% fee	£903.81	£34,037.16	£9,037.16	Includes £1,500 fee; best case
Online lender, unsecured	iwoca (49% APR example rate)	3.33% per 30 days + 6% fee	£1,202.17	£44,778.13	£19,778.13	Includes £1,500 fee
Revenue-based	Square Loans	Fixed fee, £1,325 per £10,000 on its example	Varies	£28,312.50	£3,312.50	Not available over 3 years: repaid within 18 months
Secured or Growth Guarantee Scheme	Banks and accredited lenders	Not published	Varies	Quote only	Quote only	Quote only; the scheme starts at £25,001 for term loans

Representative APR is what at least 51% of accepted applicants get; the rest can be offered more (Santander says its highest is 29.9% APR). The Square row scales its own £10,000 example fee to £25,000 to show its size; your offer depends on your Square sales. Lenders' own pages, checked 1 November 2026.

The arithmetic

Bank and asset finance rows convert the representative APR to a monthly rate, then use the standard repayment formula. For Barclays at 8.5%: (1 + 0.085)^1/12 − 1 = 0.682% a month. Then £25,000 × r ÷ (1 − (1 + r)⁻³⁶) = £785.55 a month, × 36 = £28,279.93, so £3,279.93 of interest.

iwoca quotes interest per 30 days, treated here as monthly: £25,000 at 3.33% is £1,202.17 a month, × 36 = £43,278.13, plus the 6% fee iwoca says is typical on terms over 24 months (£1,500), for £44,778.13 in all. That is about 6 times the interest on the bank loan. The Start Up Loan row is copied from its own repayment table, and it beats the cheapest bank by £284.33, but only businesses trading up to 60 months can have one.

Do not borrow at all if the loan only covers a gap your card fees created. A free statement review shows whether you are overpaying on card processing, and every pound saved there costs nothing to repay. Run your own amount and term in the business loan calculator.

Types of business loan

Term loan

A lump sum repaid in fixed monthly instalments over a set term. This is what the high-street banks sell as a small business loan: £1,000 to £100,000 at NatWest, fixed, over 1 to 7 years. Fixed rates keep repayments level for the whole term, which makes them easier to budget than a variable rate that moves with Bank Rate. See bank business loans compared for each bank's criteria.

Unsecured business loan

No asset is pledged, so the lender relies on your credit record and accounts, and the British Business Bank notes that can mean a higher rate. Unsecured is rarely the same as no personal liability: Lloyds and Santander require a guarantee from limited company directors, and iwoca requires one from at least one director. Our guide to unsecured business loans covers the difference.

Secured business loan

You pledge property or another asset that the lender can sell if you default, which usually buys a lower rate. None of the five big banks publishes a secured loan rate. Barclays' page on larger borrowing says: from £25,001 up to £25m, terms up to 25 years, fixed or variable; secured above £100,000, with no rate given. SWIG Finance takes a fixed and floating debenture over the business rather than property.

Government-backed loans

Two schemes matter. Start Up Loans lend £500 to £25,000 per founder at 7.5% fixed with 12 months of mentoring, up to £100,000 per business. The Growth Guarantee Scheme backs 70% of loans from £25,001 to £2m for businesses with turnover up to £45m; the guarantee protects the lender, and you still owe all of it. More in government-backed business loans.

Revenue-based finance

You repay a share of your sales until a fixed fee and the advance are cleared, so repayments fall in a quiet month. Square Loans charge £1,325 on £10,000, taken as typically 17.25% of daily Square sales and repaid within 18 months. Because the fee does not shrink when you repay quickly, the effective annual rate rises the faster you pay: Square shows 18.90% APR on the example, 18.45% in the same page’s FAQ. Card-takings advances are compared on the business funding hub.

Asset finance

The lender buys the van, machine or equipment and you pay for it monthly, owning it at the end under hire purchase. The asset is the security, which keeps the rate close to a bank loan: Lombard's representative example is £20,800 over 48 months at 9.33% fixed, 9.7% APR, £519.50 a month. Applied to £25,000 over 3 years that APR costs £3,742.95. The asset finance guide covers leasing and tax.

Invoice finance

A lender advances most of the value of unpaid invoices (up to 90% of an invoice on the British Business Bank's figures for factoring), and is repaid when your customer pays. It is not a 3-year loan, so price it per invoice: Triver charges from 0.06% a day on the amount advanced, so a £25,000 advance outstanding for 30 days costs £25,000 × 0.06% × 30 = £450.00. The British Business Bank adds that it is usually only for established businesses that sell to other businesses. See invoice finance.

Who lends what: published amounts and rates

Lender	Type	Amount	Term	Published rate
NatWest	Bank term loan	£1,000 to £100,000	1 to 7 years	12.57% APR on its £10,000 example only
Barclays	Bank term loan	£1,000 to £25,000	1 to 10 years	14.9% (£1,000 to £5,000); 11.2% (£5,001 to £15,000); 8.5% (£15,001 to £25,000)
HSBC	Bank term loan	£1,000 to £25,000	1 to 10 years	11.3% (£1,000 to £10,000); 8.6% (£10,001 to £25,000)
Lloyds Bank	Bank term loan	£1,000 to £250,000	From 1 year (maximum not published on the page)	11.2% (£1,000 to £25,000)
Santander	Bank term loan	£1,000 to £50,000	1 to 7 years	11.2% (£1,000 to £50,000)
Start Up Loans	Government-backed personal loan	£500 to £25,000	1 to 5 years	7.5% fixed
Growth Guarantee Scheme	Government guarantee via 56 accredited lenders	£25,001 to £2m (term loans)	Up to 6 years	Not published; set by each lender
iwoca	Online lender (Flexi-Loan)	£1,000 to £1,000,000	Up to 60 months	From 1.5% per 30 days; 49% APR representative example
Funding Circle	Online lender	£10,000 to £750,000	Not published on the business loans page	From 6.9% a year; representative APR not published
SWIG Finance	Regional lender (South West)	£25,001 to £250,000	1 to 5 years	12% over base (15.75% now) plus a 5% arrangement fee
Lombard	Asset finance (hire purchase)	Not published. No online quote above £25m turnover or a £250,000 purchase price	12 to 84 months	9.7% APR representative on its £20,800 example
Square Loans	Revenue-based (Square sellers, by invitation)	£100 to £200,000	Repaid within 18 months	£1,325 fixed fee on £10,000
Triver	Invoice finance	Facility up to £1 million; up to £100,000 per advance; invoices £100 to £100,000	Invoices on 10 to 120 day terms	From 0.06% a day on the amount advanced (about 1.8% on a 30-day invoice)

Each lender's own page, checked 1 November 2026. NatWest publishes one representative example; HSBC publishes no payout time; Funding Circle publishes no term or APR on its business loans page.

Business loan online lenders

iwoca and Funding Circle both lend to limited companies (iwoca also to LLPs) on their published criteria, and both decide fast: iwoca says a decision within 24 hours in almost all cases, Funding Circle in as little as 5 minutes with money typically within 48 hours of accepting an offer. Funding Circle advertises rates from 6.9% a year but publishes no representative APR, so we have not priced it. Peer-to-peer platforms work in a similar way, and the British Business Bank notes that borrowers typically pay an arrangement fee to the platform. Our Funding Circle review has more.

50k and 100k business loans

A £50,000 unsecured loan is within published limits at NatWest (£100,000), Santander (£50,000, its customers only), Lloyds (£250,000), iwoca and Funding Circle. At £100,000, NatWest's small business loan reaches its ceiling, and Lloyds gives an APR only up to £25,000: above it, the rate is set at application. Both sizes clear the £25,001 floor for a Growth Guarantee Scheme term loan, and both sit inside the £25,000 to £250,000 that community lenders typically provide. In the South West, SWIG Finance lends from £25,001 at 15.75% with a 5% fee, which on its minimum loan is £25,001 × 5% = £1,250.05.

Business loan eligibility

Every lender checks your credit and your ability to repay. What differs is the business structure they accept, how long you must have traded and who has to sign a guarantee. These are the criteria each lender publishes.

Lender	Who can apply	Guarantee or security
NatWest	Aged 18 or over and a director of the business; no bankruptcy or CCJ	A personal, director or member’s guarantee may be required
Barclays	Not published on the loan page beyond status and lending assessment; not all industries	Not published on the loan page
HSBC	Not published on the loan page	Security may be required, assessed case by case
Lloyds Bank	Aged 18 or over; a sole trader, partner or director; turnover up to £25m for the representative APR	A guarantee is required from limited companies and LLPs
Santander	Sole traders, partnerships, LLPs and private limited companies with no more than 2 partners or directors who own the business outright	Personal guarantee required from limited companies and LLPs
Start Up Loans	Applicants aged 18 or over, a current UK resident with the right to work in the UK, starting a business or trading for up to 60 months, unable to get finance elsewhere (a self-declaration is accepted) and passing a personal credit check and affordability assessment	Unsecured; a personal loan in your name
iwoca	UK limited companies and LLPs; up to 20% of turnover	A personal guarantee from at least one company director is required
Funding Circle	Limited companies	A personal guarantee may be one of the offer conditions
SWIG Finance	Limited companies in the South West of England, typically trading for more than 2 years	No tangible security; a fixed and floating debenture and personal guarantees are typically taken
Lombard	Business owners, for business purposes only	Security may be required; applications involve a credit search
Square Loans	Invite only; companies and corporations only	Repaid from your Square sales

Sole traders have fewer doors: of the lenders above, only Lloyds, Santander, Start Up Loans, the Growth Guarantee Scheme and Lombard's asset finance say outright that they lend to them. The sole trader business loans page sets out the evidence they ask for. With a weak credit file, read business loans with bad credit before applying anywhere, because a full application means a full credit check, as Santander's loan page states.

How to apply for a business loan

Work out the amount and what it is for. The British Business Bank says lenders want the purpose, and a general purpose such as working capital needs explaining in detail.
Check your business credit report and correct errors. Pay down existing debts and chase money you are owed, because lenders look at your cash flow.
Get quotes that do not mark your file. NatWest, Barclays, Lloyds and Funding Circle say their quote or eligibility check does not affect your credit score; Santander makes a full credit check on application.
Bring your accounts up to date. If your last filed accounts are more than 2 years old, lenders may ask for fresh ones; Funding Circle says the same.
Gather the documents, then compare offers on total repaid in pounds, not on the headline rate.

The documents the British Business Bank lists, which vary by lender:

Business bank statements
Financial accounts, including a profit and loss statement and balance sheet
Business and personal tax returns
Legal documents such as incorporation papers, licences or contracts
Proof of address and ID for the owners
Details of other finance, such as leases, loans or credit lines
Details of any assets offered as security
A business plan and financial forecasts

Source: British Business Bank, How to apply for a business loan, checked 1 November 2026.

If the bank says no

Ask for the reasons in writing. Under the Bank Referral Scheme, in place since November 2016, Barclays, HSBC, Lloyds Bank, RBS, Santander, Virgin Money, Bank of Ireland, Danske Bank and First Trust Bank must offer a declined small business a referral to an online finance platform. Community Development Finance Institutions are the other route: not-for-profit lenders that lend to businesses with a relationship approach and help with the application, typically lending £25,000 to £250,000 and sometimes from £1,000.

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Frequently asked questions

What is a business loan?

A lump sum you repay in scheduled instalments of capital and interest, at a fixed or variable rate, over anything from one month to 25 years on the British Business Bank's description. You tell the lender what the money is for and show you can repay it. A Start Up Loan is the exception in structure: it is an unsecured personal loan for business purposes, so it is assessed on you rather than the business.

Can I use a personal loan instead of a business loan?

You can, but it puts the debt in your name. For sole traders and partnerships of up to 3 partners, business credit of £25,000 or less can fall under consumer credit rules anyway, and over £25,000 it is exempt. A limited company borrowing in its own name keeps the debt off your personal file, although Lloyds, Santander and iwoca all ask directors for a personal guarantee.

Who lends £50,000 or £100,000 to a small business?

On published limits: NatWest's Small Business Loan goes to £100,000, Santander's to £50,000 (its own customers only) and Lloyds' to £250,000. Barclays and HSBC stop at £25,000 on their small business loans. iwoca lends to £1,000,000 and Funding Circle to £750,000. From £25,001 the Growth Guarantee Scheme also applies.

What is a government guaranteed business loan?

Under the Growth Guarantee Scheme the government guarantees 70% of the loan to the lender, not to you: you stay liable for 100% of it. Loans run from £25,001 to £2m through 56 accredited lenders, and the interest rate is not published: set by each lender, which must pass on the benefit of the guarantee.

What is a flexi business loan?

A drawdown facility rather than a single lump sum. iwoca's Flexi-Loan lets you draw down what you need, when you need it, and charges interest only on the outstanding balance for the days you use it, with no fee for repaying early. Rates start at 1.5% per 30 days and its calculator example is 49% APR representative, so it suits short gaps better than a three-year loan.

Should I borrow from a bank or a private lender?

Ask the bank first. On £25,000 over 3 years, Barclays’ 8.5% APR costs £3,280 against £19,778 at iwoca's example rate. Private lenders win on speed and on businesses a bank turns down; if you are declined by Barclays, HSBC, Lloyds Bank, RBS, Santander or another designated bank, it must offer a referral to a finance platform.