Sole trader and self-employed business loans
Sole traders can borrow, and the cheapest routes are open to you: a Start Up Loan at 7.5% fixed if you have traded under 60 months, bank loans from Lloyds (whose criteria name sole traders) and Santander (if you already bank there) at 11.2% APR representative, and the Growth Guarantee Scheme from £25,001. Fewer online lenders will take you: iwoca lends to limited companies and LLPs only.
The bigger difference is liability, not access. In the government's words, sole trader owners are personally responsible for all of the debts of the business. So borrow the smallest amount that does the job, and where you can keep it to £25,000 or less: at that size a business loan to a sole trader is normally a regulated credit agreement, with consumer credit rules behind it.
Which lenders give business loans to sole traders
| Lender or scheme | Sole traders? | What its own page says |
|---|---|---|
| Start Up Loans | Yes | A personal loan, so the business structure does not matter; trading up to 60 months |
| Growth Guarantee Scheme | Yes | Sole traders and partners are named as eligible; from £25,001 for a term loan |
| Lloyds Bank | Yes | Criteria say a sole trader, partner or director can apply |
| Santander | Yes, existing customers | Sole traders apply in the Business Banking app; a Santander business account is required |
| NatWest | Not stated | Published criteria ask for a director of the business; sole traders are not mentioned |
| Barclays | Not published | The loan page does not say |
| HSBC | Not published | The Small Business Loan page does not say |
| iwoca | No | Applications from UK limited companies and LLPs |
| Funding Circle | Not published | The page invites limited companies to apply and does not mention sole traders |
"Not published" means the lender's page does not say either way; ask before you apply. Checked 1 November 2026. Rates for each bank are in our bank business loans comparison.
What an £8,000 sole trader loan costs
Lloyds publishes its representative example at exactly this size: £8,000 over 60 months at 10.65% fixed (11.2% APR) is £172.55 a month. 60 × £172.55 = £10,353.00, so the interest is £2,353.00.
| Route | Rate | Monthly | Total repaid | Interest |
|---|---|---|---|---|
| Start Up Loan | 7.5% fixed | £160.30 | £9,618.22 | £1,618.22 |
| Lloyds Bank (published example) | 11.2% APR | £172.55 | £10,353.00 | £2,353.00 |
| Santander (representative APR) | 11.2% APR | £172.60 | £10,355.90 | £2,355.90 |
Start Up Loan row: 7.5% ÷ 12 monthly, the method that reproduces the Start Up Loans published repayment table. Santander row: its representative APR converted to a monthly rate. Your own offer depends on your credit file and income.
The Start Up Loan saves £734.78 over the bank loan here, so if you are still inside the 60-month window, apply there first. It is a personal loan, which for a sole trader changes nothing: you are personally liable either way.
What lenders ask self-employed borrowers for
- Proof of income from HMRC. Once you have filed your Self Assessment return you can print your SA302 tax calculation for the last 4 years and a tax year overview, 72 hours after filing. HMRC suggests checking the lender accepts self-printed copies. Get your SA302 on GOV.UK.
- Your own numbers. Santander asks for turnover and costs over the last year, expected turnover, total debt repayments and what you take out for personal use. Lloyds asks for proof you can make the repayments and details of other business finance.
- For a Start Up Loan. A business plan, cash flow forecast and personal survival budget, plus ID, proof of address and bank statements. Free templates are on the Start Up Loans site.
- A clean personal credit file. Expect a personal credit check, because for a sole trader the business record is your record.
Borrowing against your card takings
If customers pay you by card, a merchant cash advance looks at your sales rather than accounts. You repay a fixed fee through a share of each day's takings, so repayments drop in quiet weeks. YouLend does not publish its fee, factor rate, repayment share or sole trader criteria on its own site (checked 1 November 2026), so ask any provider for a written quote and cost it yourself.
Costing your advance quote
Take A = the advance and F = the factor rate on your quote.
- Total repayable: T = A × F.
- Cost of the advance: C = T − A.
- Effective cost against a loan: C ÷ A, the cost per pound borrowed.
On the £8,000 example above, over 60 months the Start Up Loan costs £1,618.22 ÷ £8,000 = 20.2% per pound and Lloyds £2,353.00 ÷ £8,000 = 29.4%. An advance usually clears in months, so ask for N, the expected months to repay, and compare (60 ÷ N) × C with the loan's interest in pounds.
An advance is quicker to qualify for than a bank loan. Use one for a short, specific need, not as a substitute for a cheaper loan you could get with a week's paperwork. Our business loan interest rates comparison sets the same method against bank and online lender rates.
Self-employed and need funding?
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Frequently asked questions
Can a sole trader get a business loan?
Yes. On their own pages, Start Up Loans, Growth Guarantee Scheme, Lloyds Bank and Santander say sole traders can apply (Santander only for existing customers). iwoca lends only to limited companies and LLPs, and NatWest's published criteria ask for a director.
Can I get a loan if I am self-employed and have no accounts yet?
A Start Up Loan is built for that: it assesses a business plan, cash flow forecast and personal survival budget rather than filed accounts. Once you have filed a Self Assessment return, HMRC lets you print an SA302 for the last 4 years, 72 hours after filing, which lenders may ask for as proof of income.
Do sole traders have to give a personal guarantee?
Usually there is nothing to guarantee: as a sole trader you are already personally liable for the business's debts. Lloyds and Santander ask for guarantees only from limited companies and LLPs.
Are business loans to sole traders regulated?
A business loan of £25,000 or less to a sole trader, or to a partnership of up to 3 partners, is normally a regulated credit agreement. Above £25,000, credit taken wholly or mainly for business purposes is exempt. Loans to limited companies are outside consumer credit rules altogether.
Should I set up a limited company to borrow more easily?
Only if you have other reasons to incorporate. A company opens doors at lenders such as iwoca, but Lloyds and Santander both require a personal guarantee from limited companies, so the director ends up liable much as a sole trader would. You also lose the consumer credit protection on borrowing of £25,000 or less.