How to get a business loan in the UK: requirements, steps and options (2026)

To get a business loan in the UK, work out how much you need, check your eligibility and credit, choose the right type of finance, compare lenders, prepare your documents and apply. New businesses can borrow £500–£25,000 through the government-backed Start Up Loans scheme, while trading businesses can choose between high-street banks, challenger banks and alternative lenders. Banks typically take days to weeks to fund; online and revenue-based lenders can decide in as little as an hour and fund within 24 hours.

How do business loans work?

A business loan gives you a lump sum that you repay over an agreed term, plus interest or fees. The amount you borrow is the principal, the cost is usually quoted as an annual interest rate or APR, and terms run from a few months to 10+ years depending on the product. Repayments are typically fixed monthly instalments, which makes budgeting straightforward.

Loans are either secured or unsecured. Secured loans are backed by an asset such as equipment, stock or property, which usually means lower rates and larger amounts. Unsecured loans skip the asset but lean harder on your credit and trading history, and most lenders will ask for a personal guarantee — a legal commitment that you'll repay personally if the business can't.

Lenders price on risk. Longer trading history, healthier turnover and stronger credit mean cheaper borrowing, which is why the first real step is understanding how a lender will see your business.

How to get a business loan in the UK — step by step

Here's the full process, from working out what you need to money landing in your account.

Step 1: Work out how much you need and why

Lenders will ask what the money is for, so have a specific, costed answer: stock, equipment, marketing, hiring, a vehicle or buying another business. The purpose shapes the product — equipment suits asset finance, where the asset itself secures the loan, while stock and marketing suit shorter-term products because the capital pays for itself within months. Borrow what the plan justifies, not the maximum you're offered.

Step 2: Check your eligibility and credit

Before applying anywhere, know your numbers: how long you've been trading, your annual turnover and the state of your personal and business credit. Unlike the US, there's no single credit score cut-off in the UK — lenders check your files with Experian, Equifax or TransUnion and score you against their own criteria. A history of missed payments, CCJs or heavy existing borrowing narrows your options; clean files and consistent turnover widen them.

Checking your own reports first is free and doesn't affect your score. It also flags errors worth fixing before a lender sees them.

Step 3: Choose the right type of finance

Match the product to the job. Start Up Loans suit new businesses that need modest capital plus mentoring. Bank term loans suit large, planned investments. Overdrafts and credit lines suit cash-flow swings. Revenue-based finance suits growing businesses that need capital quickly without giving up equity. The full comparison is in the types of business finance section below.

Step 4: Compare lenders

Costs vary widely for the same product, so compare at least 3 offers on APR or total cost, repayment schedule, fees, funding speed and whether security or a personal guarantee is required. Many UK lenders and brokers run soft-search eligibility checks that don't leave a footprint on your credit file — use them before committing to full applications. The cheapest headline rate isn't always the cheapest loan once arrangement fees and early repayment charges are counted.

Step 5: Prepare your documents

Expect to provide most of the following: recent business accounts, business and personal bank statements (3–6 months), a cash-flow forecast covering 12–24 months, proof of ID and your business registration details (your Companies House number if you're a limited company or LLP, or your UTR if you're a sole trader or partnership registered with HMRC). Start-ups and Start Up Loan applicants also need a business plan with financial projections — for Start Up Loans, a dedicated business adviser helps you prepare it.

Online and revenue-based lenders are lighter-touch. Many connect directly to your business bank account, accounting software or sales platforms and skip most of the paperwork.

Step 6: Apply

Apply to your shortlist. High-street banks may take days or weeks to underwrite, particularly for larger or secured loans. Online lenders use automated underwriting — applications take minutes and some, like Funding Circle, advertise decisions in as little as an hour. Keep hard applications to your genuine shortlist so your credit file doesn't accumulate unnecessary searches.

Step 7: Review the terms and the personal guarantee

Before signing, confirm the total repayment in pounds, not just the rate, and check for arrangement fees, early repayment charges and what happens if you miss a payment. Look hard at any personal guarantee: it makes you personally liable if the business can't repay, so understand exactly what it covers and take independent advice for larger commitments. Once you accept, funds typically arrive within 1–3 working days for online lenders, or at completion for banks.

What are the business loan requirements in the UK?

UK business loan requirements come down to 6 things, with thresholds that vary by lender type.

To qualify with the widest range of lenders, the practical checklist is: file your accounts on time, keep business and personal banking separate, fix errors on your credit files and be ready to show 12–24 months of cash-flow forecasts. Lenders fund businesses they can read clearly.

What types of business finance are available in the UK?

Each product fits a different job. The government-backed options come first because they're what most new-business searches are really asking about.

Start Up Loan (government-backed). An unsecured personal loan for business purposes of £500–£25,000 per founder, repaid over 1–5 years at a fixed 7.5% a year (the rate changed from 6% in April 2026), with 12 months of free mentoring, no security or personal guarantee and no application or early repayment fees. Since April 2026, businesses trading for up to 5 years can apply for a first loan, and co-founders can each borrow up to £25,000 to a maximum of £100,000 per business. Best for new and early-stage businesses that banks won't yet fund.

Growth Guarantee Scheme. The government guarantees 70% of the facility to the lender — you remain fully liable for the debt — on facilities up to £2m through accredited lenders, covering term loans, overdrafts, asset finance, invoice finance and asset-based lending. It's designed to turn marginal declines into approvals. A July 2026 expansion raised the turnover cap from £45m to £54m and extended the maximum term to 10 years for loans up to £1.1m. You apply through an accredited lender, not the government directly. Best for established businesses that fall just short of standard bank criteria.

Bank term loan. A lump sum from a high-street bank (NatWest, Lloyds, Barclays, HSBC) repaid in fixed instalments, typically over 1–10 years. The cheapest route for established businesses with strong accounts. Best for large, planned investments.

Business overdraft or credit line. A revolving limit you draw on as needed, paying interest only on what you use. Best for managing cash-flow gaps and seasonal swings.

Revenue-based finance. Capital advanced against your future sales, repaid in line with your revenue for a single fixed fee rather than compounding interest — so you pay more in strong months and less in quiet ones. Best for growing consumer and online businesses funding stock or marketing. How revenue-based financing works →

Invoice finance. An advance, typically 80–90%, against unpaid B2B invoices. Best for businesses with long payment terms and reliable customers.

Merchant cash advance. A lump sum repaid as a percentage of daily card takings. Accessible with weaker credit, but usually the most expensive option — always calculate the effective annual cost before signing.

Asset finance. A loan or lease where the equipment, vehicle or machinery is the security, often covering 80–100% of the purchase price. Best for hardware-heavy purchases.

Grants. Not loans at all — nothing to repay. The King's Trust supports 18-to-30-year-olds starting businesses, and regional growth hubs and Innovate UK run sector-specific schemes. Competitive and slow, but worth checking before you borrow.

For a fuller comparison of the non-bank routes, see our guide to alternative business loans.

Where can you get a business loan in the UK?

You have 4 broad routes, and the right one depends on how you trade off cost, speed and eligibility.

High-street banks offer the best pricing and remain the right first call for established businesses with strong accounts and time on their side. Government schemes exist precisely for the businesses banks can't yet say yes to. Challenger banks like Tide and Starling suit digital-first businesses that want banking and borrowing in one app. Alternative lenders compete on speed and data-driven underwriting — Funding Circle advertises decisions in as little as an hour, and if you're already trading and need capital quickly, revenue-based financing from a provider like Wayflyer can fund in as little as 24 hours, for a single transparent fee, with no equity given up and repayments that flex with your sales.

These routes complement each other. Plenty of businesses hold a low-cost bank loan for long-term investment and use faster finance for time-sensitive opportunities like stock purchases ahead of peak season.

How do you get a business loan with bad credit or no money?

You can still get funded with poor credit or limited capital — UK lenders score you on their own criteria rather than a single cut-off, so a decline from one is not a decline from all. Four routes stay open.

Secured loans. Offering an asset — equipment, vehicles, stock or property — offsets a weak credit file. Approval odds rise and rates fall because the lender's downside is covered.

Revenue-based finance. If your sales are strong but your credit history isn't, revenue-based lenders assess your recent trading data rather than your credit file alone. Consistent monthly sales matter more than what happened 3 years ago, and quotes typically start with a soft search that leaves no footprint.

Guarantors. A creditworthy co-owner, co-director or third-party guarantor lets the lender underwrite their profile alongside yours. It's a serious commitment — they become personally liable if you default — so put it in writing and take advice.

Build your business credit first. If you can wait even 6 months: file your accounts and confirmation statement on time at Companies House if you're a limited company or LLP (or your Self Assessment on time with HMRC if you're a sole trader or partnership), pay suppliers promptly, keep business banking separate and correct errors on your Experian, Equifax and TransUnion files. Lenders re-score you on current data.

If you have no money and no trading history at all, a Start Up Loan is the most realistic route — it's designed for exactly this, needs no security and comes with an adviser who helps you build the business plan. Grants and the King's Trust are worth checking in parallel. Once you have around 6 months of consistent sales, revenue-based finance and online lenders open up.

How long does it take, and how much can you borrow?

Funding speed varies more than any other factor between lender types.

Borrowing ranges run from £500 (Start Up Loans) to several million (bank and guarantee-backed lending), with alternative lenders like Funding Circle covering £10k–£750k. What you can actually borrow is capped by what your cash flow can service — lenders want repayments covered comfortably by monthly cash flow, with headroom.

Two worked examples. A £25,000 Start Up Loan at 7.5% fixed over 5 years costs about £501 a month, roughly £30,100 in total. A £50,000 bank term loan at 8% APR over 5 years costs about £1,014 a month, roughly £60,800 in total. Run the numbers against your own cash flow before applying — shorter terms mean higher monthly payments but a lower total cost.

FAQs

How do I become eligible for a business loan?

Lenders look at how long you've traded, your turnover and cash flow, and your personal and business credit. High-street banks and government Start Up Loans have stricter criteria; alternative and revenue-based lenders weigh recent sales more than credit history. Most require you to be 18+, with a UK-registered business and a UK business bank account.

Is it hard to qualify for a business loan?

It depends on the lender. Banks typically want 2+ years of accounts and clean credit, so newer businesses find them hard. Government Start Up Loans are designed for businesses banks decline, and alternative lenders approve on trading performance — so most viable UK businesses can qualify somewhere, though the cost varies with the risk.

What credit score do you need for a business loan?

There's no single cut-off in the UK. Lenders check your personal and business files with Experian, Equifax or TransUnion and score you against their own criteria. Banks prefer strong, clean credit; challenger and revenue-based lenders can approve lower scores if trading performance is healthy. Poor-credit options — secured loans, revenue-based finance, guarantors — exist but usually cost more.

Can a new business or start-up get a loan?

Yes. The government-backed Start Up Loan offers £500–£25,000 per founder as an unsecured personal loan at 7.5% fixed, with 12 months of free mentoring — even with no trading history, and for businesses trading up to 5 years. Established businesses have more options, including bank term loans and revenue-based financing.

How much can I borrow to start a business?

Through the Start Up Loans scheme, £500–£25,000 per founder, up to £100,000 per business if co-founders each apply. Beyond that, new businesses can look at grants, asset finance for equipment or personal savings, then move to bank and revenue-based lending once trading. How much you're approved for depends on your business plan and affordability.

What is the easiest way to get a business loan?

It depends on your situation. For new businesses, the Start Up Loans scheme is the most accessible route — it needs no security and includes an adviser. For trading businesses, online and revenue-based lenders are usually easiest: soft-search quotes, light paperwork, decisions from an hour and funding in as little as 24 hours.

Which bank gives a business loan easily?

No bank guarantees easy approval — NatWest, Lloyds, Barclays and HSBC all underwrite on trading history, turnover and credit. Challenger banks like Tide and Starling offer faster, app-based applications. If speed and flexibility matter most, alternative and revenue-based lenders approve on trading data and typically move much faster than any bank.

Do you need a personal guarantee?

Often, yes — most unsecured bank loans and many alternative products require the business's owner(s) or director(s) to guarantee repayment personally. Notable exceptions: Start Up Loans require no security or personal guarantee, and some revenue-based products don't either. Always check the guarantee terms before signing and take independent advice for larger commitments.