Why comparing business loans matters
The difference between the best and worst business loan offer for the same borrower can be thousands of pounds. A business borrowing £100,000 at 8% APR over 24 months pays roughly £8,700 in interest. The same business borrowing the same amount at 18% APR pays around £19,800. That is an £11,000 difference for identical capital.
This difference is often invisible at the application stage — lenders present rates in different formats, over different terms, with different fees attached. Comparing effectively requires knowing what to look for.
The main product types
UK business loans are not a single product. Common options include:
Term loans: a fixed sum borrowed and repaid with interest over a fixed term — typically 1–5 years. Best for planned investments.
Revolving credit facilities: a credit limit you draw down and repay as needed. Best for managing working capital, similar to a business overdraft.
Merchant cash advance (MCA): a lump sum repaid as a percentage of daily card transactions. Best for businesses with consistent card income. Rate expressed as a factor rate (e.g. 1.25× repayment on £100k = £125k total cost).
Revenue-based finance: similar to an MCA but repayment tied to monthly revenue rather than card transactions. More flexible for businesses without a card terminal.
Invoice finance / factoring: advance funding against outstanding invoices. Best for B2B businesses with slow-paying customers.
Asset finance: funding tied to a specific asset purchase. The asset acts as security.
What to compare
When comparing business loan offers, focus on:
Total cost of credit: the total amount you will repay minus the amount you borrowed. This is more useful than an interest rate quoted in isolation.
APR: the annualised percentage rate, including fees. Legally required to be disclosed. However, many short-term lenders quote factor rates or “monthly rates” that obscure the true APR. Always ask for the APR.
Term: a lower rate over a longer term can cost more in total than a higher rate over a shorter term. Compare total cost, not just rate.
Repayment structure: daily, weekly, or monthly repayments affect cash flow differently. Factor in your revenue cycle.
Early repayment charges: some lenders charge penalties for repaying early. If you anticipate repaying ahead of schedule, this matters.
Security requirements: secured loans typically have lower rates but put assets (or personally guarantee) at risk.
Time to funding: urgency matters. Some lenders fund within 24 hours; others take 3–4 weeks.
The fastest way to compare UK business loans
Applying to multiple lenders separately is time-consuming and results in multiple hard credit searches, each of which affects your credit score.
The more efficient approach is to apply once through a credit broker with a multi-lender panel. A broker like Fundably:
- Takes a single soft-search application (no credit score impact)
- Matches your business to appropriate lenders from a 50+ panel
- Returns multiple offers in parallel — typically within hours
- Lets you compare and choose the best offer before committing
There is no cost to apply through a broker — the broker earns an arrangement fee from the lender on completion.
What information lenders need
Most business loan applications require:
- Business name, registered number, and trading address
- Trading history (months / years trading)
- Monthly or annual revenue
- Purpose of the funding
- Funding amount required
- Director personal details (name, address, date of birth)
- Typically: last 3–6 months bank statements
Initial credit matching uses a soft search — no credit impact. Full credit checks occur only if you choose to proceed with a specific lender’s offer.
Apply through Fundably to compare business loan offers from 50+ lenders.