How to compare business loans in the UK
To compare business loans effectively, apply through a multi-lender broker that returns multiple offers from a single soft-search application, then evaluate each offer on total cost of credit, repayment structure and time to funding. The difference between the best and worst 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, while the same amount at 18% APR costs around £19,800.
Lenders present rates in different formats, over different terms, with different fees attached. Comparing effectively requires knowing what to look for.
Business loan types: quick comparison
| Product | Best for | Typical cost | Time to fund |
|---|---|---|---|
| Term loan (unsecured) | Planned investment, growth capex | 6–20% APR | 1–5 days |
| Revolving credit | Working capital, day-to-day cash flow | 8–25% APR | 2–7 days |
| Merchant cash advance | High card-transaction businesses | Factor rate 1.1–1.5× | 24–72 hours |
| Revenue-based finance | Businesses with recurring digital revenue | Factor rate 1.1–1.4× | 24–72 hours |
| Invoice finance | B2B businesses with outstanding invoices | 0.5–3% service fee + discount charge | 24–48 hours |
| Asset finance | Equipment, vehicle, machinery purchase | 4–12% APR | 2–7 days |
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. See our comparison of revenue-based finance and term loans for a detailed breakdown.
Invoice finance / factoring: advance funding against outstanding invoices. Best for B2B businesses with slow-paying customers. Our invoice finance guide covers this in depth.
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.
What is 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 commercial finance broker with a multi-lender panel. As an NACFB member with a 50+ lender panel, 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 Fundably. We earn 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 with 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.
Lenders on Fundably’s panel include iwoca and Funding Circle for unsecured term loans, Nucleus Commercial Finance for larger secured facilities, Capital on Tap and Funding Circle FlexiPay for revolving credit and cards, YouLend for revenue-based finance and Triver for invoice finance, alongside specialist asset finance and bridging providers.