A business loan is a type of funding offered to businesses, as opposed to an individual. You should use them only for business purposes and not for personal needs..
Business loans can be helpful at many stages of a business. You can use them to grow, buy equipment, hire staff, or manage cash flow. Whether you're just starting or already running a business, a loan can give you the support you need to move forward.
Use capital to open new locations, launch new products, or scale your business operations
Maintain stability during seasonal dips or long invoice cycles without straining your cash reserves.
If you want to take advantage of supplier discounts, or prepare for a busy season, use finance to buy your goods early.
Whether you can get a business loan depends on a few factors, such as the type of loan you want and the lender you apply to. If you're applying to a UK lender, your business must be based in the UK.
Lenders will check a few key things before offering a loan, as they want to make sure your business is able to repay it. Here’s what they often look for:
Each lender is different, so it’s a good idea to compare a few options.
Understanding what your monthly payments could be and the total cost of a business loan is easy with our business loan calculator. You’ll be able to instantly see how much you'll need to pay back, helping you plan and manage your finances effectively. Simply enter the amount you wish to borrow, the interest rate, and the term of the loan.
What do you need the funding for?
Funding for covering costs e.g. tax or payroll. These are typically unsecured loans.
For how long do you want to pay back your loan?
Interest rate
Loan amount
£ -Total interest amount
£ - 11% APR over a 3 yearsTotal repayable
£ -Total monthly repayment
£ - / monthNot sure what your business can afford?
Sign up to check your affordabilityHere’s how to get the best business loan with Capitalise:
There are various types of loans available for businesses. From traditional term loans, to specialised options like invoice financing, there’s something for every business need. Read through the common types below to find out the funding that fits your business now:
| Type of business loan | How it works |
|---|---|
| Invoice finance | Get cash quickly by borrowing against the payments your customers owe you. This helps your business avoid waiting for invoices to clear. |
| Asset finance | Allows you to buy or lease equipment immediately without full upfront payment, helping you manage your cash flow better. |
| Merchant cash advance | Ideal for businesses with lots of card transactions, this gives your business cash upfront in return for a cut of your future sales. |
| Peer-to-peer loans | These loans connect you with individual investors through a lending platform. This often results in better interest rates and flexible terms. |
| Start up loans | Designed for new businesses, these loans provide the funds you need to get started and support initial growth. |
| Secured loans | These loans require collateral, such as a property or equipment, but you'll usually benefit from lower interest rates. |
| Unsecured loans | No collateral needed here, but expect higher interest rates since the lender is taking on more risk. |
| Short term loans | Great for quick financial needs like restocking inventory or covering a temporary cash shortfall, and typically paid back within a year. |
| Long term loans | These are for bigger investments and are paid back over several years. |
| Line of credit | This flexible financing option gives you access to a set limit of money. You can draw down as needed, so it's perfect for smoothing out cash flow or handling unexpected costs. |
During the pandemic, the government offered several loan schemes to help businesses, such as:
On 1st July 2024, the Growth Guarantee Scheme (GGS) came into effect and will be available until March 2026. This scheme provides access to 70% government backed finance for loan amounts up to £2 million. We work with several lenders approved for the scheme, allowing you to explore options for a government backed loan. Apply online.
When you apply for a small business loan, lenders will check the creditworthiness of your business. They will look at your business credit score, financial history, profitability, and any assets you own. This evaluation helps the lender see the risks of lending to your business. It also helps them decide what rates to offer.
Some business loans will also include an initial arrangement fee, or early repayment fees. The full loan agreement will always outline these fees if you receive an offer.
If you apply for a loan with Capitalise, you'll get support from our expert funding specialists. They will help you understand all the costs involved. This way, you will know what to expect, we’ll work with you to ensure there are no surprises.
Check your eligibility instantly, receive dedicated expert support and compare your offers - all in one place.
Capitalise is an FCA-regulated platform built to support UK businesses in taking control of their financial health. We make it easy for business owners to access funding by connecting them with over 100 trusted UK lenders.
Our intelligent platform matches you with lenders based on your business needs and ranks options based on past success rates - helping you make confident, informed decisions.
When you apply through Capitalise, you're not alone. Every application is supported by a dedicated funding specialist who will:
With Capitalise, you can compare offers side by side and secure the best funding solution for your business with expert support at every step.
A business loan can be used for a variety of purposes to support and grow your business.
Here are some common uses:
Essentially, you’ll be able to use a business loan for any purpose, as long as it relates to the business’ needs and not for personal purposes.
Deciding to take out a loan to grow your business comes down to a few key points. First, you could look at how your business is doing financially and consider if it can handle the cost of a new loan?
You can think about what you will use the loan for. This could be buying new equipment or purchasing more inventory. Consider if this will help you earn more money.
For many businesses, a business loan is a great way to accelerate growth. But it’s important to consider your own individual circumstances to decide if it’s right for you.
To qualify for a business loan from a UK lender, your business must be based in the UK.
The amount you can borrow depends on several factors. These include your business's financial health, revenue, and credit score. The lender's own criteria will also play a role.
You can use our Business Loan Calculator to estimate how much you can borrow, the total loan cost, and your monthly payments. This will help you understand how much you can afford to borrow.
When you apply for a business loan with Capitalise, you get access to a marketplace of over 100 UK lenders. One of our expert funding specialists will guide you through your options and help you understand what’s available. This makes it easy to compare rates and choose the best loan for your business.
You can still get a business loan with bad credit, but it might be hard to get an unsecured loan or one from a high street bank.
Some lenders will look at other factors than your business credit score, such as the value of any assets you own. This means that there can be some options available if you have poor credit.
You can often repay a business loan early. If you can afford to do so, it can be a wise decision as it allows you to save money on interest.
However, it's important to first check the details of your loan agreement. Some lenders may charge fees for paying off loans early. You should check if the interest savings are worth the penalty.
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