Business loans UK 2026
A UK business loan is debt finance for a company or sole trader, repaid over a fixed term or against trading flow. There is no single best lender. The right pick depends on ticket size, trading history and credit profile. This page sets out the main loan structures, the realistic 2026 rate ranges, the lenders that work for each profile, and what to do if a lender declines you.
What a UK business loan is and who needs one
UK business loans split into a handful of structures, each fitting a different cash-flow shape. Most SMBs use one of the following:
- Unsecured term loan. Fixed amount, fixed term, fixed monthly repayments. £10k to £500k typical, 1 to 5 year term, 7% to 26% APR depending on profile. Best for one-off projects with predictable repayment capacity.
- Flexi-loan or revolving line of credit. Draw-as-you-go up to a set limit, pay interest only on the drawn balance. £1k to £500k. Best for working-capital gaps that come and go.
- Merchant cash advance. Lump sum repaid as a percentage of daily card takings. No fixed term. Sized against six months of card-machine history. Best for retail, hospitality and any card-flow-led business.
- Asset finance. Loan secured against a specific asset (vehicle, plant, IT, fit-out). Hire purchase, finance lease or operating lease. Lower eligibility hurdles because the asset is the security.
- Commercial mortgage. Long-term debt secured against business premises. £150k to £5m+, 5 to 25 year terms. For owner-occupier purchases or refinancing.
- Invoice finance. Advance against unpaid B2B invoices. See our sister site MarketInvoice for the full invoice-finance comparison.
Six UK lenders worth knowing in 2026
A short editorial shortlist. None of these are paid placements. Each is FCA-regulated where relevant, with a Companies House number we can verify.
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Term loan · £10k to £500k · founded 2010 · CRN 07123069
Largest UK SME term-loan platform. Soft-search at quote, decisions in 1 to 3 days, eligibility criteria public up front.
Typical rate: 6.9% to 26.9% APR. Decision: 1 to 3 business days.
Read full Funding Circle review → -
Flexi-loan / line of credit · £1k to £500k · founded 2011 · CRN 07798925
Flexi-loan structure suits draw-as-you-go working capital. Fastest mainstream decision time, engages from 12 months trading.
Typical rate: From 2% per month. Decision: Same day to 24 hours.
Read full iwoca review → -
SME term loan + commercial mortgage · £150k to £5m · founded 2019 · CRN 11470391
PRA-regulated bank for established Ltd companies needing £150k to £5m. Strong on transparency, slower decision cycle than fintech lenders.
Typical rate: From 7.99% APR. Decision: 5 to 10 business days.
Read full Allica Bank review → -
SME term loan + bridging · £500k to £50m+ · founded 2015 · CRN 08595042
Bespoke deals £500k to £50m+ for established UK SMBs. Relationship-led underwriting, not platform-driven.
Typical rate: Bespoke. Decision: 7 to 14 business days.
Read full OakNorth review → -
Merchant cash advance + term loan · £3.5k to £500k · founded 2013 · CRN 10183728
Merchant cash advance against card flow. Strong on hospitality, retail and post-decline applications.
Typical rate: Factor rate 1.15 to 1.45. Decision: Same day.
Read full Capify review → -
Merchant cash advance · £10k to £500k · founded 2011 · CRN 07475281
MCA with no-PG options for some applicants. Fast and accommodating on credit history.
Typical rate: Factor rate 1.10 to 1.40. Decision: 24 to 48 hours.
Read full 365 Business Finance review →
For the full ranked picks see Best business loans UK 2026, the head listicle with our weighting methodology.
Eligibility: who qualifies
UK SMB lender eligibility is more uniform than it looks. Most mainstream lenders share a core acceptance bar:
- Trading history. 12 to 24 months for fintech lenders. 24 to 36 months for high-street banks. Six months for some MCA lenders. None for the British Business Bank Start Up Loan.
- Turnover. Most fintech lenders ask for £100k+ annualised. Allica and OakNorth ask for £500k+. MCA underwrites against monthly card takings, not turnover.
- Credit profile. A clean director credit file plus no current CCJs is the mainstream bar. Specialist post-decline lenders engage with CCJs, defaults and sub-12-month trading.
- Structure. Limited company is preferred by most lenders. Sole traders carry personal liability and have a narrower panel. LLPs sit between the two.
- Sector. Standard sectors (retail, hospitality, professional services, construction, manufacturing) are universally underwritten. High-risk sectors (gambling, adult, CBD) need specialist routes.
Cost: what UK business loans actually cost in 2026
Bank of England base rate sits at 3.75% as of March 2026. SMB lending prices off base, plus a margin for credit risk, plus product structure. Realistic 2026 ranges:
| Product | Typical pricing | Example lenders |
|---|---|---|
| Unsecured term loan | 7% to 26% APR | Funding Circle, Fleximize, LendingCrowd |
| Flexi-loan | 2% to 3% per month on drawn balance | iwoca, Just Cashflow, Fleximize |
| Merchant cash advance | Factor 1.15 to 1.45 of advance | Capify, 365 Business Finance, Liberis, YouLend |
| Asset finance | 6% to 18% APR equivalent | Allica Bank, Aldermore, Close Brothers, Time Finance |
| Commercial mortgage | From 6.5% APR | Allica Bank, Shawbrook, Hampshire Trust Bank |
| Start Up Loan (gov-backed) | 6% APR fixed, £500 to £25k | British Business Bank delivery partners |
Headline rates are the cleanest end of each range. The offered rate depends on credit, turnover, sector, ticket size and term.
Frequently asked questions
What is a business loan in the UK?
A business loan is debt finance issued to a UK company or sole trader for trading, capex or working-capital purposes. The most common UK structures are unsecured term loans (fixed amount, fixed term, fixed repayments), flexi-loans (draw-as-you-go lines), merchant cash advances (repaid as a percentage of card takings), asset finance (loan secured against a specific asset) and commercial mortgages. Pricing, eligibility and decision speed differ materially by product.
How much can a UK business borrow in 2026?
For unsecured term loans, £10k to £500k is standard with most fintech lenders. PRA-regulated banks reach £5m. Bespoke deals at OakNorth, Shawbrook and clearing banks reach £25m to £50m. Asset finance is sized to the asset value. Merchant cash advance is sized to monthly card takings, typically 100% to 150% of one month of takings.
What APR should an established UK Ltd company expect in 2026?
Clean-credit established borrowers should expect 7% to 12% APR for unsecured term loans, 2% to 3% per month on flexi-loans (drawn balance), and factor rates of 1.15 to 1.35 on merchant cash advance. Bank of England base rate is 3.75% as of March 2026, so all sterling SMB rates anchor off that.
Do I need 2 years of trading to get a UK business loan?
For mainstream term loans from Funding Circle, Allica Bank or high-street banks, yes, 2 years is the typical minimum. For an iwoca flexi-loan, 12 months. For merchant cash advance against card flow, 6 months can be enough. For the British Business Bank Start Up Loan (£500 to £25k, government backed at 6% APR), no trading history is required.
Which UK business lenders use soft search at quote stage?
iwoca, Funding Circle, Allica Bank, Fleximize and most reputable mainstream lenders use soft search at quote stage, which leaves no footprint on your credit file. Hard search applies later, on full application. Avoid any broker or lender that runs a hard search at quote stage; that is a red flag.
What if my business loan application is declined?
A decline at one UK lender is not a decline at all. Lenders specialise: where one rejects for a CCJ, another underwrites it. After a decline, get the reason in writing, wait two to four weeks before reapplying to avoid stacking hard searches, then route to a specialist post-decline lender or broker matched to your decline reason. See our after-a-decline guide for routing.
Alternative routes if you are declined
A decline at one UK lender is not a decline at all. Lenders specialise. Common routings:
- CCJ history: Capify, JPM Capital, Bizcap or Bolton Finance.
- Sub-12-month trading: British Business Bank Start Up Loan or iwoca from 12 months.
- Insufficient turnover: smaller-ticket MCA, supplier finance, asset finance.
- Affordability stretched: shorten ticket, lengthen term, consolidate before reapplying.
See the full after-a-decline guide for decline-reason-to-lender routing.
Business loans by trade
- Construction business loans: CIS, retentions, materials prefunding
- Engineering business loans: capex on machinery, R&D advance pairings
- Accountants business loans: practice acquisition, fee finance
- Retailers business loans: seasonal stock, MCA against card flow
Common questions
Where to read next
- Best business loans UK 2026 (ranked listicle, weighted methodology)
- Cheapest UK business loans
- Fastest UK business loans
- Asset finance UK guide
- Cashflow loans UK
- By sector and by product directories
- All lender reviews (full panel)
- Business loan rates 2026 guide
- Our /get-quotes/ form for live broker matching across the panel
Reviewed by Oliver Mackman, Director, Best Business Loans Ltd (16833937). Last reviewed: 2026-05-10.