What agreement lengths are available?

UK SMB finance agreements run from 3 months at the short end to 25 years at the long end, depending on product. Short working capital and merchant cash advance facilities sit at 3 to 18 months. Standard unsecured term loans run 1 to 5 years. Asset finance runs 2 to 7 years. Commercial mortgages and land-secured facilities run 5 to 25 years.

The right term depends on what the loan funds. Short-cycle working capital (stock, VAT, payroll) should not be funded over 5 years because you pay interest long after the cash has flowed through. Equipment that depreciates over 7 years should not be financed over 3 because you would be paying it off faster than it earns. The accounting principle of matching loan term to asset useful life is the strongest single rule in UK SMB finance.

Typical UK ticket-and-term combinations: merchant cash advance £10k to £500k over 3 to 18 months (factor rate, no interest). Working capital term loan £5k to £500k over 1 to 5 years. Asset finance £10k to £1m over 2 to 7 years. Property-secured term loan £150k to £5m over 5 to 15 years. Commercial mortgage £150k to £25m over 10 to 25 years.

Some lenders allow agreement lengths to flex during the life of the facility. iwoca's flexi-loan structure lets you draw and repay against a credit limit rather than a fixed schedule. Most term loans allow early repayment, sometimes with a 1 to 3% redemption fee.

See is a deposit required for the upfront contribution question, and can repayments be structured seasonally or with a payment holiday for term flex options.