Small Business Loans from £1,000 - £500,000

If you need funding to grow your UK business, a small business loan can provide a fast and affordable solution to help support your goals.

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Small business loans for start-ups and established businesses alike can benefit from a quick cash boost. If you want to expand your business, refurbish your premises or invest in more stock, we can help get the business finance you need.

While there are many different types of business loans available on the market, Capalona can help identify the right one for your situation and growth objectives.


What is a small business loan?

A small business loan is a type of business finance that helps to ensure that companies have enough money to cover daily operating costs. A small business loan offers you a convenient, low-cost way to finance your business activities. This type of loan can be used for almost any business purpose, such as boosting cash flow, purchasing equipment, recruiting staff and covering unexpected bills.

A small business loan from one of our alternative finance providers or Government-backed scheme can be tailored to suit your individual needs.


Are small business loans secured or unsecured?

Both secured and unsecured small business loans are available for business owners in the UK. Unsecured loans are typically smaller amounts at a higher cost with shorter repayment terms. However, if you require a larger loan, offering an asset as security against the loan may enable you to secure more funds at better rates.

Check out our comparison guide and infographic on the key differences between secured and unsecured business finance for more information.

Wine shop owner who has used a small business loan

What are the different types of business loans?

As mentioned, there are two main types of small business loans: secured and unsecured. Within these broader categories, many different types of loans and financing options exist for UK SMEs:

With an unsecured business loan, you can borrow money without putting up your business assets as security for the loan. This tends to be popular with smaller businesses that don’t have lots of collateral readily available to offer as security.

On the other hand, with secured business loans, companies borrow money under the agreement that in the event their business defaults on loan repayments, the lender will be able to take legal authority over the agreed asset until payment has been made in full.


What are the best small business loans?

When it comes to finding the best small business loan for your firm, there are a number of factors to consider. From what you need the funding for, to your ability to make repayments, there is no single funding product that can categorically be described as ‘the best’.

However, when choosing the best small business loan, you will want to make sure that you are receiving the correct amount of money needed, with competitive interest rates and comfortable repayment terms. At Capalona we are committed to helping companies like yours find the best loans for their businesses.

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What is the difference between a business loan and a personal loan?

Business loans can only be used for business purposes and company purchases. Examples of this include using your loan to fund business expansion, or buy new stock and equipment. A personal loan differs to this because it is intended for personal use. Lenders will usually impose restrictions on personal loans that state they can’t be utilised for business use and vice versa.


How does a small business loan work?

A small business loan is no different from any other type of business finance. The credit provider gives you money upfront, and then you repay it, including any interest and fees over an agreed timeframe.

The term 'small business loan' is used to describe a wide variety of funding options, including unsecured business loans, secured business loans, merchant cash advances, peer-to-peer business loans and invoice financing.

Each type of loan can vary in structure and repayment mechanism. For example, some allow you to draw down funds as and when you need it. These are called lines of credit or revolving credit facilities. They are much more flexible and work similarly to a credit card, paying interest only when you use it.

Remember, Capalona is free to use. As a responsible broker, we do not charge any fees for using our online small business loan matching service.

Depending on the loan you choose, you may be required to offer a company or personal asset to secure the loan. Failure to fulfil your repayment terms may result in the lender seizing your assets. You must, therefore, consider this option carefully.


How long does a small business loan last?

The term length of your small business loan will depend on the specific SME funding product that you choose for your firm. Small business loans tend to be taken out for a shorter period of time. However, there are many factors that come into this, including:

  • How much you want to borrow
  • The type of business loan you require
  • The interest rate and how quickly you can comfortably make repayments

What are the rates and fees for small business loans?

Small business loan rates and fees will vary significantly depending on the lender and type of funding product they offer. The rates can also be affected by your business activity, such as performance, industry sector and credit history.

Although interest rates are usually fixed, they can be variable, meaning it can go up or down at any time during the loan term. All fees, charges and repayment terms will be made clear and agreed at the outset of the loan, so you will know how much it will cost.

Remember, if you default on a small business loan, your credit rating may be negatively impacted, and you may struggle to secure credit in the future.

With competitive interest rates and flexible repayment terms, our range of loans offers peace of mind for all business owners. These short-term business loans are suitable even if the business has been trading for less than six months.

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Is a small business loan right for me?

Getting a business loan from a traditional high street bank can be challenging if you haven't been trading for long or have a bad credit history.

If you’re experiencing such complications, it’s worth knowing that banks aren’t your only option. Many alternative finance companies and non-bank lenders specialise in providing SME loans to business owners of small companies.

A short-term business loan could offer you some flexibility, especially if you’re facing an unexpected situation or seasonal fluctuations.

Trying to obtain funds from a high street bank can be a frustrating and time-consuming process. With Capalona, a short-term small business loan could be agreed in principle in just a few minutes, with the funds transferred to your account within a matter of hours after approval.


Can I get a small business loan with bad credit?

A small business loan from one of our trusted alternative funding providers is an excellent option if you have a bad credit rating.

Many lenders have tailored their products to suit specific needs. While interest rates are higher if you have a poor credit score, you can repay it over a short time frame to keep the costs to a minimum.

Did you know? Credit checking agencies like Experian let you access your full business credit report and score in real-time. They also provide helpful tips and advice on how to improve it.

Regardless of your credit history, we can find the right product for you, even if you have a less than perfect credit score.


Do small business loans require a personal guarantee?

More often than not, when applying for a small business loan you will need to be prepared to sign a personal guarantee. This guarantee is legally binding and essentially agrees that you as the business owner or company director, will take personal responsibility for making payments if your business is unable to.

Personal guarantees tend to be more common when you are looking for an unsecured loan product, or if you have bad credit and the lender wants extra assurance before agreeing to let you borrow.


What credit score is needed for a small business loan?

There is no set credit score that will guarantee a successful small business loan application. Each lender has their own requirements and often your business credit score is just one part of what they’ll be looking at when making their decision to lend.

As mentioned, small business loans are easier to apply for with adverse credit. This is because funding smaller amounts poses less risk to the lender. However you should bear in mind that lower credit scores usually require higher interest rates and the signing of a personal guarantee.


What if I've been unsuccessful in securing a business loan in the past?

In the event your business has been refused a business loan in the past, it’s important to assess your financial situation and ensure that funding is the right option for your business. After being rejected, there are steps you can take to improve your credit score and ensure that any outstanding debts are paid off.

Once your business’s financials are in better shape, you should be in a better position to apply for a small business loan. Please contact our team at Capalona if you have any concerns about your business when applying for funding.


How can I use a small business loan?

A small business loan can be used for almost any business purpose. You may need a cash boost to invest in stock levels, refurbish or extend your operating environment, hire additional staff or purchase the latest equipment.

They can also be used to cover unforeseen costs, such as an unexpected bill, and economic fluctuations caused by seasonality.


What are the advantages of small business loans?

When taking out finance, it’s essential to consider every aspect of the loan agreement. Here are some general advantages of small business loans.

Accelerate your growth potential - Taking your business to the next level requires working capital and a small, short term business loan offers a fast and affordable way to meet your business goals.

Asset security not required - The majority of loans are unsecured. However, most lenders may offer you the flexibility to use your business assets to secure the loan, should you wish to do so.

Keep cash flowing - Cash flow can be a tricky part of business management. A short-term business loan could give you the breathing space you need to overcome potential issues.


What are the disadvantages of small business loans?

Here are some key disadvantages to consider when taking out a small business loan.

The cost of borrowing - While small business loans have low-interest rates, the cost of which still needs repaying as well as the original loan amount. Trying to keep the repayment terms as short as possible will help keep these costs to a minimum.

Higher rates for low credit scores - If you have a low credit score, the cost of borrowing will be higher, as you pose a greater risk to the lender. However, repaying your loan on time could help to improve a poor rating, so applying for a loan when you are in a position to repay it could prove advantageous.


How much could I borrow?

With a small business loan, you could qualify for a quick, short-term loan from as little as £1000 to £500,000 from one of our trusted direct lenders.

A lender may require you to offer assets as security against the loan, depending on the amount you need. Small business loans are usually repaid over a short timeframe, from six months to three years.

Did you know? Securing business or personal assets against a loan allows you to borrow more and helps keep interest rates lower.

While you may not envisage any difficulties in paying the loan, you cannot predict the future. You must ensure securing your asset against the finance arrangement is a risk you are willing to take.

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Can I repay my business loan early?

While some lenders choose to charge early repayment fees, the majority of lenders that we work with do not charge any extra costs for paying off your business loan in advance.


Can I get a small business loan for my startup business?

If you are in the early stages of planning your business or you are already into your first few months of trading, we can help you with our business loans for startups. Through a UK government-backed startup loans partnership, we are best placed to offer a funding solution to get your business idea off the ground. For more information about this scheme click here or use our business startup loans calculator.


Are there specific small business loans for women?

With the rapid growth of female entrepreneurs in the UK, there is access to a range of small business loans for women who require working capital. Alternative business funding companies and government-backed lenders have dedicated funding available to help women grow their business, whether they are a startup venture or an established small business.

Female entrepreneur making a small business loan application

At Capalona we have arranged a number of small business loans for women across the UK. So, if you’re a female entrepreneur in need of funding, please reach out to us today.


Can I get a small business loan without collateral?

Yes, you can get a small business loan without collateral. These loans are unsecured and don’t rely on your business securing assets against the loan. Visit our unsecured business loans page for more information.


Does my business qualify for a small business loan?

To qualify for a small business loan, you must be registered to operate as a UK-based business. Most lenders will typically finance limited companies and sole traders that have been trading for over two years. However, start ups, small businesses and those with poor credit scores will also be considered for finance.

  • Trading for at least 3 months
  • Limited company, limited liability partnership (LLP) or sole traders registered in the UK

Applying for a small business loan takes 2 minutes via our simple online application form. You could be approved by one of our trusted lenders in a few minutes. Once approved, the funds could be transferred to your account within hours.

To help you with a general idea of costs you can use our dedicated small business loans calculator.

If you do not qualify for a small business loan, we can offer an alternative funding option to meet your needs.


How do I get a business loan?

Applying for a business loan with Capalona is quick and easy. Our online application takes less than 5 minutes to complete. Within the form we will ask you some questions in order to be able to provide you with the best options for your needs. After assessing your firm, you will receive tailored no-obligation quotes from lenders on our panel.

As we aim to get to know your business better, when you apply for a business loan we will ask:

  • How much funding you need
  • What you plan to use the funds for
  • How long you will need it for
  • The legal status of your business
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Why choose Capalona to arrange my business loan?

Capalona is a leading business finance brokerage, and as such we are specialists in arranging small business loans for UK businesses. To date, we have worked with countless startups and SMEs and helped them secure the best small business loans with competitive rates.

As mentioned, when it comes to small business loans there are lots of products to choose from! When making a decision about finance, you don’t want to get it wrong, which is why getting a second opinion can be beneficial.

We have built long-term relationships with the lenders that we work with to ensure that all businesses are able to get access to funding. This means that even if your business has suffered adverse credit in the past, we will still strive to find you the right small business financing solution.

We love working with small businesses and watching them succeed. When you get a business loan through Capalona, you can rest assured that you’re receiving the best deal for your company’s needs.

What our experts say

Testimonial

"A small business loan could give you the short-term funds you need to meet your business obligations and goals. It offers a fast funding solution without lengthy paperwork, business plans and administration."

"Many lenders have created versatile loan solutions that offer business owners simple, quick and efficient funding options to keep their business moving. Capalona can help you find the best small business loan that is right for you and your business."

Chloe Mckenna - Finance Specialist

If you would like to know more about your small business loan options, please complete our online application, or call us on 0800 133 704.

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