Small Business Loans

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.

What is a small business loan? Are small business loans secured or unsecured? How does it work? What are the rates and fees? Is a small business loan right for you? How can I use a small business loan? What are the advantages? What are the disadvantages? How much could I borrow? Small business loans for startups Are there specific small business loans for women? Does my business qualify?

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 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.

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How does it 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 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.

What are the rates and fees?

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.

Is a small business loan right for you?

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 loans to business owners of SMEs.

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 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.

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?

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?

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’re 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’re willing to take.

Young business women applying for a small business loan on laptop

Small business loans for startups

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 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.

Does my business qualify?

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.

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’d 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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