Best Small Business Loans UK: Rates and Eligibility Compared
Funding Circle offers the lowest rate (from 6.9% APR) for small limited companies trading 12+ months. British Business Bank Start-Up Loans (6% fixed, no guarantee) remain the standout for businesses under three years old.
- Tide Funding Options compares small business loans from multiple lenders in one place.
- One application reaches several lenders without affecting your credit score.
- Covers term loans, flexible credit lines, and invoice finance from a single marketplace.
Compare Small Business Loan Providers
All Cards at a Glance
Compare key features side by side.
| Provider | Best For | Key Feature | Annual Fee | Action |
|---|---|---|---|---|
 | Established limited companies wanting competitive rates and larger loan amounts | Check provider | From 6.9% APR | View Deal → |
 | Pre-revenue startups and early-stage businesses needing affordable government-backed finance | Check provider | 6% fixed APR | View Deal → |
 | SMEs needing fast, flexible credit without fixed monthly repayments | Check provider | 49% APR (representative) | View Deal → |
 | Businesses with adverse credit needing fast funding | Check provider | From 24% APR | View Deal → |
 | Barclays customers wanting a competitive bank rate with long repayment terms | Check provider | 11.2% APR (representative) | View Deal → |
Data verified May 2026. Rates are representative — your actual rate depends on credit profile, trading history, and loan amount. Check provider sites for current terms.
Our Top Small Business Loan Picks
Funding Circle Business Loan
British Business Bank Start-Up Loans
iwoca Business Loan
Capify Business Loan
What Small Business Loans Cost
Interest Rates and APR
Rates in this comparison range from 6% fixed (British Business Bank) to 26.4%+ representative APR (iwoca Flexi-Loan) — and we think the difference matters significantly at scale: on a £50,000 loan over 3 years, the gap between 6% and 26% APR is roughly £17,000 in interest.
Funding Circle and the British Business Bank both offer fixed rates — your monthly repayment doesn’t change over the term, and we think that predictability matters. iwoca charges a factor rate on drawn amounts, which is more expensive but allows you to repay early without penalty.
If your business qualifies for both Funding Circle and a high-street bank, we’d compare the total cost of credit — including all fees — not just the monthly repayment.
Fees and True Cost of Borrowing
Funding Circle charges a completion fee of 1–3% of the loan value, added at drawdown. We verified this isn’t always reflected in headline APR figures — ask for the total cost of credit, including all fees, before you sign.
Early repayment charges vary significantly: Funding Circle has none; high-street banks vary; iwoca’s structure means you only pay interest on the outstanding drawn balance. We think this is worth calculating at quote stage. Always calculate what you’d owe if you repaid at 12, 18, and 24 months — it’s worth the arithmetic.
For small businesses borrowing under £25,000, we think the British Business Bank is the cheapest option — and the rate gap is bigger than most expect. — 6% fixed, no arrangement fee, no personal guarantee. It’s slower (4–6 weeks) but the rate advantage is substantial.
Personal Guarantees and What They Mean
Most small business loans require a personal guarantee from the director — and we think this is the most important thing to understand before signing. “Unsecured” means no charge over a specific asset — it doesn’t mean no personal liability. If your business defaults and you’ve signed a personal guarantee, the lender can pursue your personal assets.
The British Business Bank Start-Up Loans scheme is the only product in this comparison without a personal guarantee requirement — because the loan is made to you personally, not the business.
We recommend understanding exactly what you’re personally guaranteeing before you sign. Some lenders cap the guarantee at the loan amount; others include interest and costs. Read the guarantee document, not just the loan agreement.
Eligibility for Small Business Loans
Trading History
Trading history is the biggest eligibility filter for small businesses — and we’ve mapped this across every lender in this comparison. We mapped minimum thresholds across every lender in this comparison: pre-revenue (British Business Bank); 6 months (iwoca, Capify); 12 months (Funding Circle); 24 months typical for Barclays.
If your business is under 12 months old, we’d say your practical options are the British Business Bank (up to £25,000) or iwoca (up to £1,000,000 but at a meaningfully higher rate). Funding Circle won’t consider you until you’ve 12 months of trading history.
If you’re 12–24 months in, we think Funding Circle is likely the best-priced route available. Check their eligibility requirements before applying — they lend to limited companies and LLPs only, not sole traders.
Business Structure and Revenue
We’d flag this early: Funding Circle requires a limited company or LLP structure — sole traders have been ineligible since February 2026. We’d flag this early to save wasted applications. If you operate as a sole trader, your options in this comparison are iwoca, Capify, the British Business Bank, or a high-street bank.
Revenue thresholds also apply. Funding Circle typically requires around £50,000 in annual revenue. High-street banks vary but often want 12 months of bank statements showing healthy turnover. Capify and iwoca are more accessible at lower revenue levels.
Credit History
High-street banks require clean personal and business credit — typically 650+ personal credit score and no recent defaults or CCJs. We found Funding Circle will consider some adverse credit if trading performance is strong.
iwoca and Capify are the most flexible on credit history in this comparison. Capify focuses primarily on trading performance and bank statement analysis rather than credit scoring. Expect a higher rate if your credit is imperfect — that’s the cost of accessible lending.
The British Business Bank Start-Up Loans scheme considers adverse credit on a case-by-case basis. The loan is personal, so your credit history matters — but it’s not automatically disqualifying.
How to Choose the Right Small Business Loan
Match the Lender to Your Trading Age
- Pre-revenue or under 3 years: British Business Bank Start-Up Loans. Up to £25,000 at 6% fixed, no personal guarantee. Allow 4–6 weeks for the application and mentor-matching process.
- 6–12 months trading: iwoca or Capify. More expensive than Funding Circle or a bank, but both accept early-stage businesses. If you need speed, iwoca can fund same day or next business day.
- 12–24 months trading: Funding Circle — the best-priced commercial lender likely accessible to you. Limited company or LLP only.
- 24+ months trading: Try your existing bank first — relationship customers get sharper rates. Use Funding Circle or iwoca as a backstop if your bank declines or quotes too high.
Match the Lender to Your Timeline
- Need funds today or tomorrow: iwoca — same-day decisions, funds same or next business day for straightforward applications.
- Can wait 24–48 hours: Funding Circle — decision typically the same or next business day, funds within 24 hours of approval.
- Can wait 2–4 weeks, want the lowest rate: British Business Bank (if under 3 years) or high-street bank (if 24+ months established).
What’s the easiest small business loan to get in the UK?
Capify and iwoca have the most accessible eligibility criteria — both accept businesses from 6 months of trading and consider all credit profiles. Banks typically require 2+ years of trading and a clean credit history. Accessibility comes at a cost: Capify and iwoca are meaningfully more expensive than Funding Circle or a bank.
Can I get a small business loan with bad credit?
Yes. Capify specifically focuses on trading performance over credit history — CCJs and adverse credit are considered. iwoca is also more flexible than banks. Expect a higher interest rate. The British Business Bank Start-Up Loans scheme considers adverse credit on a case-by-case basis for businesses under 3 years old.
How much can a small business borrow?
It depends on your lender and revenue. British Business Bank Start-Up Loans cap at £25,000. Funding Circle lends up to £500,000. iwoca lends up to £1,000,000. High-street banks typically lend up to £100,000 unsecured without a charge over assets.
How long does it take to get a small business loan?
Speed varies significantly. iwoca can make decisions within hours and fund same day or next business day. Funding Circle typically approves and funds within 24 hours of a completed application. The British Business Bank Start-Up Loans scheme takes 4–6 weeks due to mentor-matching and underwriting requirements.
Do I need a personal guarantee for a small business loan?
Usually yes. Almost every lender in this comparison requires a personal guarantee, meaning your personal assets are at risk if your business defaults. The exception is the British Business Bank Start-Up Loans scheme — because the loan is made to you personally rather than the business, no guarantee is required.
We compiled this guide by researching small business loan providers, checking current rates, fees, and eligibility criteria from each provider’s primary website. Selection reflects pricing, accessibility, and overall value for typical UK small business needs. Verified in May 2026.
All product and pricing claims are sourced from providers’ primary websites, FCA register entries, and official documentation. Rates and fees change — confirm current terms with providers before applying.
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