Tide Funding Options
Funding Circle Business Loan
Barclays Business Loan
iwoca Business Loan
British Business Bank Start Up Loans
Fleximize Business Loan
How Small Business Loans Work
Loan Types and What You Borrow Against
You pick from a few shapes: an unsecured term loan on your trading record, a secured loan against your premises, or a revolving line you draw and repay as cash flow allows.
Most small businesses start unsecured, where amounts run from £1,000 up to £100,000 from a bank, and up to £750,000 from Funding Circle.
Unsecured doesn’t mean risk-free. That’s the part the label hides.
Why Small Business Loans Need a Personal Guarantee
Above £10,000, almost every unsecured loan asks you for a personal guarantee as a director, so your own assets back the debt if the company defaults.
The Start Up Loans scheme is the exception: it takes no guarantee, though the loan is made to you personally, so the risk lands on you either way.
How Small Business Funding Reaches You
Speed varies a lot: iwoca decides within 24 hours and Funding Circle within 48, while a high-street bank can take days to weeks on your application, slower than the lenders we rate fastest.
Picture your accountant uploading the management accounts through Open Banking on a Friday while you wait, and the offer lands the same day.
Small Business Loan Costs and Fees
Interest Rates and Representative APR
You’ll pay 8.5% to 14.9% APR at a high-street bank, from 6.9% at Funding Circle for the strongest companies, and far more from fast lenders, where iwoca’s representative APR is 49%.
The Bank of England base rate is 3.75%, with its next decision on 18 June 2026, and bank pricing sits a modest margin above it.
We rate Funding Circle and the banks cheapest for an established small business, with the fast specialists earning their place on speed, not price.
The cheapest rate rarely funds the fastest. That’s the trade-off you weigh.
Fees and the Total Cost of Borrowing
Your headline rate isn’t the whole bill. Funding Circle adds a 1% to 3% completion fee, while Barclays, NatWest and Lloyds waive arrangement fees on small loans.
HSBC is the outlier among the banks: no arrangement fee, but an early repayment penalty of a month plus 28 days’ interest if you settle early.
Early Repayment Charges on a Small Business Loan
If you might repay early, check the exit terms: Funding Circle, iwoca and Fleximize charge no early repayment fee, and Barclays and NatWest waive it too.
Penalty-free early repayment quietly saves you money. That’s worth confirming before you sign.
Eligibility for Small Business Loans
Trading History and Business Structure
Your trading history sets your options: iwoca lends from three months, Fleximize from six, Funding Circle from one to two years, and the banks usually want two years of accounts.
Sole traders are increasingly shut out; Funding Circle and iwoca both dropped them, so a bank, the Start Up Loans scheme or a high-street overdraft may be your route.
Picture your accountant exporting two years of accounts for the bank while you wait on a decision.
Credit Score, Turnover and Affordability
Your credit file shapes the rate, and a clean record opens the cheapest bank and Funding Circle pricing.
Alternative lenders lean on turnover and cash flow through Open Banking instead: Funding Circle expects a £50,000 annual turnover, and we rate iwoca the most forgiving on a thin file.
Government-Backed Schemes for Small Businesses
If a commercial lender says no, two schemes help: the Start Up Loans scheme for new firms, and the Growth Guarantee Scheme for up to £2 million through accredited lenders.
The Growth Guarantee Scheme runs to March 2030 and gives the lender a 70% guarantee, but you stay 100% liable, so it widens access rather than cutting your risk.
How to Compare Small Business Loan Lenders
Comparing Lenders by Cost
If cost is your priority, compare what the loan costs your cash flow over the full term, including the rate, any completion fee and early repayment charge, not just the headline APR.
We rate the banks and Funding Circle cheapest for clean, established firms, while the fast lenders cost more for speed and easier acceptance.
Comparing Lenders by Speed and Acceptance
If you need cash quickly or have a thinner file, iwoca and Fleximize decide fast and accept earlier-stage businesses, where a bank is slower and stricter.
Open Banking is why: it lets a lender read your account in minutes instead of waiting on filed accounts.
Comparing Lenders by Loan Size and Term
Match the lender to your sum: up to £25,000 from the Start Up Loans scheme, £100,000 from a bank, £750,000 from Funding Circle, or a flexible line from iwoca.
The right lender fits your stage and sum, not the biggest brand. That’s the call that saves you money.
Who Small Business Loans Are Best For
Best for Established Small Businesses
If you have two years of accounts and a clean credit file, Funding Circle or your bank give you the lowest rate on a small business loan.
We rate Funding Circle top here on price for limited companies, with Barclays close behind for the high-street relationship and a larger £100,000 limit.
Best Small Business Loan for New Firms
If you’re new or under a year in, the Start Up Loans scheme and Barclays will look at your forecast, and iwoca lends from three months of trading. We rate the scheme best for genuinely new firms on cost.
Picture your accountant emailing a cash flow forecast to the adviser while you wait to hear if the case stacks up.
When Another Type of Finance Beats a Loan
If you’re buying equipment, asset finance is cheaper than a term loan; for unpaid invoices, invoice finance frees the cash without new debt.
A grant beats any loan because you never repay it, and a small overdraft suits a short gap better than a fixed-term loan.
Frequently Asked Questions
What is the best small business loan in the UK?
For an established limited company, Funding Circle offers the lowest rate, from 6.9% APR up to £750,000. Among the banks, Barclays is the strongest all-rounder, lending up to £100,000 with no fees and accepting startups. New businesses are usually best served by the government Start Up Loans scheme at a fixed 7.5%.
How much can a small business borrow?
High-street banks lend up to £25,000 (HSBC, Barclays small loan) or £50,000 to £100,000 (Lloyds, NatWest) unsecured. Funding Circle lends up to £750,000 and iwoca up to £1,000,000. The amount you are offered depends on turnover, trading history and affordability.
What credit score do you need for a small business loan?
High-street banks want a strong personal and business credit record and will usually decline adverse credit. Alternative lenders such as iwoca and Capify are more flexible, reading your live cash flow through Open Banking, but price the extra risk into a higher rate.
Do you need a personal guarantee for a small business loan?
Usually, for any unsecured loan above £10,000 to a limited company. The guarantee makes you personally liable if the business defaults. The Start Up Loans scheme is the main exception, as the loan is already a personal one made to the founder.
Can a new business get a small business loan?
Yes. The government Start Up Loans scheme is designed for businesses trading up to five years, lending £500 to £25,000 at a fixed 7.5% with no guarantee. Barclays also lends to startups on forecast figures, and iwoca lends from three months of trading.
What is the Growth Guarantee Scheme?
The Growth Guarantee Scheme is a government-backed programme running to March 2030 that lets accredited lenders offer facilities up to £2 million. The government guarantees 70% of the loan to the lender, but you remain 100% liable for the debt, so it widens access rather than reducing your risk.
How We Reviewed Small Business Loan Lenders
Ranking criteria. We ranked lenders on rate, loan size, speed and how easily a small business can qualify. Cost and eligibility carry the most weight, because they decide whether a loan is affordable and whether you can get one at all.
Data sources. Rates, limits and eligibility were checked directly in June 2026: Funding Circle, Barclays, iwoca, Start Up Loans and Fleximize, with NatWest, HSBC and Lloyds checked for the high-street comparison. No comparison sites.
Update cadence. We re-verify every lender on this page at least monthly, and whenever a lender changes pricing, eligibility or terms. The verification date reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.
Regulatory note. This is editorial content, not regulated financial advice. Lending to limited companies is generally unregulated. Credit is subject to status and approval; compare offers directly with lenders before you apply.