Best Banks for Small Business Loans

For a business to run smoothly, cash flow must be in motion too. Small business loans help you and your business to sail through the initial setting up phase. While most banks in UK offer loans to start up businesses, we decided to round up some of the best offers right now:

Government-supported start up loans

If you are an entrepreneur planning to start or expand your business in the UK, you are eligible for a government-backed unsecured loan of up to £25,000. This is offered by British Business Bank. The rate of the interest is fixed at 6 percent per annum with no set-up or early repayment fees and can be availed for a term of 1 to 5 years.

In addition, applicants with approved loans get 12 months of business mentoring. In order to be eligible, you have to be a UK resident planning a business in the country itself or already have a UK-based company running for less than two years.

HSBC small business loan

HSBC is offering small business loans starting from £1,000 and up to £25,000 with an interest rate of 7.1 percent every year. With repayment terms ranging from 1 to 10 years, this loan is right for people who’re looking for long-term paying commitments.

Virgin start-up loan

Small-business owners looking to scale their business or entrepreneurs just starting out can apply for £500-£25,000 per co-founder with the Virgin start-up loans. The tenure of the Virgin start-up loan can be from 1 to 5 years with a 6 percent interest per annum. You need an EU passport or valid UK visa and your business has to be less than two years old. There is no arrangement fee or penalties on early repayment. Applicants who are approved for the loan also receive access to exclusive business support.

Boost Capital small business loan

Boost Capital loans are more flexible than traditional loans and are ideal for tiding over small cash crunches – stock, renovations, equipment purchase, or marketing, for instance. The loan amounts start from £3,000 with repayment terms ranging from 4 to 18 months.
Boost Capital does not use interest rates; but ‘factor rates’ instead, from 1.1 to 1.5. Also, Boost Capital may charge an arrangement fee but offers discount to businesses for early repayment once they have paid back a certain amount.

Lloyds Bank business loans

Lloyds Bank is offering four options – Base Rate Loan, Fixed Rate Loan, Commercial Fixed Rate Loan and Capped Base Rate Loan. The loan amount ranges from £1,000 to £50,000 and rate of interest is based on the loan option you go for. Since the loan amount could be large, the repayment term ranges from 1 to 25 years on commercial fixed rate loans and base rate. For fixed rates, the loan term is 1 to 10 years and the loan tenure is anywhere between 5 to 25 years for the capped base rate. The arrangement fee and the eligibility criteria depend on the loan option that you choose.

Which option will you go for and why? Do share with us in comments below.