What Is a Business Loan?

A business loan is a lump sum of capital provided to your business, which you repay over an agreed term with fixed monthly payments. Unlike overdrafts or revolving credit facilities, you receive the full amount upfront and know exactly what you’ll pay each month until the loan is repaid.

Business loans can be secured (backed by business or personal assets) or unsecured (based on business performance and creditworthiness). The type you choose depends on the amount needed, your business profile, and whether you have assets to offer as security.

Simple example: If your business needs £50,000 to purchase equipment and hire two new staff members, a business loan provides that £50,000 upfront. You then repay it over 3-5 years with fixed monthly payments of approximately £1,000-£1,500 (depending on interest rate and term). You know exactly what you owe each month, making budgeting straightforward.

Business loans are available for virtually any legitimate business purpose – from expansion and equipment purchases to stock acquisition, marketing campaigns, and cash flow management.

Types of Business Loans We Arrange

Unsecured Business Loans

What it is: A loan based on your business’s trading history, cash flow, and creditworthiness, with no assets required as security.

Best for:

• Established businesses with 12+ months trading history
• Companies with strong cash flow and good credit
• Businesses needing smaller amounts (typically £5,000-£100,000)
• Directors who don’t want to pledge personal or business assets, however personal guarantees from the directors may be required

How it works: Lenders assess your business bank statements, revenue, profitability, and credit history. If approved, you receive the funds within 24-48 hours in most cases. No property or assets are used as security, so approval is faster but interest rates are typically higher than secured loans.

Typical terms: 6 months to 5 years

Interest rates: 8-25% APR (depending on business profile and lender)

Typical amounts: £5,000-£100,000 (some lenders offer up to £250,000)

Speed: Very fast – often approved and funded within 24-48 hours

Unsecured business loans are ideal when you need funding quickly and don’t want the complexity or time delays of secured lending.

Secured Business Loans

What it is: A loan secured against business or personal assets (property, equipment, vehicles, or other valuable assets), allowing you to borrow larger amounts at lower interest rates.

Best for:

• Businesses needing larger amounts (£50,000-£500,000+)
• Companies wanting lower interest rates
• Businesses with valuable assets but perhaps weaker cash flow
• Long-term funding needs (5-10 years)

How it works: You offer an asset (typically commercial or residential property) as security. The lender places a charge on the asset, which means they can recover their money by selling the asset if you default. Because the lender’s risk is lower, they offer larger amounts and better interest rates.

Typical terms: 3-10 years (sometimes up to 25 years for property-secured loans)

Interest rates: 5-12% APR (lower than unsecured due to security)

Typical amounts: £50,000-£5,000,000 (depending on asset value)

Speed: Slower than unsecured (2-8 weeks due to valuations and legal work)

Secured business loans are ideal for larger funding needs, business acquisitions, or when you want to minimize monthly payments through longer terms and lower rates.

Term Loans

What it is: A traditional loan structure where you borrow a fixed amount and repay it over a fixed term (1-10 years) with regular monthly payments.

Best for:

• One-off capital investments (equipment, premises, acquisitions)
• Businesses wanting predictable monthly costs
• Companies with steady, reliable cash flow

How it works: You receive the full loan amount upfront and make fixed monthly payments (capital + interest) until the loan is fully repaid. The interest rate is usually fixed, giving you complete payment certainty.

Typical terms: 1-10 years

This is the most common type of business loan and works well for most business funding needs.

Revenue-Based Finance (Merchant Cash Advance)

What it is: A flexible repayment loan where you repay a percentage of your daily card sales rather than fixed monthly amounts.

Best for:

• Retail, hospitality, and service businesses with high card transaction volumes
• Businesses with fluctuating seasonal revenue
• Companies needing very fast funding (same-day approval possible)

How it works: The lender advances you a lump sum (typically £5,000-£250,000). Instead of fixed monthly payments, you repay a small percentage (typically 10-20%) of your daily card sales. When sales are high, you repay more; when sales are low, you repay less.

Typical terms: 6-18 months

Cost: Higher than traditional loans (factor rates of 1.2-1.5, equivalent to 20-50%+ APR)

Speed: Very fast – often approved and funded within 24 hours

Important note: This is the most expensive form of business finance, but it offers maximum flexibility for businesses with variable revenue. Having run a hospitality business myself, I understand how valuable this flexibility can be during quiet periods.

What Can You Use Business Loans For?

Business loans are versatile and can fund virtually any legitimate business purpose:

Business Expansion

• Opening new locations or branches
• Entering new markets or territories
• Launching new product lines or services
• Scaling operations to meet growing demand

Equipment & Vehicles

• Purchase machinery, tools, or production equipment
• Buy commercial vehicles (vans, trucks, company cars)
• Upgrade technology and IT infrastructure
• Replace aging equipment before breakdowns impact operations

Stock & Inventory

• Purchase bulk inventory to secure volume discounts
• Build stock levels ahead of busy seasons
• Fund inventory for new product launches
• Bridge the gap between purchasing stock and receiving customer payments

Staffing & Payroll

• Hire additional staff to support growth
• Cover payroll during cash flow gaps
• Recruit specialist or senior team members
• Fund training and development programs

Marketing & Sales

• Launch advertising campaigns
• Attend trade shows and exhibitions
• Develop new websites or digital marketing
• Hire sales staff or marketing agencies

Business Acquisitions

• Purchase competitor businesses
• Buy out business partners
• Acquire customer lists or intellectual property
• Fund management buyouts (MBOs)

Cash Flow Management

• Bridge payment gaps (waiting for customer invoices to be paid)
• Cover seasonal fluctuations in revenue
• Manage unexpected expenses or emergencies
• Take advantage of time-sensitive opportunities

Premises & Property

• Pay deposits on commercial property purchases
• Fund office or retail fit-outs and refurbishments
• Relocate to larger or better-located premises
• Make leasehold improvements

Industries We Serve

Business Loans for Construction Companies

Construction businesses face unique cash flow challenges: long payment terms, retention periods, and upfront material costs. Business loans help you:

• Purchase materials and pay subcontractors before customer payments arrive
• Invest in plant, equipment, and vehicles
• Tender for larger contracts requiring working capital
• Bridge CIS tax deductions and VAT timing gaps

We understand construction cash flow and can arrange funding from £10,000 to £500,000+ with flexible terms.

Business Loans for Hospitality Businesses

Having run a hospitality business for over 10 years, I deeply understand the funding challenges facing restaurants, hotels, cafes, and catering companies. Business loans help you:

• Refurbish premises to attract more customers
• Purchase kitchen equipment and furniture
• Hire and train staff ahead of busy seasons
• Fund marketing campaigns to increase bookings
• Bridge cash flow gaps during quiet periods

From a £15,000 loan to refurbish a dining area to £200,000 to open a second location, we can find the right funding solution for your hospitality business.

Business Loans for Retail Businesses

Retail businesses need funding for stock, seasonal fluctuations, and growth opportunities. Business loans help you:

• Purchase stock ahead of peak seasons (Christmas, summer, back-to-school)
• Open new retail locations or expand existing stores
• Invest in e-commerce platforms and online marketing
• Refurbish stores to improve customer experience
• Bridge cash flow gaps between purchasing stock and making sales

We arrange business loans from £5,000 for stock purchases to £250,000+ for store expansions.

Business Loans for Professional Services

Accountants, solicitors, consultants, and other professional service firms use business loans to:

• Hire additional qualified staff
• Invest in technology and software
• Fund marketing to attract new clients
• Acquire other practices or client lists
• Relocate to more prestigious offices

Professional service firms often have strong cash flow but limited assets, making unsecured business loans an ideal solution.

Business Loans for Manufacturing

Manufacturing businesses require funding for equipment, materials, and expansion. Business loans help you:

• Purchase or upgrade production machinery
• Buy raw materials in bulk to secure better pricing
• Hire production staff to increase capacity
• Fund research and development of new products
• Expand into larger manufacturing facilities

We arrange both secured and unsecured loans from £25,000 to £1,000,000+ for manufacturing businesses.

How Much Can I Borrow?

Business loan amounts vary significantly based on loan type, business profile, and lender:

Unsecured Business Loans:

• Minimum:£5,000 (some lenders)
• Maximum:£250,000 (most lenders cap at £100,000)
• Most common:£10,000-£75,000

Secured Business Loans:

• Minimum:£25,000
• Maximum:£5,000,000+ (depending on asset value)
• Most common:£50,000-£500,000

Revenue-Based Finance:

• Minimum:£5,000
• Maximum:£250,000
• Most common:£10,000-£50,000

Factors affecting loan amount:

• Annual turnover (lenders typically offer 10-50% of annual revenue)
• Trading history (longer trading history = larger loans)
• Profitability and cash flow
• Credit history (business and personal)
• Assets available as security (for secured loans)
• Existing debts and commitments

How Much Do Business Loans Cost?

Business loan costs depend on several factors: loan type, amount, term, your business profile, and the lender.

Typical Interest Rates

Unsecured business loans: 8-25% APR

• Established businesses with strong credit: 8-12% APR
• Newer businesses or some adverse credit: 15-25% APR

Secured business loans: 5-12% APR

• Property-secured loans: 5-8% APR
• Asset-secured loans: 8-12% APR

Revenue-based finance: Factor rates of 1.2-1.5 (equivalent to 20-50%+ APR)

Arrangement Fees

• Unsecured loans:Typically no upfront fees (built into interest rate)
• Secured loans:£500-£2,000 arrangement fee, plus legal and valuation costs (£1,000-£3,000)

Example Cost Breakdown: Unsecured Business Loan

• Loan amount: £50,000
• Term: 5 years (60 months)
• Interest rate: 12% APR
• Monthly payment: £1,112
• Total repayable:£66,720
• Total interest cost: £16,720 over 5 years

Tax benefit: Interest payments are tax-deductible as a business expense. If you’re a basic rate taxpayer (20% corporation tax), you save approximately £278 per month in tax, reducing your effective monthly cost to around £834.

Compare this to not borrowing:

• Without the £50,000, you might miss growth opportunities worth far more than £16,720
• The loan allows you to invest in revenue-generating activities (new staff, equipment, marketing)
• Fixed monthly payments make budgeting straightforward

Example Cost Breakdown: Secured Business Loan

• Loan amount:£150,000
• Term:10 years (120 months)
• Interest rate:7% APR
• Arrangement fee:£1,500
• Legal/valuation costs:£2,000
• Monthly payment:£1,742
• Total repayable:£209,040 + £3,500 fees = £212,540
• Total interest cost:£62,540 over 10 years

Lower monthly payment: By securing the loan and extending the term, the monthly payment is only £1,742 compared to £3,337 for a 5-year unsecured loan – a saving of £1,595 per month.

Secured vs. Unsecured Business Loans: Which Is Right for You?

Feature	Unsecured Business Loan	Secured Business Loan
Loan Amount	£5,000-£250,000	£25,000-£5,000,000+
Interest Rate	8-25% APR	5-12% APR
Security Required	None	Property or assets
Approval Speed	24-48 hours	2-8 weeks
Typical Term	6 months-5 years	3-25 years
Best For	Smaller amounts, fast funding	Larger amounts, lower rates
Credit Requirements	Good-excellent credit	More flexible
Risk	No asset at risk	Asset can be repossessed

 

Choose unsecured if:

• You need funding quickly (within days)
• You’re borrowing less than £100,000
• You don’t want to pledge assets
• You have strong business cash flow and credit

Choose secured if:

• You need more than £100,000
• You want the lowest possible interest rate
• You have property or valuable assets
• You want longer repayment terms (lower monthly payments)

Business Loan vs. Overdraft: What’s the Difference?

Feature	Business Loan	Business Overdraft
Structure	Lump sum upfront	Revolving credit limit
Repayment	Fixed monthly payments	Flexible (only pay interest on amount used)
Interest	Fixed rate on full amount	Variable rate on daily balance
Best For	One-off capital investments	Day-to-day cash flow management
Term	Fixed (1-10 years)	Ongoing (reviewed annually)
Amount	£5,000-£5,000,000+	£1,000-£100,000
Approval Speed	1-14 days	1-4 weeks

 

Choose a business loan if:

• You need a specific amount for a one-off purpose
• You want predictable fixed monthly payments
• You’re making a capital investment (equipment, property, acquisition)

Choose an overdraft if:

• You need flexible access to funds for day-to-day expenses
• Your cash flow is unpredictable or seasonal
• You only want to pay interest on what you actually use

Am I Eligible for a Business Loan?

Most businesses qualify for some type of business loan if you meet these basic criteria:

Minimum Requirements (Unsecured Loans)

• Trading history:At least 6-12 months (some lenders accept 3 months)
• Annual turnover:Minimum £50,000-£100,000 (varies by lender)
• UK-registered business:Limited company, sole trader, or partnership
• Business bank account:Active for at least 3-6 months
• Credit history:Reasonable business and personal credit (some adverse accepted)

Minimum Requirements (Secured Loans)

• Trading history:At least 12 months (some lenders more flexible)
• Asset to secure:Property, equipment, or other valuable assets
• Asset equity:Typically need 20-40% equity in the asset
• Ability to repay:Sufficient cash flow to afford monthly payments

You May Still Qualify Even If:

• You’re a relatively new business (under 2 years trading)
• You have some adverse credit (CCJs, defaults, missed payments)
• You’ve been declined by your bank
• Your business has seasonal or fluctuating revenue
• You’re a sole trader or partnership (not just limited companies)

Typical Documentation Required

• Last 3-6 months business bank statements
• Last 2-3 years business accounts (if available)
• Personal ID (passport or driving licence)
• Proof of business address
• Details of existing debts and commitments
• Business plan (for larger loans or newer businesses)

Not sure if you qualify? Contact us for a free, no-obligation assessment. Even if you’ve been declined elsewhere, we have access to specialist lenders who consider complex situations.

Benefits of Business Loans

Lump sum funding – Receive the full amount upfront to invest in growth, equipment, or opportunities.

Fixed monthly payments – Know exactly what you’ll pay each month, making budgeting and cash flow forecasting straightforward.

No equity dilution – Unlike investors, you don’t give up ownership or control of your business.

Tax deductible – Interest payments are tax-deductible as a business expense, reducing your effective cost.

Fast approval – Unsecured loans can be approved and funded within 24-48 hours for urgent needs.

Flexible use – Use the funds for any legitimate business purpose (equipment, stock, staff, marketing, expansion).

Build business credit – Successfully repaying a business loan improves your business credit score, making future funding easier.

Whole-of-market access – We compare rates and terms across dozens of lenders to find you the best deal.

No revenue sharing – Unlike revenue-based finance or equity investment, you repay a fixed amount regardless of business performance.

Whole-of-Market Lender Access

We’re not tied to any single lender. I have access to:

• High street banks(NatWest/RBS, Lloyds Bank, Barclays, HSBC, Santander) – for established businesses with strong credit
• Challenger banks(Aldermore, Shawbrook, Metro Bank, Allica Bank, Starling Bank) – more flexible criteria and faster decisions
• Alternative finance providers(iwoca, Funding Circle, Capitalise, Kriya, Fleximize) – for newer businesses, adverse credit, or very fast funding
• Specialist secured lenders(Together Money, Masthaven Bank, Shawbrook, Precise Mortgages) – for larger secured loans
• Revenue-based finance providers(Liberis, Payl8r, YouLend) – for retail and hospitality businesses
• Complex case specialists– for businesses with adverse credit, limited trading history, or unique circumstances

This means I can compare rates, terms, and eligibility criteria across the entire UK market to find you the best business loan for your situation.

Why Choose Capital 8 Finance?

I Understand Business Owner Challenges

I ran my own business for over 10 years, holding every role from operations to ownership. I understand the challenge of needing capital to grow but not wanting to take on excessive debt or give up equity.

This background gives me genuine empathy for your situation and practical insight into business funding decisions.

Scotland-Based, UK-Wide Service

Based in Dundee, I serve business owners across Scotland and throughout the UK. I understand the unique challenges of Scottish businesses and have completed business loan cases across all regions.

As a Scottish business finance broker, I can connect you with lenders who understand local business conditions and industry requirements.

Fast, Personal Service

As a solo operator, you deal directly with me throughout the entire process. No call centres, no account managers who don’t know your situation.

I’ll respond to your enquiry within 24 hours, provide you with options within 48 hours of receiving your information, and keep you updated at every stage.

Whole-of-Market Access

I’m not tied to any single lender, which means I can find you the best rates and terms from dozens of lenders – including specialist lenders you wouldn’t find on your own.

No Fee Unless We Secure Your Funding

For unsecured business loans, I don’t charge you any fees – lenders pay me a commission when your loan completes. For secured loans, there are legal and valuation costs, but I’ll explain all costs upfront before you proceed.

How to Apply for a Business Loan

Here’s what happens next:

1. Initial consultation– We’ll discuss your funding needs, business situation, and preferred loan structure (call or video meeting, 15-30 minutes)
2. Options provided– Within 24-48 hours, I’ll provide you with loan options, rates, terms, and monthly payment examples from suitable lenders
3. Documentation submitted– Once you choose a lender, I’ll help you gather the required documents (bank statements, ID, business accounts)
4. Application submitted– I’ll submit your application and liaise with the lender on your behalf
5. Approval & funding– Unsecured loans: 24-48 hours. Secured loans: 2-8 weeks (due to valuations and legal work)

Ready to explore your business loan options? Contact Capital 8 Finance today for your free consultation.

Frequently Asked Questions

What’s the difference between a business loan and a business overdraft?

A business loan provides a lump sum upfront with fixed monthly repayments over a set term. An overdraft is a revolving credit facility where you only borrow what you need and pay interest only on the amount used. Loans are better for one-off capital investments; overdrafts are better for managing day-to-day cash flow fluctuations.

How quickly can I get a business loan?

Unsecured business loans can be approved and funded within 24-48 hours for urgent needs. Secured business loans take longer (typically 2-8 weeks) due to property valuations, legal work, and lender underwriting processes.

Can I get a business loan with bad credit?

Possibly. We have access to specialist lenders who consider businesses with adverse credit, including CCJs, defaults, and even previous insolvencies. Your options may be more limited and interest rates higher, but funding is often still available – especially for secured loans where you offer an asset as security.

Do I need to provide a personal guarantee?

Most unsecured business loans require a personal guarantee, which means you’re personally liable if the business can’t repay. Secured loans use assets as security instead, though directors may still provide guarantees. We’ll explain all guarantee requirements before you proceed.

Can sole traders and partnerships get business loans?

Yes. Business loans are available to limited companies, sole traders, and partnerships. Some lenders prefer limited companies, but we have access to lenders who work with all business structures.

What can I use a business loan for?

Almost any legitimate business purpose: equipment, stock, staff, marketing, expansion, acquisitions, cash flow, premises, or working capital. Lenders typically don’t restrict how you use the funds as long as it’s for business purposes.

How much can I borrow?

This depends on your annual turnover, profitability, trading history, and credit profile. As a rough guide, lenders typically offer 10-50% of your annual turnover for unsecured loans. Secured loans can be much larger, depending on the value of assets you can offer as security.

What’s the difference between secured and unsecured business loans?

Unsecured loans don’t require assets as security, are approved faster (24-48 hours), but have higher interest rates (8-25% APR) and lower maximum amounts (typically £250,000). Secured loans require property or assets as security, take longer to arrange (2-8 weeks), but offer lower interest rates (5-12% APR) and higher amounts (£25,000-£5,000,000+).

Can I repay my business loan early?

Most lenders allow early repayment, though some charge early repayment fees (typically 1-3 months’ interest). We’ll explain any early repayment terms before you proceed. Some lenders offer no early repayment charges.

Will applying for a business loan affect my credit score?

Initial enquiries and quotes typically use “soft searches” that don’t affect your credit score. Once you proceed with a formal application, lenders conduct a “hard search” which appears on your credit file. Multiple applications in a short period can negatively impact your score, which is why it’s better to work with a broker who can identify the best lender before applying.

Do I need to provide business accounts?

For established businesses (2+ years trading), most lenders require your last 2-3 years of business accounts. For newer businesses, lenders rely more heavily on bank statements and management accounts. Some alternative lenders don’t require formal accounts at all – just bank statements.

What if my business is seasonal?

Many lenders understand seasonal businesses and will assess your annual performance rather than just recent months. We can also arrange revenue-based finance where repayments flex with your revenue – higher during busy periods, lower during quiet periods.

Can I get a business loan if I’ve been declined by my bank?

Yes. High street banks have become very restrictive, but the alternative lending market has grown significantly. We have access to dozens of lenders with more flexible criteria than traditional banks. A bank decline doesn’t mean you can’t get funding – it often just means you need a different type of lender.

How long does it take to repay a business loan?

Business loan terms typically range from 6 months to 10 years, depending on the amount, loan type, and your preference. Shorter terms mean higher monthly payments but less total interest. Longer terms mean lower monthly payments but more total interest paid.

What happens if I can’t make a payment?

Contact your lender immediately if you’re struggling to make a payment. Most lenders will work with you to find a solution (payment holiday, restructuring, etc.) rather than immediately defaulting the loan. Missed payments damage your credit score and can lead to default proceedings, so early communication is critical.