TL;DR - Business Loan UK 2026
- UK business loans range from £1,000 to £5 million+ depending on type and lender - unsecured term loans typically cap at £500,000 to £750,000
- Rates start at around 6.9% APR for well-qualified limited companies - the rate you receive depends on turnover, credit history, trading age and loan purpose
- The Growth Guarantee Scheme (GGS) offers government-backed loans from £25,001 to £2 million at rates typically 13% to 15% APR - accessed via accredited lenders including Funding Circle, HSBC, Lloyds and NatWest
- Most lenders require at least 2 years trading history and minimum £50,000 annual turnover for unsecured loans - some specialist lenders accept 12 months trading
- The British Business Bank (BBB) Finance Hub at british-business-bank.co.uk lists all accredited GGS lenders and other government-backed schemes
- Always compare the total cost of borrowing - APR, completion fee, and total repayable - not just the headline interest rate
Last reviewed: June 2026 - Sources: British Business Bank, FCA, GOV.UK
KEY FACTS - BUSINESS LOANS UK 2026 | |
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A business loan is a fixed-sum credit facility advanced by a lender to a business, repaid with interest over an agreed term. Business lending in the UK is not regulated by the FCA in the same way as consumer credit - commercial lending to incorporated businesses falls outside the FCA's Consumer Credit sourcebook (CONC) unless the loan is to a sole trader or partnership with fewer than 4 partners. This distinction affects the protections available to borrowers.
Types of Business Loan UK 2026
| Type | Amount | Term | Security | Best For |
|---|---|---|---|---|
| Unsecured term loan | £1,000 to £750,000 | 6 months to 6 years | Personal guarantee typically required | Working capital, growth, cash flow |
| Secured business loan | £25,000 to £5 million+ | 1 to 25 years | Property or asset as collateral | Large purchases, property, expansion |
| Growth Guarantee Scheme | £25,001 to £2 million | Up to 6 years | Government guarantee to lender (70%) | Growth, investment, working capital |
| Asset finance | £1,000 to £5 million | 1 to 7 years | Asset itself as security | Vehicles, machinery, equipment |
| Invoice finance | Up to 90% of invoice value | Rolling | Invoices as collateral | B2B businesses with slow-paying clients |
| Overdraft | £500 to £250,000 | Revolving | None or charge over assets | Short-term cash flow gaps |
| Merchant cash advance | £2,500 to £500,000 | 3 to 18 months | Future card revenue | Retail and hospitality with card sales |
Business Loan Eligibility UK
Eligibility criteria vary significantly by lender and product. General requirements for unsecured term loans from mainstream and alternative lenders:
- UK-registered limited company, LLP, or sole trader
- Minimum 12 to 24 months trading history - most mainstream lenders require 2 years, some specialist lenders accept 12 months
- Minimum annual turnover of £50,000 to £100,000 depending on lender
- No current CCJs, administration, or liquidation proceedings
- Directors with satisfactory personal credit history - a personal guarantee is typically required
- Business bank account with 3 to 6 months statements
The Growth Guarantee Scheme has specific eligibility rules set by the British Business Bank: UK-based business, turnover below £45 million, viable business proposition, not in financial difficulty at the point of application. Sole traders and partnerships are eligible. Full eligibility criteria at british-business-bank.co.uk/finance-hub.
Business Loan Rates UK 2026
| Product | Typical APR Range | Notes |
|---|---|---|
| Unsecured term loan (alt lender) | 6.9% to 30%+ | Rate depends on credit assessment, turnover and term |
| Unsecured term loan (high street bank) | 8% to 20% | Stricter criteria, longer processing |
| Growth Guarantee Scheme | 13% to 15% | Government guarantee premium adds to cost |
| Secured business loan | 4% to 12% | Lower rate due to security - property typically required |
| Asset finance (hire purchase) | 5% to 15% | Depends on asset type and age |
| Merchant cash advance | 20% to 60%+ (effective) | Quoted as factor rate not APR - compare carefully |
The Bank of England base rate stands at 4.25% as of June 2026. Commercial lending rates are set independently by lenders but track the base rate over time. The advertised representative APR must be offered to at least 51% of successful applicants for FCA-regulated products - commercial lending to incorporated businesses is not subject to this rule, so rates can vary significantly from advertised rates.
Personal Guarantees on Business Loans
Most unsecured business loans to limited companies require a personal guarantee from the director or directors. A personal guarantee makes you personally liable for the loan if the company cannot repay. Key points:
- A personal guarantee is not a charge over a specific asset - it is a general personal liability
- Lenders can pursue you personally for the outstanding balance if the company defaults
- Some lenders cap the guarantee at a percentage of the loan; others require unlimited guarantees
- Before signing, take independent legal advice - the lender's solicitors act for the lender, not for you
- Personal guarantee insurance exists as a product to mitigate this risk
How to Compare Business Loans UK
When comparing business loan offers, look beyond the headline interest rate:
- Total amount repayable: the single most important figure - compare like for like on the same loan amount and term
- Arrangement/completion fee: typically 1% to 3% of the loan, added upfront or rolled into the facility
- Early repayment charges: some lenders charge 1 to 2 months interest for early settlement - others charge nothing
- Fixed vs variable rate: fixed rates give payment certainty; variable rates may fall if the base rate falls
- Time to funds: alternative lenders typically 24 to 72 hours; high street banks 1 to 4 weeks
- Soft vs hard credit search: use eligibility checkers that run soft searches before making a full application
The Bank Referral Scheme
If a high street bank declines your business loan application, they are required under the Small Business, Enterprise and Employment Act 2015 to refer you to the government's Bank Referral Scheme platforms - currently Funding Xchange, Funding Options, and Business Finance Compared. These platforms match declined businesses with alternative lenders. The referral is automatic and free.
Government-Backed Business Finance
The British Business Bank manages several government-backed lending schemes beyond the Growth Guarantee Scheme. These include the Start Up Loan scheme (£500 to £25,000 at 6% fixed for new businesses), the Enterprise Finance Guarantee (now superseded by GGS), and the Northern Powerhouse Investment Fund and Midlands Engine Investment Fund for regional businesses. Full details at british-business-bank.co.uk.
Related Guides
Disclaimer: Kaeltripton.com is an independent editorial publisher. This guide contains factual information only and does not constitute financial advice. Business lending to incorporated companies is not regulated by the FCA under the Consumer Credit Act - always seek independent financial advice and take legal advice before signing a personal guarantee.
What is a business loan?
A business loan is a fixed sum of money borrowed by a business from a lender, repaid with interest over an agreed term. Types include unsecured term loans, secured loans, government-backed loans (Growth Guarantee Scheme), asset finance, invoice finance, and overdrafts.
What are the eligibility requirements for a UK business loan?
Most lenders require a UK-registered business with at least 12 to 24 months trading history, minimum annual turnover of £50,000 to £100,000, no current CCJs or insolvency proceedings, and a business bank account. Directors are typically required to provide a personal guarantee.
What is the typical interest rate on a UK business loan in 2026?
Unsecured term loans from alternative lenders start at around 6.9% APR for well-qualified applicants. The rate you receive depends on your business credit profile, turnover, trading history, loan amount and term. Growth Guarantee Scheme loans typically carry rates of 13% to 15% APR due to the government guarantee premium.
Do I need a personal guarantee for a business loan?
Most unsecured business loans to limited companies require a personal guarantee from the director. This makes you personally liable if the company cannot repay. Take independent legal advice before signing any personal guarantee. Personal guarantee insurance is available as a risk mitigation product.
What government business loan schemes are available in the UK?
The Growth Guarantee Scheme (£25,001 to £2 million), the Start Up Loan scheme (£500 to £25,000 at 6% fixed), and regional investment funds managed by the British Business Bank. Full details at british-business-bank.co.uk/finance-hub.
Sources: British Business Bank Finance Hub; Growth Guarantee Scheme terms (british-business-bank.co.uk); FCA Consumer Credit sourcebook (CONC); Small Business, Enterprise and Employment Act 2015 (Bank Referral Scheme); Bank of England base rate June 2026; Centre for Finance, Innovation and Technology (CFIT) SME lending report 2026.
