Beware of scams

We are aware of scams coming from email and social media where people try to impersonate us. We will never ask you for money or your bank details. Learn more about what to look out for and how to protect yourself.

How to get the best business loan

If you need to raise funds for your new business, a small business loan could be the answer. Here’s our guide to how you can improve your chances of getting the best small business loan deal.

Securing a loan for your new business isn’t just about getting money from any source. From government grants to crowdfunding services, there are lots of ways to get a cash investment but for many small businesses getting a loan makes the most financial sense.

The traditional route of getting a loan from a high street bank is still relevant – around one third of all new businesses apply for loans from banks. However, with high interest rates that can be north of 6% and often complex application requirements, it can be hard to secure the best deal for a business loan.

Rather than limit yourself to a high street bank, investigate other loan opportunities. Government-backed organisations such as Start Up Loans provide a less expensive way to borrow money, offering personal loans for business purposes of up to £25,000 and 6% interest, along with access to a mentoring network providing free support and advice.

When applying for a small business loan or other finance for your business, follow our handy tips to increase your chance of success.

Shop around for the best business loan

Don’t take the easy option and head to the nearest high street bank. While existing customers with a solid financial history and a great business plan may secure a decent deal, there are other ways to secure funding. Look at alternatives such as Start Up Loans, government grants, regional and community funding, and even business angels investors.

Read our free guide to the best business funding alternatives >>

Investigate the loan details

Resist the temptation of headline-grabbing small business loan rates. Offers of free payment periods or lower-than-expected interest rate repayments may not tell the whole story. Make sure you investigate all the costs and requirements for the loan, such as the APR which includes all the fees and any extra charges. Be clear about any loan conditions, and check what would trigger the loan to be called in by the lender. If in doubt, ask the lender to separate out all the costs of lending and servicing the loan.

Be honest with loan lenders

Some small business owners can be overly optimistic about the financial health of their business. It’s best to be completely transparent about your business when seeking a loan. This includes the truth about its cashflow, trading position, other loans and debts, credit history and forecasting. Lenders are cautious in providing credit to a small business, and it’s far better to be honest about the state of your business and why you want the loan rather than trying to impress the lender with a rosy picture in the hope of getting more money.

Take advantage of your assets

Before hunting out a small business loan, make sure you’re sweating the assets of your business. Assets such as the invoices you’ve issued to customers – and the invoices you’ll be issuing in the future – have a value that you can sell on to invoice factoring businesses. These businesses will pay you in advance for the invoices, then collect payment from the customer on your behalf, retaining some of it as a fee and interest.

Get professional funding advice

Before raising funds or applying for a loan, it’s best to pause and seek professional financial advice. Speak to a business financial expert, and visit events or online advice services to get a view on how you can get a loan. Often they’ll be able to recommend other sources of funding, or suggest ways optimise your P&L accounts to minimise tax and maximise profits, which may reduce the amount you need to borrow.


Learn with Start Up Loans and help get your business off the ground

Thinking of starting a business? Check out our free online courses in partnership with the Open University on being an entrepreneur.

Our free  Learn with Start Up Loans courses opens in new window include:

Plus free courses on finance and accounting, project management, and leadership.


Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

Feeling Inspired?