Funding for SMEs
Small Business Loans
Small business loans are loans for SMEs, micro-businesses and sole traders, usually from £5,000 to £250,000. They're used for everything from new equipment and stock to marketing, hiring and covering a quiet season.
Funding Plus compares small business loans from banks, online lenders and community lenders, including options for businesses the big banks often turn away.
- Loans from £5,000
- Options for sole traders and partnerships
- Free to compare, no obligation
Reviewed by the Funding Plus team · Last updated October 2026
Step 1 of 3 · Small Business Loans
How much do you need?
Takes about a minute. No impact on your credit score.
Small Business Loans at a Glance
- Amounts
- £5k – £250k
- Terms
- 6 months – 6 years
- Decision
- 1 – 7 days
- Security
- Usually none
- Best for
- SMEs and sole traders
Typical figures across the market. Your offers depend on your business, the lender and the security available.
How Small Business Loans Work
- 1Tell us what you needThe amount, what it's for and how long you've been trading.
- 2We find suitable lendersIncluding lenders that specialise in smaller amounts and younger businesses.
- 3Compare offersSee the monthly payment and total cost of each loan.
- 4Get fundedMost small business loans pay out within a few days of acceptance.
How Much Do Small Business Loans Cost?
Smaller loans often carry higher rates than large secured loans, because fixed costs are spread over a smaller amount and the lender takes on more risk. Comparing lenders makes a real difference to the price.
- Interest, usually fixed
- Arrangement fees on some loans
- No valuation fees on unsecured loans
- Possible early repayment charges
Worked example
Borrowing £20,000 over 2 years
- Loan amount
- £20,000
- Interest rate
- 14% a year
- Monthly repayment
- £960.26
- Total interest
- £3,046
- Total repayable
- £23,046
Illustrative only, not a quote. Assumes a fixed rate and no fees.
Who Can Get Small Business Loans?
- A UK-based business of any legal form
- Usually 6 months or more of trading
- A business bank account with regular income
- Affordability for the monthly repayments
- Some lenders accept limited or imperfect credit
What You'll Need to Apply
- 3 to 6 months of business bank statements
- Latest accounts or self-assessment tax return
- ID and proof of address
Pros and Cons of Small Business Loans
Advantages
- Available to sole traders and partnerships
- Quick decisions on smaller amounts
- No need to offer property
- Builds your business credit history
Things to watch
- Higher rates than large secured loans
- Personal guarantees are common
- Lending to sole traders under £25,000 is regulated, so lenders run extra checks
- Smaller limits for newer businesses
Where Small Businesses Borrow
High-street banks
Often the cheapest if you qualify, but stricter on trading history and credit.
Online lenders
Faster decisions using open banking, with flexible criteria at higher rates.
Community lenders (CDFIs)
Not-for-profit lenders for businesses that banks turn down.
Small Business Loans vs Other Options
| Option | Best for | Typical speed | Security |
|---|---|---|---|
| Small business loan | One-off costs for SMEs | 1 – 7 days | Usually none |
| Start-up loan | Businesses under 2 years old | 1 – 4 weeks | None |
| Business line of credit | Ongoing cash flow gaps | Days | Usually none |
| Merchant cash advance | Shops and restaurants taking cards | Days | None |
Who Uses Small Business Loans?
Small business loans suit owner-managed businesses in almost every sector.
Customer story
“[Real customer story for Small Business Loans: what they needed, how quickly it was arranged and what it let them do.]”
[Name], [Role], [Business name] · [Amount] small business loan
Small Business Loans FAQs
What's the smallest amount I can borrow?
Some lenders on our panel start at around £5,000. For smaller amounts, a business credit card or the Start Up Loans scheme may suit better.
Can sole traders get small business loans?
Yes. Loans of £25,000 or less to sole traders and small partnerships are regulated by the FCA, which gives you extra protection.
Do I need to be profitable?
Not always, but lenders need to see that you can afford the repayments. Strong, regular income through your bank account helps.
How quickly can I get a small business loan?
Many online lenders decide within 24 to 48 hours and pay out within days of acceptance.
Will my personal credit score matter?
For small businesses, yes. Lenders usually check the owner's or directors' personal credit as well as the business.
Related Guides
Compare small business loan quotes today
One quick enquiry, offers from UK lenders that fit, and a real person to talk you through them.