How to Get a Business Loan

Find how to get long-term business loans for your SME, in this review by CompareBanks.

Updated: October 23, 2023

You may be thinking about getting a business loan if you don’t have the spare cash and need to invest in things like new facilities, machinery, personnel, or advertising.

In this article, we'll go over some of the most often-asked questions concerning business loans, as well as the basics of getting one, the requirements for applying, and possible alternatives to this kind of financing.

This manual will detail the steps you need to take to apply for a loan, and explain what you can do to increase your chances of approval.

1. Capital on Tap★★★★★Click Here
2. Tide★★★★★Click Here
3. Metro Bank★★★★★Click Here

At a Glance, Pros and Cons

In this section, we round up the advantages and drawbacks of getting a business loan for your company.


✔️ Your company may eventually expand. If you decide to seek a loan from a bank, the money you get will surely improve your company's chances of growing and expanding in the ways you've planned. If you need to hire more people or relocate to a bigger space, you may use the money you'll be getting towards those goals.

✔️ No financial meddling is expected. If you're paying back your small business loan on schedule, which you should try to do at all times to prevent any problems, the bank probably won't bother you again. They probably won't put any limits on your spending, so you'll be able to do anything you want with the money. Furthermore, as the business owner, you are the only one who understands exactly what your company needs to thrive.

✔️ Interest rates that are going up. A small business bank loan often comes with far more favourable interest rates than those offered by other internet lenders. If you need money for the long haul, a bank loan is usually the best alternative over an overdraft, a personal loan, or depending only on a credit card.

✔️ Interest is not taxable. Take into account the tax deductibility of interest while selecting between various sources of financing.


❌ There may be stringent requirements to meet. When considering making a loan to a startup, banks naturally exercise caution. They are concerned that they will not get their money back on time from lending it to your business. Their stringent requirements make it difficult for new businesses to get the credit they need to get off the ground.

❌ Not all of it is certain. A high street bank loan for a small company could not provide you with the whole amount you need. It's possible that you won't obtain the entire amount you're requesting from the bank because they see your request as too high-risk or because they believe the amount you've requested is too high.

❌ There is a potential for loss with a secured loan. When you take out a loan from a bank, your company's collateral is at danger if you don't pay back the money on time. This implies that if your firm has a period of weak sales, you run the danger of having some of your most valued items seized by the government.

What is a business loan?

Commercial enterprises, as opposed to private borrowers, are the typical users of business loans. It's possible that some are better suited for newer enterprises, while others need longer track records.

Borrowers often pay back their loans with interest over a certain number of monthly payments. Loans for companies may range from a few thousand dollars to several millions.

What exactly is a “Start-Up Loan”?

Since its inception in 2012, the government-backed start-up loans initiative has had a significant effect, helping to fund roughly 68,000 firms to the tune of £543.8m.

Take for instance, the site Start Up Loans, which is a division of the British Business Bank, provides funding for an average of 31 new enterprises every day, with loans averaging a little over £8,000 apiece. Everything from a mermaid school to a real crime museum got its start with the help of this project, which works in a broad variety of fields.

It takes special satisfaction in aiding those who may have trouble obtaining loans elsewhere; 35% of its borrowers have been jobless. It's hardly surprising that the programme has been so well received; its primary goal is to ensure the success of startups. Some of the advantages are:

  • A simple, fixed interest rate of 6% that's straightforward to grasp.
  • Get a loan of up to £20,000.
  • Costs for prepayment are waived.
  • Repayment plans ranging from one to five years are available.
  • Mentoring for approved students for a full year at no cost.

Guidelines for seeking a seed capital loan

Applying for a business loan can be more transparent and easier than other financing options, but there are a few items you should have on hand to speed up the process. You may categorise the items you require to apply for a start-up loan as either personal information or company (or projected business) documentation. Personal information required includes:

  • 📖 Your National Insurance Number.
  • 📖 Specifics about your living situation for the last three years, including past and present addresses.
  • 📖 For a credit check, have ready your full bank account name and sort code.

Once you have that, you can begin.

Step 1: Verify eligibility 

The first step is to verify online that you are a UK resident, legally eligible to work in the country and the owner of a company that has been operating for less than two years. Those who have had a company for two years or longer may be ineligible for startup loans. Although there is no universally accepted definition of “trading”, HMRC includes the following scenarios as examples:

  • Engaging in commercial pursuits (as in a trade or profession)
  • Purchasing and selling items for the purpose of financial gain or excess
  • Performing functions
  • Accumulating any business profit
  • Taking charge of investments
  • Making money in any other way

Step 2: Registration details 

Easy peasy, only need your name, birthdate, personal email, and cell phone number. If you're unsure whether or not the name you're using matches the one on your passport or driver's licence, you'll need to get those documents out and compare them.

After you've done this, an email with a confirmation link will be delivered to your inbox. Visit the link in your private email, create a password, and log in. When you've completed that, you'll be prepared to go forward.

After signing up, you can begin the application process. First, provide your full name, title, personal email address, and phone number (all of which should already be filled in for you; double-check against your passport/driver's licence). If you have previously gone by another name, please provide that information as well.

Step 3: General background data

There is a need for a little more information here, but it is not difficult. Everything you need to complete this phase is listed below:

When you were born

  • Gender (with the choices “Non-binary” and “prefer not to say”)
  • Status in Marriage
  • Origins of ancestry
  • Your National Insurance Number (found on your National Insurance card, in correspondence from the Department of Work and Pensions, or on official papers pertaining to your employment, such as a P45)
  • Position held at the moment
  • Origin / Birthplace / Passport Country
  • Highest education level 
  • Yearly gross (before-tax) income plus perks.
  • If there are any prior convictions that have yet to be served

Step 4: Payroll and credit verification

The next step is a review of your credit history. To begin, decide how much money you want to borrow and how long it will take you to pay it back. You will be able to modify these figures at a later date, but they are required for the credit check.

Your personal bank account information, including account number and sort code, must now be entered. If you still get paper bank statements or have access to internet banking, you will see them listed.

Step 5: What happens next?

When your application for business financing is finalised, what happens next?

Your application will be reviewed, and you will hear back within a few days. The length of time this takes is unpredictable once it has started; it might be as short as two to three weeks for those who need little help, or it could take over three months for those who require considerable support.

Cooperating Vendors

Even if your selected provider is in charge of everything from start to finish, after you've submitted your application, the delivery partners will be your most important point of contact and will make the final decision on whether or not your loan is accepted.

You can see a complete list of delivery partners on the service's website, but in general, they are companies that focus on a certain area or industry and employ knowledgeable business consultants who can help you along the way. If you're successful, they'll set up coaching services and assist you fine-tune your company strategy, cash flow projection, and personal survival budget.

You may choose your preferred delivery partner throughout the application process. If you don't volunteer for a certain sector or region, you'll be automatically allocated to one. Once the delivery procedure has begun, you will not be able to switch delivery partners, so be careful to specify your selection.

How to get a business loan — Reviews

Please double-check that your choice of service is covered by the FSCS.

1. Capital on Tap — Top Small Business Loan Option

Capital on Tap might be an excellent choice if you'd rather not deal directly with a bank or a lender with a high interest rate. 

While not technically a loan, a safe credit card serves the same purpose. You are taking out a loan from a financial institution and repaying the money plus interest.

Capital on Tap is awesome since it allows you to get incentives and rebates that can be re-invested into your company.

With an infinite supply of cards, you may provide access to as many workers as necessary without sacrificing control of the company. The card gives you 1% cashback on every purchase, and you can use that money towards whatever you like.  Small companies would benefit greatly from this, but nonprofits and single proprietors should keep a few things in mind.

2. Tide

Tide's app is able to connect securely with any business's banking provider, regardless of whether or not they use open banking services. 

This technology allows Tide to rapidly collect data and use its algorithms for loan approvals. Working capital, invoice discounting, and loans for new businesses are all available from Tide. Grants, grants, and merchant cash advances are just a few of the many financial alternatives out there.

There is no more immediate source of funding for businesses. Open banking has allowed Tide to boast about how quickly and painlessly they can approve loans. The typical time it takes to acquire approval for a business loan is 3 minutes and 24 seconds, as stated on the Tide website.

3.  Metro Bank

Metro Bank (review) is committed to providing a convenient, one-stop banking experience for its clientele. Their small business loans are excellent, but you must be one of their business clients to apply.

You may tailor the conditions to your company's specifications, allowing you to centralise all operations. You may go into any of their several UK locations and speak with a real person.

Their interest rates are market-sensitive and might be anything from 9% to 12%. If you need money to pay bills or expand your company, you may apply for a loan of up to £25,000.

In order to qualify for an unsecured loan via this method, you may need to provide a guarantee or security.

How to get a business loan: The Verdict 

Finding the finest business loan requires looking at all the options you have and seeing which one fits your needs the best.

Consider these lending criteria as a whole.

✔️ Interest rate calculated each year. The annual percentage rate (APR) of a loan is the total amount of interest and fees calculated over the life of the loan. By comparing annual percentage rates, you can see which company loans are the most and least expensive.

✔️ Fees. There may be up-front costs associated with submitting a loan application. Estimating and including these charges in your cost comparisons can help you make an informed decision.

✔️ Terms of repayment. Typical loan terms for corporations are between one to twenty-five years. Choosing a longer loan term will reduce your payments each month, but it will raise the total amount of interest you pay. The best loan term for you is one that allows you to accomplish your objectives while yet maintaining manageable monthly payments.

✔️ Faster financing. Business loans from large banks may provide attractive rates for customers with excellent credit, but the application procedure may be time-consuming and complicated for those without stellar credit. Online lenders may be able to provide quicker finance if that is a priority.

The steps required to get a company loan from a bank might differ depending on the specific financial institution chosen. You may apply to some of the largest banks by filling out an online application and supplying personal and company details. If that's not possible, you'll need to apply in person.

Application requirements may ask for the company's name, the year it was founded, annual gross sales, and the combined annual household income of all proprietors. When comparing Internet loans to traditional banks, brick-and-mortar institutions often have stricter qualifying restrictions.

For more, see our top business loan accounts.

Related Guides:

Getting business loans guide — FAQs

Can I get a personal loan to launch a company?

Is it OK to use a personal loan for commercial purposes?

How much money can I get for my company if I get a loan?

Can a person get a loan from the government to establish a business?

What are the consequences if I fail to repay a business loan?

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