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Best Small Business Loans July 2025

Small business loans are designed to provide the funding your venture needs. The key is finding the best business loan for you.

A small business loan is a way of borrowing funds to help your business grow, improve cash flow, or get off the ground. 

Several types of loans for small businesses are available. Which is right for you depends mainly on your business, the reason you need the loan, and the amount you want to borrow.   

How do small business loans work?

When you take out a small business loan, the provider lends your business a sum of money. The amount that is borrowed, plus the interest payable on that loan amount, must then be paid back in regular instalments over an agreed period of time. 

This loan term is often several years – some loans can be repaid over 25 or 30 years. Or if you want a short-term loan, some lenders offer terms of three months or shorter. 

But once all of the repayments have been made, everything that is owed should be cleared.  

Am I eligible for a small business loan?  

You will usually need to be at least 18 years old, a UK resident, and have a UK-based business to be eligible for a small business loan.

Beyond this, lenders set their own qualifying criteria and will determine your eligibility for a loan based on information such as:

If you have a new or younger business, a strong business plan and proving your business is financially viable will be important.

What credit score is needed for a small business loan?

There is no definite minimum credit score you or your business needs in order to apply for a small business loan. However, a strong credit score could increase your chances of getting a loan and potentially give you access to lower interest rates. 

What can small business loans be used for?

Small business loans can be used for a variety of different business-related purposes, such as:

When applying for a small business loan, it’s normal for a lender to ask how the funds being borrowed will be used. Business loans can’t be used for personal reasons, such as buying a family car or paying off personal debt.

What types of small business loans are there? 

There are two main types of business loans for small businesses – unsecured and secured – and then several other options that lend on either one or both of those bases:

Unsecured business loans 

An unsecured business loan can be taken out without having to use any assets from your business as security for the loan. This means unsecured loans are often quicker and easier to arrange, but interest rates may be higher. Lenders may also ask for a personal guarantee that you’ll repay the loan from your own personal funds if your business can’t. 

Secured business loans

A secured business loan can only be taken out if you’re willing to put forward an asset from your business as security, such as your business premises or a piece of equipment. This often means you can borrow larger sums of money and access lower interest rates with a secured loan. However, there is also the risk that the lender will repossess the asset used as collateral if you fail to repay the loan.

Other small business loan options

How to get a small business loan through NerdWallet UK

We can help you find the best small business loans for you and your business. You’ll also be matched with lenders from our panel that offer you the best chance of acceptance. To see the funding options open to you, without affecting your credit score: 

  1. Answer a few questions about you and your business, so we know what to look for. 
  2. Get matched instantly with suitable lenders and loans that you’re eligible for. 
  3. Compare loans and apply to your chosen provider, with forms pre-filled using details you’ve provided already.

» COMPARE: Find the right loan for your small business

Pros and cons of small business loans

Advantages

Disadvantages 

What do different lenders have to offer? See our business loan lender reviews

Small business loan FAQs

What are the interest rates for a small business loan?

Small business loan interest rates tend to range from 6% to 20% APR, but may be higher or lower. Rates can differ widely depending on the lender, loan type, and your business’s finances, credit score and forecasts.   

What is the easiest small business loan to get?

An unsecured business loan tends to be the easiest type of business loan to get. This type of loan may need a business owner to provide a personal guarantee, but doesn’t usually require any collateral or security for the loan. 

How much can I borrow for a small business loan?

Depending on the lender, small business loans tend to range anywhere from £1,000 to £1 million, or much higher. The maximum amount you can borrow will depend on factors such as your business turnover, credit score and type of loan. Secured loans tend to allow the largest borrowing amounts.  

» MORE: Try our business loan calculator

How long does a small business loan take to get?

It may be possible to get a small business loan in a matter of hours or it could take a few weeks. Much depends on the lender, the type of loan (secured loans tend to take longer), and the information you provide with your application. Applying for an online business loan is often fastest. 

What documents are needed for a small business loan?

Exact requirements differ between lenders but some of the documents you can expect to be asked to provide include recent bank statements, financial accounts, tax returns and company documents. An up-to-date business plan and financial forecasts are also usually needed.

» MORE: How to get a business loan

What is the minimum down payment for a small business loan?

The minimum amount required as a down payment can vary between lenders and business loan types. Some secured business loans may require a large downpayment as security for the loan, while unsecured business loans don’t usually require a downpayment.

Can I get a small business loan with bad credit? 

You could still get a small business loan, even if you or your business has a less-than-perfect credit history. There are some specialist lenders for small business loans with bad credit. However, you are likely to face higher interest rates than a business with a better credit rating. The lender may also require some form of security or personal guarantee.

Are small business loans a good idea? 

Getting a small business loan may be worth considering if you need funding to help your business expand or overcome short-term financial challenges. Where a small business loan is unlikely to be right for you is if you don’t think you could afford the loan repayments or your business has existing debts you’re struggling to meet. 

Dive even deeper

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