Compare Business Loans UK: Rates, Lenders and How to Choose
To compare business loans properly, look past the headline rate: check the total amount repayable, arrangement and exit fees, term length, whether a personal guarantee is required, and how fast the funds arrive.
Quick answer
To compare business loans properly, look past the headline rate: check the total amount repayable, arrangement and exit fees, term length, whether a personal guarantee is required, and how fast the funds arrive. In 2026, UK rates typically run from around 7% APR at high-street banks to 25% or more with online lenders pricing for risk — and two offers with the same headline rate can differ by thousands of pounds in total cost.
Key takeaways
- Compare loans on total amount repayable, not the headline rate — fees and term length change the real cost more than a percentage point of APR.
- High-street banks are usually cheapest but slowest; online lenders decide in hours and price for risk.
- A representative APR only has to be offered to 51% of accepted applicants — treat advertised rates as a starting point, not your rate.
- A longer term lowers the monthly payment but almost always raises the total interest paid.
- Personal guarantees are standard on unsecured SME lending — a genuine no-guarantee offer is a real differentiator, not small print.
- Use soft-search eligibility checks to compare personalised quotes without marking your credit file.
The Six Numbers That Decide a Business Loan Comparison
Most comparison mistakes come from judging offers on a single number — the advertised rate. Lenders know this, which is why the headline figure is often the least informative part of a quote. Put every offer you receive through the same six checks:
- 1
Total amount repayable
The single best comparison figure: everything you will hand back over the life of the loan, including interest and fees. Every UK lender can tell you this number — ask for it in writing.
- 2
APR vs factor rates
Term loans quote an APR; merchant cash advances quote a factor rate (for example 1.25 means you repay £1.25 per £1 borrowed). They are not comparable directly — convert everything to total repayable.
- 3
Fees
Arrangement fees of 1–5% are common, and some products add drawdown, monitoring or early-settlement charges. A 'fee-free' offer at a slightly higher rate is often cheaper overall.
- 4
Term length
Stretching the same rate over a longer term cuts the monthly payment but increases total interest. Only compare like-for-like terms — or use total repayable.
- 5
Security and personal guarantees
Most unsecured SME lending still requires a director's personal guarantee. Check exactly what is at risk before comparing prices — a cheaper loan with harsher security terms is not automatically the better deal.
- 6
Speed to funds
If the money is needed for a time-limited opportunity, a lender that funds in 48 hours at a higher rate can beat a cheaper offer that takes six weeks.
Compare the Main Types of Business Finance
A business loan is not always the right product to compare in the first place. Depending on what the money is for, one of these structures may fit better — and pricing differs substantially between them. Our guide to the types of business loans available in the UK covers each in depth.
Term loan
- Best for
- One-off investment with predictable repayments
- Typical amounts
- £10k–£1m+
- Typical speed
- 24 hours–6 weeks
Business overdraft
- Best for
- Small, short-lived cash flow dips
- Typical amounts
- Up to ~£50k
- Typical speed
- Days
Revolving credit facility
- Best for
- Recurring working-capital swings
- Typical amounts
- £10k–£500k
- Typical speed
- 24–72 hours
Merchant cash advance
- Best for
- Card-heavy retail and hospitality
- Typical amounts
- £5k–£200k
- Typical speed
- 24–48 hours
Invoice finance
- Best for
- B2B firms waiting on 30–90 day invoices
- Typical amounts
- % of ledger
- Typical speed
- 24–48 hours
Asset finance
- Best for
- Vehicles, plant and equipment purchases
- Typical amounts
- Asset value
- Typical speed
- 1–3 weeks
Typical UK Business Loan Rates in 2026
Pricing follows the Bank of England base rate plus a margin for risk, so the ranges below move as the base rate moves. For current averages by product, see our monthly tracker of average UK business loan interest rates.
High-street bank term loan
- Typical pricing
- ~7–12% APR
- Decision speed
- 2–6 weeks
- Notes
- Cheapest for established firms with strong filed accounts
Challenger / online term loan
- Typical pricing
- ~10–25%+ APR
- Decision speed
- 24–72 hours
- Notes
- Risk-based pricing; newer or lower-credit businesses pay the top of the range
Secured / asset-backed loan
- Typical pricing
- From ~6–9% APR
- Decision speed
- 1–3 weeks
- Notes
- Security lowers the rate but puts the asset at risk
Merchant cash advance
- Typical pricing
- Factor rate ~1.1–1.5
- Decision speed
- 24–48 hours
- Notes
- No APR quoted — always convert to total repayable
Banks vs Online Lenders: Where to Start Comparing
High-street banks
- Lowest headline rates for strong applicants
- Best when you already bank with them and have 2+ years of filed accounts
- Decisions typically take 2–6 weeks
- Stricter criteria — recent CCJs or thin trading history are usually declines
Online and challenger lenders
- Decisions in hours, funds in 1–3 days
- Criteria flex around trading data, not just filed accounts
- Rates priced to risk — expect to pay more than a bank would charge
- Willing to look at newer businesses and imperfect credit
In practice the comparison order that wastes the least time is: check what your own bank will actually offer and how long it will take, then put the same requirement to a panel of online lenders and compare the personalised quotes on total repayable. If the bank is materially cheaper and you can wait, take it. If you can't wait — or the bank says no — the online market is where the real comparison happens.
What Lenders Check Before They Quote
Personalised quotes beat advertised rates, but every quote is built from the same inputs. Knowing them explains why two businesses comparing the same lenders see very different prices — our full guide to business loan eligibility criteria goes deeper.
- Time trading — under 12–24 months rules out most cheap lending
- Turnover and affordability — repayments need to fit comfortably inside cash flow
- Business and director credit profiles — CCJs and defaults push pricing up fast
- Filed accounts and management figures — strong, current numbers unlock bank-grade rates
- Existing borrowing — heavy stacking of short-term debt is the most common decline reason
Worked Example: Same Headline Rate, £5,500 Apart
Five Mistakes That Make Loan Comparisons Meaningless
Avoid these when comparing offers
- Comparing an advertised representative APR against a personalised quote — always compare quote to quote
- Ignoring arrangement, drawdown and early-settlement fees buried below the headline rate
- Treating different terms as the same product — a longer term almost always costs more in total
- Submitting multiple full applications — repeated hard searches in a short window hurt approval odds; use soft-search checks to shortlist first
- Skimming the personal guarantee — it decides whether a default is a business problem or a personal one
How Funding Fred Compares Lenders for You
Doing this properly by hand means approaching lenders one by one and normalising every quote yourself. Funding Fred does the same job in one pass: a 2-minute application with a soft credit check matches your business against a panel of UK lenders, and you compare real, personalised offers — not representative rates. There is no fee for using the service and no obligation to accept an offer.
Further reading
- compare unsecured business loans
- Average UK business loan interest rates — monthly tracker
- compare business loan eligibility
- costs and eligibility for business overdraft vs line of credit vs loan
- costs and eligibility for no personal guarantee business loans
- costs and eligibility for invoice finance vs business loans
- Asset finance vs business loan for large purchases
- how to get a business loan options
- alternative business funding guide
Frequently asked questions
Can I compare business loans without a hard credit check?
Yes. Most comparison services and many lenders run a soft search to produce an indicative quote, which does not affect your credit score. A hard search normally only happens when you proceed with a full application to a specific lender.
What is a good business loan rate in the UK in 2026?
For an established business with strong accounts, high-street banks typically price term loans around 7–12% APR. Online lenders commonly range from about 10% to 25% or more depending on risk. Anything quoted below the Bank of England base rate plus ~2% for unsecured lending deserves scepticism — check the fees.
How many lenders should I compare before accepting an offer?
Three to five personalised quotes is usually enough to see the shape of the market for your risk profile. Comparing more advertised rates adds little, because advertised rates are not personalised.
Is it better to compare loans from banks or online lenders?
Compare both if time allows: banks for price, online lenders for speed and flexibility. If you have been trading under two years or have imperfect credit, online and challenger lenders are usually the realistic market.
Can I compare business loans with bad credit?
Yes, though the panel shrinks and pricing rises. Specialist lenders weigh recent trading performance more heavily than historic defaults. Comparing is arguably more important with bad credit, because pricing varies far more between lenders at the riskier end of the market.
Written by
The Funding Fred Editorial Team creates plain-English guides to help business owners understand funding options, eligibility, and application readiness before they compare finance options.
Reviewed by
UK business finance content reviewer
Robert reads our UK business finance guides before they go live, checking each one is accurate, easy to follow, and reflects how lending actually works today — not how a brochure says it should. He's listed on the FCA Register, approved as an SMF3 (AR) Executive Director at Switcha Limited, and connected to Lucky Growth Partners Ltd through its appointed representative relationship, so the regulated detail gets a properly qualified second read.
