What business finance products and services are available from UK lenders
Finding the right finance for your business can feel overwhelming, but the good news is that UK lenders offer a wide range of products tailored to different business needs and situations. Whether you're a startup, established company, or looking to expand, there's likely a finance solution that fits your circumstances. Let's walk through what's available.
Term Loans and Business Loans
A term loan is one of the most straightforward finance options. You borrow a fixed amount and repay it over an agreed period, usually between one and ten years, with regular monthly payments.
- Secured term loans - backed by business assets or property, typically offering lower interest rates
- Unsecured term loans - no collateral needed, but usually higher interest rates and stricter eligibility criteria
- Fixed or variable rates - choose stability with a fixed rate or potentially lower costs with a variable rate
- Loan amounts - typically range from £5,000 to £500,000+, depending on your business and lender
Term loans work well for businesses with steady cash flow that need capital for expansion, equipment, or working capital.
Invoice Finance and Factoring
If your business offers credit to customers, you're essentially lending them money until they pay their invoices. Invoice finance lets you access that cash immediately instead of waiting.
- Invoice factoring - a lender buys your unpaid invoices at a discount (typically 80-90% of face value) and collects payment from your customer
- Invoice discounting - you retain control of customer relationships while a lender advances funds against your invoices
- Suitable for - businesses with good customers, regular invoicing, and B2B operations
- Cost - usually 1-3% of invoice value per month, depending on your turnover and credit quality
This is ideal if you have healthy sales but struggle with cash flow due to payment terms.
Overdrafts and Working Capital
An overdraft gives you flexible access to funds up to an agreed limit, useful for managing seasonal fluctuations or unexpected expenses.
- Business overdrafts - flexible credit you can draw on and repay as needed, paying interest only on what you use
- Revolving credit facilities - similar to overdrafts but often for larger amounts and longer terms
- Interest rates - typically higher than term loans, charged daily on the amount borrowed
- When to use - short-term cash flow gaps, seasonal variations, or emergency expenses
Overdrafts are ideal for predictable working capital needs rather than permanent funding requirements.
Asset-Based Lending
Some lenders will advance money based on the value of your business assets, from equipment and machinery to vehicles and stock.
These options suit businesses with significant tangible assets they can leverage.
Equipment Finance
Borrow money specifically to purchase equipment, machinery, or vehicles. The asset itself often secures the loan.
Asset-Based Lending (ABL)
Access credit against the value of your business assets like property, inventory, or receivables. This works well for asset-heavy businesses.
Sale and Leaseback
Sell an asset you own (like property or equipment) to a lender and lease it back, unlocking cash while continuing to use the asset.
Government-Backed and Alternative Finance
The UK Government supports business lending through various schemes, while alternative lenders offer options for businesses that struggle with traditional banking.
- Start Up Loans - government-backed unsecured loans up to £25,000 for new businesses, with mentoring support included
- Bounce Back Loans - though mostly wound down, some variants remain for eligible businesses
- Enterprise Investment Scheme (EIS) - investment in exchange for equity, suitable for growth-stage companies
- Crowdfunding - raise money directly from investors via online platforms
- Peer-to-peer lending - borrow from individuals via specialist platforms, often faster than traditional banks
- Merchant cash advances - advance cash against future card sales, note these can carry higher costs
Government schemes offer excellent value, whilst alternative finance works well if banks have declined you.
Trade Credit and Supplier Finance
Sometimes the best source of short-term finance is your supply chain itself. These options help manage relationships with suppliers and customers.
- Extended payment terms - negotiate longer periods to pay suppliers, effectively borrowing from them
- Supply chain finance - your suppliers get paid early by a lender while you pay on longer terms
- Trade credit insurance - protects you if customers fail to pay, helping secure invoicing
- Consignment stock - keep stock from suppliers without paying until it sells
These work best when you have established relationships with reliable suppliers.
How Spark Finance Can Help
Navigating the UK finance market alone is time-consuming. Spark Finance is an FCA-authorised business finance broker (FRN 958123) with access to over 100 lenders across all the products mentioned in this guide.
- No-obligation eligibility check - find out which products and lenders suit your business in minutes
- No credit checks at application stage - initial assessment doesn't impact your credit file
- Expert guidance - our team understands the strengths and weaknesses of different products for different situations
- Trusted panel - we work with established, FCA-regulated lenders you can trust
- One application - no need to approach multiple lenders individually
Whether you need a term loan, invoice finance, working capital, or something more specialist, we'll match you with the right lender and product for your needs.
Ready to find out what's available?
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Frequently asked questions
What's the difference between secured and unsecured business loans?
Secured loans are backed by business assets (like property or equipment), so lenders take less risk and typically charge lower interest rates. Unsecured loans require no collateral but carry higher interest rates and stricter eligibility requirements. Your choice depends on what assets you have and how much you're willing to risk.
How quickly can I get business finance from a UK lender?
Speed varies by product. Term loans typically take 5-10 working days once approved. Invoice finance can be arranged in 2-3 days. Overdrafts may take a week or two. Alternative lenders and peer-to-peer platforms can sometimes be faster, sometimes within 24-48 hours from approval.
Do I need a perfect credit history to get business finance?
No. Many lenders specialise in supporting businesses where the owner has a less-than-perfect personal credit history. Invoice finance, asset-based lending, and alternative lenders are often more flexible than traditional banks. What matters most is your business's ability to repay.
What happens if my business is turned down by a bank?
A bank rejection doesn't mean you can't get finance. Alternative lenders, peer-to-peer platforms, asset-based lenders, and specialist finance brokers often have different criteria. An FCA-authorised broker like Spark Finance can explore options banks may not have considered suitable.
Important information: Spark Finance Limited is authorised and regulated by the Financial Conduct Authority (FRN 958123). We are a credit broker, not a lender. This guide is for informational purposes only and does not constitute financial advice. Think carefully before securing debts against property or assets. Your business may be at risk if you do not keep up repayments on a debt or other commitment entered into in relation to it.