A loan is an amount of money borrowed for a set period within an agreed repayment schedule. The repayment amount will depend upon the size and duration of the loan and the rate of interest.
Banks usually charge interest on any loans that you use, but the terms and price will vary between providers.
Different types of bank loan include:
Most lenders require you to:
It’s not a good idea to take out a loan for ongoing expenses, as it may be difficult to keep up repayments. Ongoing expenses are instead best funded from cash received from sales, possibly with an overdraft as backup.
Your bank may turn you down if you can’t:
Banks are the main source of small business loans, but many other organisations provide loans at competitive rates. Building societies offer business mortgages and personal loans. You can also consider seeking finance from non-bank lenders.
If you want to compare business bank accounts, the Better Business Finance website offers a business account finder service.
European Investment Bank
A number of UK high street banks have secured financing from the European Investment Bank (EIB) to provide lower-cost long-term loans to small and medium-sized enterprises. You may eligible to apply if you run a business with fewer than 250 employees.
The loan must be for a minimum of 2 years and the loans cannot be for short-term working capital needs.
Download a list of financial institutions offering EIB loans in the UK (PDF, 25K)
You can launch an appeal if you've been been turned down for a bank loan. Though it's possible this won't make a difference. For example, you may have been turned down because your business plan wasn't convincing, or because of your credit history.
You can start your appeal on the Better Business Finance website.