The high street banks aren’t the only option for business loans. There are plenty of other lenders, and you don’t have to limit yourself to borrowing from your existing bank. You may well be able to find a lower cost loan if you shop around.
Challenger banks
New online ‘challenger’ banks are a growing alternative to traditional high street banks and building societies. Originally most of these focused on offering personal banking. A growing number now offer small business bank accounts. Some of them also offer overdrafts or business loans, either directly or through partnerships with other lenders.
Well-known names include Starling, which can offer both overdrafts and loans for business account holders. Business account provider Tide lets you search through a range of different options, using information from your bank account to check which loans you are eligible for – and you can use the service even if you don’t have an account with Tide. Digital bank Monzo does not offer loans directly, but has a partnership with the business lending platform Funding Xchange.
You may find that there are advantages to choosing an alternative business bank account for your day-to-day business banking as well.
Specialist banks and lenders
You may want to look for a specialist lender that matches your particular type of business.
For example, ethical lenders like Triodos Bank, Charity Bank and Ecology Building Society specialise in lending to businesses (and individuals) who are making a positive impact. Other banks that offer business loans include Atom, Aldermore, Shawbrook and Cambridge & Counties.
Some of the newer lenders can offer more flexible kinds of loans. For example, iwoca offers both flexible loans and ‘revenue-based’ loans – where repayments are linked to your monthly revenue.
It’s also worth checking whether your business qualifies for any subsidised loans.
You can use Nerdwallet's loan comparison tool to find out what is on offer from many of the UK's leading small business lenders. You can also find other business finance platforms where you can search online, or work with a business finance broker.