There are 5.5 million private businesses in Britain, but while the focus of much of the UK financial market is in the capital, there are plenty of opportunities for those based in other metropolitan centres – including those seeking business financing. Here are the best business loan options up and down the country as of right now:
Traditional Business Loans
The majority of businesses still turn to traditional business loans from high street lenders for their external financing needs. The average amount borrowed is £25,000, but loans of both more and less than this are available, on both a secured and an unsecured basis. Current business loan interest rates average 6-12%, depending on lender and borrower. These interest rates are among the most competitive on the market, and are accessible to businesses in every part of the country – not just to those in urban areas.
The downside of traditional business loans is that they are hard to qualify for; while geography is not a barrier to access, their strict eligibility criteria are. Typically, these criteria state that a business needs to have: an operational history of at least two years; a good credit score; reliable, adequate cash flow; a business plan; and extensive financial documents to substantiate the business’s financial circumstances.
Alternative Financing Options
For businesses not meeting the requirements of traditional business loans, there are alternative options from specialty and challenger financial companies; these are again available throughout the country. These options include instruments like business lines of credit, merchant cash advances, invoice factoring loans, and equipment loans. Most specialty and challenger lenders have online platforms – indeed many are digital-only entities – and they tend to have more flexible eligibility and repayment criteria than traditional business loans. They also offer much faster processing times, so are a good option for those in a hurry.
UK Government/Non-Profit Programs
Not every business wants to borrow from a commercial lender though, and fortunately, they don’t necessarily have to. The UK government offers a range of loans and grants aimed at helping small and medium sized businesses, and it assists private development and investment funds to do the same. You can find a full list of the over 120 schemes currently available across the UK here, but here are the major ones to be aware of:
London/UK-Wide Programs
- Start Up Loan: provides government-backed loans of up to £25,000 to companies that have been trading for less than three years, charging a fixed interest rate of 6%
- Growth Guarantee Scheme: provides partially government-backed access to a range of financing products, such as term loans, invoice factoring loans, and so on
- Funding Circle: provides peer-to-peer loans of up to £350,000 (unsecured) and £1 million (secured) to SMEs with at least two years of trading history
Northern England/Yorkshire Programs
- Business Enterprise Fund: provides non-profit loans of up to £250,000 to businesses of all ages with less than 250 employees, based in the NE
- GC Business Finance: provides loans of up to £300,000 to SMEs in Manchester and the NW that have been unable to secure financing elsewhere
- Investment Fund – North of England: provides government-funded loans of £25,000 to £2 million to SMEs based in the North of England
- Key Fund: provides grants and loans from £5,000 to £300,000 to small and new businesses with a social purpose, based in the Midlands or the North of England
- North of Tyne Growth Fund: provides grant funding of £20,000 to £200,000 to businesses based in the NE that are looking to grow and increase employee numbers
- Rosebud Finance: provides microfinance of up to £100,000 for businesses in Lancashire
- SME Energy Efficiency Scheme: provides grants to businesses based in Tees Valley that are seeking to improve their energy efficiency
Eastern England/Midlands Programs
- First Enterprise Loans: provides loans up to £250,000 to businesses in the East and SE Midlands that are looking to grow
- Invest To Grow: provides loans and grants of between £15,000 and £250,000 to SMEs in the East Midlands that are looking to innovate, grow and create jobs
- Resilience and Innovation Grant: provides 50% match-funded grants (up to £50,000) for SMEs in the SE Midlands that need to increase their resilience to business challenges and invest in growth
- ART Business Loans: provides loans of up to £150,000 for small businesses in the West Midlands that are unable to get funding from a bank
Southern England Programs
- Business Growth Loans: provides loans of up to £100,000 to profitable SMEs in the South that have been trading for at least 12 months and that cannot secure funding elsewhere
- BCRS Business Loans: provides loans of up to £150,000 to SMEs in the SW and West Midlands that are unable to get a bank loan, for the purposes of development and growth
Scottish Programs
- Scottish Growth Scheme: provides government-funded debt finance of up to £250,000 and equity finance of up to £2 million to Scottish SMEs wanting to invest in growth
- Scottish Venture Capital Fund: provides £100,000 to £2 million to high-growth, early-stage businesses in Scotland that are looking for equity investors
- Business Energy Scotland SME Loan Scheme: provides loans of up to £100,000 to Scottish SMEs, for energy saving upgrades
Welsh/Irish Programs
- Business Development Bank of Wales: over 1100 programs on offer, delineated by business location, age and size
- Enterprise Ireland: provides grants and loans from multiple sources for Irish businesses of all ages and sizes
Rural Programs
- Gigabit Broadband Voucher Scheme: provides up to £3,500 to rural SMEs wanting to upgrade their business broadband
As is clear from the above, there is plenty of choice for SMEs across the UK. If you’d like to learn more about your business’s options, or if you need access to flexible, affordable financing today, talk to Swiftfund. And find more helpful guidance on the world of business financing on our blog.