Small business loans

What is a business loan?

A business loan provides you with the funding needed to help your enterprise prosper. There are many different kinds of business loan available, depending on the length of time you want to borrow and the interest rate you’re offered. Different loans may also be available to you depending on the purpose of your borrowing.

Apply for a start up business loan with your own assets as security, or put up a company-owned asset, such as property or equipment to allow your business the chance to grow. A secured loan can provide comparably lower interest rates than an unsecured loan, as the lender will view the arrangement as lower risk.

How does a business loan work?

Like most types of personal loan, you can borrow money to expand and develop your business. Depending on the kind of loan you choose, you may need to demonstrate a strong case for borrowing the money or present an in-depth business plan before receiving funds.

If you’re successful in applying for a business loan, you’ll typically receive the funds within a week or two and can start to spend on the things outlined in your application. You’ll then repay the loan, including accrued interest, at the agreed rate each month until the debt is settled.

You may be able to pay off your debt early, but this can come with added charges. Check the terms of any loan you’re offered to find out more about the cost of early repayment.

Things to consider before you apply for a business loan

Before you apply for a loan for your business, there are a few things it’s worth considering.

Is a business loan right for me?

A loan for a new business can help your business take its first steps, turning your creative spark into a successful venture. Compared to other types of credit, such as personal loans or credit cards, business loans offer a great deal of flexibility.

If you can provide evidence that shows a lender your enterprise is brimming with potential, and you can afford to make the regular repayments on a small business loan, you’re already on the right track to qualifying for some financial help.

Read our guide to financing a new business to find out more about accessing funds.

Regular income and outgoings

A lender will ask about your income and regular outgoings to help them assess your personal circumstances. This helps them decide whether you’re a suitable applicant.

Your credit history

Lenders look at your credit report to help them decide if a particular loan’s terms and rates are a good fit. You don’t need a perfect credit report to get a rate you’re happy with, but lenders will usually want to check your general situation – including any CCJs - before they approve a loan.

Business loan purpose

How you plan to spend the money you’re applying to borrow is an important element of your start up business loan application. Lenders will be keen to see proposals, pitches and plans for your investment so they’ll get a better understanding of your company and can be confident you’ll have the best use for a loan.

See our guide to business loans for more information.

Representative example

SECURED LOANS – Rates from 3.37% variable. We also have plans ranging up to rates of 65.2%. Our range of available plans and products means we’re well placed to help you find a loan that meets your needs.

Representative 8.6% APRC variable.

Representative example: If you were to borrow £10,000 over 10 years at an Annual Interest Rate of 5.14% (variable), it would mean you make 120 payments of £122.71 per month.

The total amount repayable will be £14,725.20 (This includes a lender fee of £495 and a broker fee of £1000 – these costs have been added to the loan.) The overall cost for comparison is 8.6% APRC representative. Maximum APR is 65.2%.

Commonly asked questions about business loans

For more information about business loans, check our list of questions customers often ask below:

Will a business loan affect my credit score?

A typical small business loan may not require a check on your personal credit rating. You may be able to apply for the loan through an established business with a proven track record, making it possible to obtain the funds you want without impacting on your personal credit score.

What do I need to apply for a business loan?

Applying for a loan online is easy with Norton Finance. All you need to get started are a few simple details, including:

• Name and address
• Details of your earnings and staff on payroll (if applicable)

Once we receive this information, we’ll contact you to discuss your requirements in more detail. It’s a good idea to have information to hand regarding what you need the loan for, as well as details of any other loans you have.

Further discussions around your loan application are likely to focus on your company, and things like:

• Profitability and turnover
• Trading history
• Loan amount as a proportion of turnover
• Payment history

It’s important that you are planning to borrow what you can afford, so it helps to give prospective lenders as much background as you can in advance of a loan decision.

Business loan details

How much can I borrow?
With a loan from Norton Finance, you may be eligible to borrow between £3,000 and £500,000, depending on your circumstances.

How long are the repayment terms?
Our repayment terms can be anything from one to 30 years, depending on how much you want to borrow, and what you can afford to repay.

What are the interest rates?
The rate of interest will vary based on your current circumstances and financial history. Loan interest rates for homeowners start from 3.37%.

Are there any loan fees?
As we’re a broker, not a bank, we receive commission from the lender after a loan application has been completed. We may also charge a broker fee of up to 12.5% on any secured loan amount borrowed. There are no broker fees on unsecured loans.

Can I pay off a loan early?

You can pay off a loan early. However, there may be an early repayment fee for doing so. This will allow for a substantial rebate of interest that would have been paid had the loan reached the end of its agreed term. This could make early repayment an attractive option, but it’s always best to make sure you understand the terms and conditions of the loan and are confident you can repay it.

Applying for a business loan

Our dedicated Commercial and Business Loan specialists are here to help you navigate the application process, compare rates and work out how to get a loan to meet your needs. Use our business loans calculator to decide the amount and work out repayment rates.

What kinds of businesses are eligible for a business loan?

We can help companies across a wide range of sectors to secure the financial support they’re looking for. Here are just a few examples:

Healthcare

Doctors, dentists and healthcare professionals might use a business loan to grow their customer base. This could be by investing in CRM (Customer Relationship Management) software to manage patient files more effectively, or market research to track feedback, improve customer service and increase the level of interaction with patients. Whatever the aim, a loan could help build a greater reputation, attract more patients and ultimately become more profitable.

Retail and freelance

The UK has a burgeoning population of self-starters and small retailers, who are increasingly harnessing the power of digital media to market their goods and services. A business loan could help fund a professional digital marketing and social media management to keep them one step ahead of the competition.

Catering and hospitality

With the help of a business loan, restaurants, cafes and hotels could transform their services from shabby to chic, improving their appeal. Applicants could use the loan to invest in advertising to get their voice heard or improve their accommodation or facilities.