How to obtain a small business loan in the UK: a step-by-step guide

This guide takes you through each step, combining Funding Options’ experience supporting 11,000+ UK SMEs with market insights and lender expectations - all to help you access the funding that fits your business goals.

Start with clarity: what do you need and why?

Lenders are more likely to approve your application when your funding needs are clearly defined. Start by asking yourself: How much do I need? What will I use it for? And how quickly do I need the funds?

Whether you're buying stock ahead of a busy quarter or bridging a cash flow gap during a quieter month, being specific helps lenders assess risk and gives them confidence in your plan.

According to the British Business Bank’s 2024 Small Business Finance Markets report, SMEs who plan ahead are 52% more likely to be approved for finance.

Choose the right type of loan for your needs

Once your goals are clear, the next step is choosing the best product. Not all loans are the same - and the right one depends on how your business operates, your credit profile, and what the money is for.

Here's a quick overview of the most common types of small business loans available in the UK:

Each product suits different use cases. For instance, invoice finance can work well for businesses with slow-paying clients, while a revolving credit facility offers short-term flexibility without repeated applications. Funding Options’ platform helps you compare all of these in one place, matched to your circumstances.

Each lender’s criteria vary slightly, but generally they’ll consider your trading history, annual turnover, credit profile, and financial health. Most lenders want to see at least six months of trading and a minimum turnover of around £50,000.

If your business is growing but not yet profitable, or if you’ve had credit challenges in the past, there are still viable funding options - such as secured loans or business loans with a personal guarantee.

Prepare the right documentation

To strengthen your application and avoid delays, prepare documents such as:

• 6–12 months of business bank statements

• recent management accounts or full-year financials

• proof of ID for directors

• VAT returns, if registered

For larger loans or newer businesses, lenders might also ask for a business plan or cash flow forecast.

Compare lenders carefully

Interest rates matter - but so do terms, flexibility, and fees. An arrangement fee or early repayment penalty can make a low-rate loan more expensive than it seems.

At Funding Options, we help UK businesses compare quotes from over 120 lenders. In early 2025, typical interest rates for SME loans ranged from 6.2% to 14.5% APR, depending on credit profile and loan structure (Source: UK Finance).

Apply online and get a fast decision

Once you’ve selected a lender, the application process is often quick and digital. Many unsecured lenders can provide decisions within 24 hours. Larger or asset-backed loans may take slightly longer due to underwriting.

Rejected? There may still be options

It’s not uncommon to be declined - particularly by traditional banks. If that happens, don't give up. Platforms like Funding Options specialise in helping businesses that may have been turned down elsewhere. You may find better-suited funding through alternative finance providers.

Final thoughts

Securing a business loan doesn’t need to be intimidating. With preparation, the right guidance, and a clear plan, UK business owners can access the funding they need to unlock growth.

Funding Options by Tide gives you access to 120+ lenders, personalised support, and a smarter route to the right finance. Whether you're starting out, scaling up, or simply smoothing out cash flow, we’re here to help.

FAQs

How fast can I get a small business loan? Unsecured loans can be approved in 24-48 hours. Larger or secured loans may take a few days to process.

What if I have poor credit? You may still be eligible  particularly for products like invoice finance or loans supported by a guarantor.

How much can I borrow? This depends on turnover, trading history, and credit profile - but amounts typically range from £1,000 to over £500,000.