Whether you’re after a lump sum of £30,000 or consistent access to credit for slowly growing your business, there’s a range of loan options that could help. Here, we run through your best choices.
What are my options?
If you’re looking for a lump sum to be paid upfront, options include:
A regular business loan. With this standard option, you’ll have a lump sum of £30,000 transferred into your business account. You’ll make monthly repayments on the balance, with each payment covering interest accrued so far and chipping away at the outstanding balance.
A business cash advance. A business cash advance may be a better option if you’re not sure when you’ll be able to pay back your loan because of fluctuating sales. Rather than paying a regular sum each month, you’ll pay a fixed percentage of the sales you make in the month. That means you’ll pay back over a longer timeframe if sales are slow, and faster if business is booming, but either way, it’ll cost you the same amount overall.
Asset finance.Asset finance allows you to spread the cost of equipment purchases over a longer period. Instead of paying a huge sum up-front, you pay monthly with interest on top. It’s more expensive than paying outright, but it could be a good way of accessing the latest equipment without a huge initial outlay. If you’ve already splashed out on decent equipment, then asset refinancing allows you to unlock the value held in those existing assets.
If you’re looking for ongoing access to business credit, consider the following options:
Invoice finance. There are two main types of invoice finance. Invoice discounting, where the lender will use your unpaid invoices as collateral for your loan, or invoice factoring, where the lender will buy your unpaid invoices from you (at less than their full value).
A business line of credit. A line of credit works similarly to a credit card or overdraft, but usually comes with a higher credit limit. You’ll only pay interest on the amount you borrow, on the days you borrow it, and can repay as and when it suits you (subject to a set monthly minimum). Interest rates are higher than those associated with a more traditional, fixed-term business loan, but are offset by a much greater degree of flexibility.
What about a start-up loan?
Government-backed start-up loans are available to certain businesses that have been trading for less than two years, and are capped at £25,000. However, this figure is per director, and multiple directors can apply. With competitive, fixed rates, these loans can be a smart choice, provided your business is eligible.
Check your eligibility for a Start Up loan
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Secured loans allow you to put business or personal assets up as collateral against failure to repay your loan. This can make a lender more open to approving your loan application, as it’s better protected against the risk of you falling into arrears.
It’s not unusual for lenders to insist on having security for sums as large as £30,000, especially for businesses or individuals with limited or damaged credit histories.
Getting an unsecured loan is usually faster because the lender won’t need to verify the value and liquidity of any asset(s) put forward as security.
In 2018 Barclays doubled its limit on unsecured lending for SMEs to a cool £100,000. But getting approved for larger sums without security is likely to require excellent credit, detailed affordability checks and a healthy growth curve from a well-established base.
Personal guarantees
A personal guarantee is a contract that states you’ll be personally responsible for paying back a loan if your business is unable to do so. Many lenders will demand you sign one of these if you apply for an unsecured loan.
How much does it cost to repay a £30,000 business loan?
Interest rate of 5% fixed p.a.
Interest rate of 10% fixed p.a.
Interest rate of 20% fixed p.a.
2 year loan
Monthly: £877.43 Overall: £21,058.27
Monthly: £922.90 Overall: £22,149.56
Monthly: £1,017.92 Overall: £24,429.99
3 year loan
Monthly: £599.42 Overall: £21,579.05
Monthly: £645.34 Overall: £23,232.37
Monthly: £743.27 Overall: £26,757.78
5 year loan
Monthly: £377.42 Overall: £22,645.48
Monthly: £424.94 Overall: £25,496.45
Monthly: £529.88 Overall: £31,792.66
How to compare £30,000 business loans
Here are some of the key factors to consider:
Overall cost. It can be easy to obsess over interest rates and fees (the annual percentage rate, or APR, is designed to provide a benchmark for comparison, taking into account both interest and any mandatory charges), but more importantly, how much is this loan going to cost your company overall? When you’re trying to identify the best business loan, the loans that are cheapest overall are naturally a good place to start.
Duration of loan. This will normally be dictated by what you can afford to repay each month: borrowing for longer is the natural way to keep your monthly costs down, but don’t forget that doing so will usually push up the overall cost of borrowing.
Eligibility. Never apply for a loan without checking that the business is eligible for it. It’s a waste of time and demoralising, but what’s more, the application could be visible to future prospective lenders through your company’s credit record.
Security required. Does the finance require security, and if so, do you have a suitable asset that you’re willing to put forward?
Flexibility. Nobody knows what’s around the corner, let alone three or four years down the line. Different types of business finance offer different levels of flexibility, and even within the same class of product, different lenders will have different policies. If your business is volatile, flexibility should be high on your list of requirements.
Is my business eligible?
Lenders each have their own criteria, but first and foremost they’ll need to be sure that the monthly repayments would be affordable for your business, given its income and outgoings. You can boost your chances of being approved by demonstrating:
A good business credit score and personal credit score.
A consistent history of profits.
A reasonable plan for paying back your debts.
£30,000 business loan calculator
This tool is designed to help you estimate the monthly and overall costs of borrowing £30,000. You can adjust the duration of the loan and the interest rate to get a better idea of what would be affordable. Our calculations assume that any fees involved are bundled in with the loan amount and repaid over the same term, at the same rate. Refer to your loan agreement for exact repayment amounts as they may vary from our calculations.
Interest rate
Loan term
Fees
Your loan would cost around £ each month and £ overall.
What about a broker or matching service?
Brokers and matching services can be handy for time-pressed business owners, especially if their credit history is a bit worse for wear.
A good matching service will be able to instantly check which lenders would offer you a £30,000 loan, saving you valuable time and stopping you from damaging your credit score via multiple loan applications.
Many of these services are free to use, as the brokers instead charge a referral fee to the lenders they recommend.
The downside is that these services rarely have access to the full market. They’ll only be able to refer lenders from their panel of partners. That means you may not be offered the very best deal you’re eligible for.
Frequently asked questions
Yes. There are lenders that specialise in providing finance for start-ups. These offer more lenient lending criteria to new businesses, although the rates on offer might not match those offered to established businesses.
It varies massively depending on the type of loan. For a £30,000 loan, you can expect terms between one and five years. It’s possible to get loans with terms of 10 years or more, but these are harder to be approved for.
Your lender will look for proof that you’ll be able to comfortably repay your loan. That’s why they’ll be keen to know what you’re planning to spend the loan on. However, provided you’ve shown a solid plan to repay the loan, they need to be relatively lenient about how you use it.
We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
Chris Lilly is Head of publishing at finder.com. He's a specialist in personal finance, from day-to-day banking to investing to borrowing, and is passionate about helping UK consumers make informed decisions about their money. In his spare time Chris likes forcing his kids to exercise more.
What’s working capital finance? How does it work? Which type is right for your business? Our guide unpacks them to help you navigate cash flow ups and downs.
If you run a small business and need to borrow money, you may be asked to give a personal guarantee. We’ve looked at how it works and what risks it carries.
Invoice finance means getting paid right after you’ve issued an invoice, but it can be expensive. We look at the pros and cons, eligibility and alternatives.
Although you may be able to get a personal loan to start or grow a small business, most lenders state that their personal loans cannot be used for this purpose.
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