{"id":24359,"date":"2025-09-22T14:50:16","date_gmt":"2025-09-22T13:50:16","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=24359"},"modified":"2025-10-21T11:44:08","modified_gmt":"2025-10-21T10:44:08","slug":"business-loan-calculator","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/business-loan-calculator\/","title":{"rendered":"Business loan calculator (with amortisation schedule)"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tBusiness loan calculator (with amortisation schedule)\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2025-09-22T14:50:16+01:00\">22 September, 2025<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Business loan calculator (with amortisation schedule)\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-gb\/blog\/business-loan-calculator\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n\t<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/author\/yassirmalik\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2024\/03\/Yassir-Malik.jpg\" class=\"entry-author__image\" alt=\"yassir-malik-profile-picture\" \/>\t\t\t\t<span class=\"entry-author__name\">Yassir Malik<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n\n\n<p class=\"has-paragraph-medium-font-size\">How much will a business loan really cost your company, given the interest rate and fees? Can your business\u2019s monthly revenue support the repayment terms?<\/p>\n\n\n\n<p>When you\u2019re considering a business loan, you need to know how to calculate the actual cost of the loan and assess the repayment schedule to make sure the funding meets your needs and aligns with your finances.<\/p>\n\n\n\n<p>In this article, we cover the essentials of business loans, including common types, alternative funding options, and what to expect in terms of interest and fees.<\/p>\n\n\n\n<p>We\u2019ll also provide a business loan calculator that can run the calculation for you, making it easy for you to compare different financing types and find the best option.<\/p>\n\n\n\n<p><strong>Here\u2019s what we\u2019ll cover:<\/strong><\/p>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#h-business-loan-calculator\" data-level=\"2\">Business loan calculator<\/a><\/li><li><a href=\"#h-how-to-use-the-business-loan-calculator\" data-level=\"2\">How to use the business loan calculator<\/a><\/li><li><a href=\"#h-what-is-amortisation\" data-level=\"2\">What is amortisation?<\/a><ul><li><a href=\"#h-1-amortisation-of-intangible-assets\" data-level=\"3\">1. Amortisation of intangible assets<\/a><\/li><li><a href=\"#h-2-amortisation-of-loans\" data-level=\"3\">2. Amortisation of loans<\/a><\/li><\/ul><\/li><li><a href=\"#h-what-is-an-amortisation-schedule\" data-level=\"2\">What is an amortisation schedule?<\/a><\/li><li><a href=\"#h-types-of-business-loans\" data-level=\"2\">Types of business loans<\/a><ul><li><a href=\"#h-term-loan\" data-level=\"3\">Term loan<\/a><\/li><li><a href=\"#h-equipment-financing\" data-level=\"3\">Equipment financing<\/a><\/li><li><a href=\"#h-invoice-factoring\" data-level=\"3\">Invoice factoring<\/a><\/li><li><a href=\"#h-invoice-financing\" data-level=\"3\">Invoice financing<\/a><\/li><li><a href=\"#h-business-credit-card\" data-level=\"3\">Business credit card<\/a><\/li><li><a href=\"#h-business-line-of-credit\" data-level=\"3\">Business line of credit<\/a><\/li><li><a href=\"#h-merchant-cash-advances\" data-level=\"3\">Merchant cash advances<\/a><\/li><li><a href=\"#h-commercial-property-loan\" data-level=\"3\">Commercial property loan<\/a><\/li><li><a href=\"#h-micro-loans\" data-level=\"3\">Micro-loans<\/a><\/li><li><a href=\"#h-government-backed-loans-for-small-businesses\" data-level=\"3\">Government-backed loans for small businesses<\/a><\/li><\/ul><\/li><li><a href=\"#h-are-there-other-sources-of-funding-for-a-business\" data-level=\"2\">Are there other sources of funding for a business?<\/a><ul><li><a href=\"#h-overdraft\" data-level=\"3\">Overdraft<\/a><\/li><li><a href=\"#h-personal-loan\" data-level=\"3\">Personal loan<\/a><\/li><li><a href=\"#h-venture-capital\" data-level=\"3\">Venture capital<\/a><\/li><li><a href=\"#h-crowdfunding\" data-level=\"3\">Crowdfunding<\/a><\/li><\/ul><\/li><li><a href=\"#h-what-business-loan-fees-will-i-have-to-pay\" data-level=\"2\">What business loan fees will I have to pay?<\/a><ul><li><a href=\"#h-term-loans\" data-level=\"3\">Term loans<\/a><\/li><li><a href=\"#h-government-backed-loans-nbsp-nbsp\" data-level=\"3\">Government-backed loans&nbsp;&nbsp;<\/a><\/li><li><a href=\"#h-microloans\" data-level=\"3\">Microloans<\/a><\/li><li><a href=\"#h-commercial-property-loans\" data-level=\"3\">Commercial property loans<\/a><\/li><li><a href=\"#h-lines-of-credit\" data-level=\"3\">Lines of credit<\/a><\/li><li><a href=\"#h-business-credit-cards\" data-level=\"3\">Business credit cards<\/a><\/li><li><a href=\"#h-equipment-financing-0\" data-level=\"3\">Equipment financing<\/a><\/li><li><a href=\"#h-invoice-financing-0\" data-level=\"3\">Invoice financing<\/a><\/li><li><a href=\"#h-invoice-factoring-0\" data-level=\"3\">Invoice factoring<\/a><\/li><li><a href=\"#h-merchant-cash-advances-0\" data-level=\"3\">Merchant cash advances<\/a><\/li><\/ul><\/li><li><a href=\"#h-what-are-the-typical-terms-for-a-business-loan\" data-level=\"2\">What are the typical terms for a business loan?<\/a><\/li><li><a href=\"#h-what-business-loan-interest-rate-should-i-expect-to-pay\" data-level=\"2\">What business loan interest rate should I expect to pay?<\/a><\/li><li><a href=\"#h-how-much-do-business-loans-offer\" data-level=\"2\">How much do business loans offer?<\/a><\/li><li><a href=\"#h-can-i-fund-my-ltd-company-with-my-own-money-as-a-loan\" data-level=\"2\">Can I fund my Ltd company with my own money as a loan?<\/a><\/li><li><a href=\"#h-final-thoughts\" data-level=\"2\">Final thoughts<\/a><\/li><\/ul><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-business-loan-calculator\">Business loan calculator<\/h2>\n\n\n\n<figure class=\"wp-block-embed is-type-rich is-provider-embed-handler wp-block-embed-embed-handler wp-block-sage-embed\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Business loan calculator\" src=\"https:\/\/assets.sage.com\/calculators\/business-loan\/dist\/en-GB\/index.html\" width=\"100%\" height=\"100vh\" class=\"sage-embed-resize\" style=\"border:none;min-height:500px;\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p><strong>Note: this calculator is for illustrative purposes only.<\/strong><\/p>\n\n\n\n<p>All banks, financial institutions and lenders will have their own methodology as to how interest is calculated.<\/p>\n\n\n\n<p>This business loan calculator can help you evaluate financing options or identify your optimal loan terms.<\/p>\n\n\n\n<p>Here are a few ways to use this tool:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Determine your monthly payment given the loan amount, annual percentage rate (APR), fees, and term. Factor the payment into your budget to see how it will affect your cash flow.<\/li>\n\n\n\n<li>Calculate how much you\u2019ll repay over the course of the loan, including total interest. Get a better sense of the real cost of borrowing money and make an informed decision about financing.<\/li>\n\n\n\n<li>Assess the total cost of the loan including principal, interest, and fees. Compare funding opportunities against each other to find the smartest option for your business.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-use-the-business-loan-calculator\">How to use the business loan calculator<\/h2>\n\n\n\n<p>To use this free business loan calculator, input the following information:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Annual Percentage Rate (APR)<\/strong>: the annual cost of borrowing, expressed as a percentage. This is the percentage that the financial institution charges for lending the funds; it\u2019s the interest rate plus extra charges such as arrangement fees and broker\u2019s fees.<\/li>\n\n\n\n<li><strong>Compound frequency<\/strong>: how often the lender calculates interest and adds it to the loan principal (original amount lent). Common frequencies include monthly, quarterly, or annually.<\/li>\n\n\n\n<li><strong>Loan term<\/strong>: the total duration of the loan (typically in years or months) over which repayments are made.<\/li>\n\n\n\n<li><strong>Payment frequency<\/strong>: how often the borrower is responsible for making a loan payment.<\/li>\n\n\n\n<li><strong>Arrangement fee<\/strong>: a one-off fee charged by the lender for setting up the loan, which is typically deducted from the disbursement.<\/li>\n\n\n\n<li><strong>Other fees<\/strong>: late payment fees, prepayment fees, and other additional fees. (See the full list below.)<\/li>\n<\/ul>\n\n\n\n<p>With this business loan calculator, payments and costs are easy to assess at a glance.<\/p>\n\n\n\n<p>Based on your input, the tool displays the regular loan payment as well as the total payment amount, total interest, total interest and fees, total loan cost, and amortisation schedule.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-amortisation\">What is amortisation?<\/h2>\n\n\n\n<p>Amortisation is an accounting method that has two meanings depending on the context:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-amortisation-of-intangible-assets\">1. Amortisation of intangible assets<\/h3>\n\n\n\n<p>This involves gradually writing off the cost of intangible asset over their predicted economic life. For example, the cost of software is gradually expensed over the number of years it&#8217;s expected to be used.<\/p>\n\n\n\n<p>This approach helps businesses reflect the value of intangible assets more accurately on financial statements.<\/p>\n\n\n\n<p>Amortisation and depreciation (loss of value due to age or wear) are both shown in the income statement and are also included on the balance sheet.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-amortisation-of-loans\">2. Amortisation of loans<\/h3>\n\n\n\n<p>More relevant context to this article, amortisation means reducing the balance of a loan over time through regular repayments.<\/p>\n\n\n\n<p>It\u2019s really the regular recalculation of the outstanding debt balance after each payment, adjusting for the portion that goes toward interest and the portion that reduces the principal. This process ensures that, over time, the loan balance reduces until it is fully paid off by the end of the term.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-an-amortisation-schedule\">What is an amortisation schedule?<\/h2>\n\n\n\n<p>An amortisation schedule (or table) is a tool that outlines how a loan is repaid over time.<\/p>\n\n\n\n<p>It details each scheduled payment, breaking it down into the principal and interest components, and shows how the loan balance decreases with each payment.<\/p>\n\n\n\n<p>This kind of schedule provides transparency and helps with financial planning, cash flow forecasting, and understanding the total cost of borrowing over time.<\/p>\n\n\n\n<p>You can use our business loan calculator with amortisation schedules to track your repayment progress.<\/p>\n\n\n\n<p>It breaks down your loan balance, payments, interest, and principal throughout the repayment term, helping you plan and budget more effectively.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-types-of-business-loans\">Types of business loans<\/h2>\n\n\n\n<p>As a business owner, you could be eligible for a range of financing options depending on your trading history, business structure, turnover, and borrowing needs.<\/p>\n\n\n\n<p>Use this list to consider common types of business loans available in the UK.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-term-loan\">Term loan<\/h3>\n\n\n\n<p>A term loan is one of the most common financing options for businesses of any size.<\/p>\n\n\n\n<p>The lender delivers the loan amount as a lump sum. Then, you pay off the loan with interest over a set period of time.<\/p>\n\n\n\n<p>Term loans are ideal for businesses that need fixed payments to maintain steady cash flow during the repayment period.<\/p>\n\n\n\n<p>And since term loans tend to have comparatively low interest rates, this loan type is one of the most widely affordable options.<\/p>\n\n\n\n<p>However, getting approval for a term loan may require collateral or a personal guarantee.<\/p>\n\n\n\n<p>Also, qualifying for the lowest interest rates often requires a good credit score and multiple years in business.<\/p>\n\n\n\n<p>Your credit score is determined by an independent credit reference agency (CRA), often using its own internal scoring system.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-equipment-financing\">Equipment financing<\/h3>\n\n\n\n<p>Equipment financing is a type of loan for purchasing business equipment like manufacturing systems, commercial vehicles, or agricultural equipment.<\/p>\n\n\n\n<p>The equipment itself usually acts as security for the loan.<\/p>\n\n\n\n<p>Many lenders offer both equipment loans and equipment leases.<\/p>\n\n\n\n<p>You own the asset and repay the cost over time (plus interest).<\/p>\n\n\n\n<p>Leases let you finance the equipment for a pre-set period before returning the equipment to the lender or often with the option to buy it at the end.<\/p>\n\n\n\n<p>While this type of financing can be a good option for buying new equipment, it doesn\u2019t work for other types of purchases.<\/p>\n\n\n\n<p>This funding is typically restricted to the purchase or lease of tangible business assets and may require a deposit or VAT to be paid upfront.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-invoice-factoring\">Invoice factoring<\/h3>\n\n\n\n<p>Invoice factoring is the sale of unpaid invoices to a third-party at a discount, receiving a significant portion of the invoice value as a cash advance.<\/p>\n\n\n\n<p>It equates to a loan because it\u2019s an independent lender who advances you most of the invoice value. <\/p>\n\n\n\n<p>They take responsibility for collecting payment from your customer later on.<\/p>\n\n\n\n<p>The lender gives you a lump sum that generally equals between 80% and 95% of the original invoice value.<\/p>\n\n\n\n<p>When the customer pays the invoice, the lender forwards you the remaining amount less their factoring fee.<\/p>\n\n\n\n<p>The lender doesn\u2019t ask about your loan history or credit score because they are more concerned with your customer\u2019s ability to pay. So, approval through this method is often easier than with traditional loans.<\/p>\n\n\n\n<p>Plus, it gives you access to funds faster than many traditional loans, which helps you improve and manage cash flow.<\/p>\n\n\n\n<p>However, this financing option can get expensive quickly.<\/p>\n\n\n\n<p>Lenders typically charge fees by applying a factor rate to the invoice value, and that increases the cost when your customers take more time to pay.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-invoice-financing\">Invoice financing<\/h3>\n\n\n\n<p>Invoice financing also uses unpaid invoices as leverage.<\/p>\n\n\n\n<p>But instead of purchasing your invoices, lenders use them as collateral, providing a cash advance of between 80% and 95% of the original value.<\/p>\n\n\n\n<p>Customers pay the invoice directly to you, and you\u2019re responsible for repaying the principal and fees to the lender.<\/p>\n\n\n\n<p>Like invoice factoring, invoice financing can give you quick access to funds. It\u2019s helpful for addressing cash flow gaps.<\/p>\n\n\n\n<p>However, invoice financing can be pricey, as lenders generally charge both interest and credit management fees.<\/p>\n\n\n\n<p>The creditworthiness of your customers is a key factor in determining the terms of the loan.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-business-credit-card\">Business credit card<\/h3>\n\n\n\n<p>A credit card gives you access to a revolving line of credit.<\/p>\n\n\n\n<p>It\u2019s called \u2018revolving\u2019 because, as long as you repay the borrowed amount on schedule (in full or in part), the facility automatically renews\u2014you don\u2019t need to reapply to get the same terms.<\/p>\n\n\n\n<p>You can use it as needed to borrow funds, pay back the balance, and draw on the line of credit again.<\/p>\n\n\n\n<p>You only pay interest on the outstanding balance &#8211; often interest-free if repaid in full each month.<\/p>\n\n\n\n<p>But if you don\u2019t, interest adds up and credit cards are far less affordable.<\/p>\n\n\n\n<p>Plus, the APR can increase over time, causing you to pay more for financing.<\/p>\n\n\n\n<p>Credit cards give business owners a quick and convenient way to access funds for purchases or cash advances.<\/p>\n\n\n\n<p>They\u2019re ideal for purchasing equipment or inventory, and some offer rewards or cash back on purchases.<\/p>\n\n\n\n<p>However, APR rates can be high and balances can accumulate quickly if not managed carefully. Missing payments or exceeding limits can also affect your business credit score.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-business-line-of-credit\">Business line of credit<\/h3>\n\n\n\n<p>A line of credit allows your business to draw from a pool of funds that has a pre-set limit. It offers flexible access to funds up to a pre-approved limit.<\/p>\n\n\n\n<p>Similar to a credit card, you can borrow from the line of credit, repay it, and withdraw funds again without reapplying but typically with lower interest rates and no rewards.<\/p>\n\n\n\n<p>You owe interest on the funds you borrow rather than on the full line of credit.<\/p>\n\n\n\n<p>A range of lenders\u2014traditional banks, online banks, and alternative lenders\u2014offer lines of credit.<\/p>\n\n\n\n<p>Lines of credit are usually unsecured, but lenders may still require a personal guarantee or charge arrangement and renewal fees.<\/p>\n\n\n\n<p>They are ideal for managing unpredictable expenses or seasonal fluctuations in income, but can be more expensive than term loans when used long-term.<\/p>\n\n\n\n<p>Many charge fees for maintenance or withdrawals, which add to the cost of the loan.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-merchant-cash-advances\">Merchant cash advances<\/h3>\n\n\n\n<p>A merchant cash advance lets businesses use future sales as leverage.<\/p>\n\n\n\n<p>You can get a cash advance based on the amount of debit and credit card sales you typically generate in a month.<\/p>\n\n\n\n<p>Merchant cash advances give you access to capital quickly, and they don\u2019t require collateral.<\/p>\n\n\n\n<p>They can be a reasonable option during a cash flow emergency.<\/p>\n\n\n\n<p>However, merchant cash advances can be costly. Lenders charge a factor rate, which they set as an upfront flat rate.<\/p>\n\n\n\n<p>Many also charge high arrangement fees for the convenience of a cash advance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-commercial-property-loan\">Commercial property loan<\/h3>\n\n\n\n<p>A commercial property loan is a term loan designed specifically for commercial spaces.<\/p>\n\n\n\n<p>You can use this type of load to buy or refinance premises for your business\u2014such as an office, shop, warehouse, or industrial unit.<\/p>\n\n\n\n<p>You purchase or lease property and then repay the loan and interest over a pre-set time period.<\/p>\n\n\n\n<p>Commercial property lenders typically offer comparatively low interest rates. Many also have lengthy repayment terms, typically 5-25 years, but also often require a deposit\u2014often 20% or more.<\/p>\n\n\n\n<p>Similar to a mortgage, a commercial property loan takes time for the application process, involving legal, valuation, and arrangement fees.<\/p>\n\n\n\n<p>Many lenders require a detailed loan application and a property inspection, making this option less ideal for quick funding.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-micro-loans\">Micro-loans<\/h3>\n\n\n\n<p>Startups and very small businesses may require relatively small loans that are more typical of the amounts banks lend to private individuals.<\/p>\n\n\n\n<p>However, if such loans are for business this changes the risk profile, and banks often have rules prohibiting the use of private loans for business.<\/p>\n\n\n\n<p>At the same time, the margins banks derive from such small amounts do not justify the cost of managing them in a traditional business context.<\/p>\n\n\n\n<p>So traditional banks generally avoid lending these amounts to businesses.<\/p>\n\n\n\n<p>Some specialist institutions\u2014such as credit unions, microfinance institutions, and fintech lenders\u2014have stepped in to cover these needs in a business context.<\/p>\n\n\n\n<p>They offer micro-loans, typically ranging from \u00a31000 to \u00a325,000.<\/p>\n\n\n\n<p>These operate under the same terms as term loans, but are unsecured, meaning you don\u2019t need to provide collateral to secure the loan.<\/p>\n\n\n\n<p>To qualify, borrowers generally need a viable UK-based business (often trading for 6\u201312 months), a minimum turnover (commonly starting from \u00a35,000 per month), and a solid repayment plan.<\/p>\n\n\n\n<p>Interest rates typically range from 6% up to 20% or more, which matches the rates offered with traditional business loans but works out more expensive considering the smaller amount being lent.<\/p>\n\n\n\n<p>The justification for charging similar rates is that micro-loans are riskier for lenders, being unsecured and serving new businesses that may lack a credit history or proven track record.<\/p>\n\n\n\n<p>However, micro-loan providers offer quick access to funds and optional business support\u2014making them ideal for covering cash-flow gaps or funding modest growth.<\/p>\n\n\n\n<p>There are also social lenders such as Community Development Finance Institutions (CDFIs) and government-backed schemes like Start Up Loans (see next section). CDFIs offer affordable, responsible lending and often work closely with local communities.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-government-backed-loans-for-small-businesses\">Government-backed loans for small businesses<\/h3>\n\n\n\n<p>Two government-backed initiatives of note are the Start Up Loan scheme and the Growth Guarantee scheme, which target different stages of the small business financing journey.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-start-up-loan-scheme\">Start Up Loan scheme<\/h4>\n\n\n\n<p>This scheme is aimed at individuals looking to launch or grow a new business. It offers personal loans of \u00a3500 to \u00a325,000 per founder, with a fixed interest rate of 6% per annum and repayment terms of 1 to 5 years.<\/p>\n\n\n\n<p>Eligible applicants must be 18 or older, have a business that\u2019s been trading for less than 36 months, based in the UK.<\/p>\n\n\n\n<p>The loan is unsecured and comes with free business mentoring for the first 12 months.<\/p>\n\n\n\n<p>Although the loan is personal in nature, it must be used for business purposes. Borrowers are personally liable for repayment, and the loan is recorded on their individual credit file.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-growth-guarantee-scheme\">Growth Guarantee scheme<\/h4>\n\n\n\n<p>Previously known as the Recovery Loan Scheme until 2024, this programme supports established UK businesses with a turnover of up to \u00a345 million.<\/p>\n\n\n\n<p>The goal is to provide guarantees so that businesses can qualify for loans from traditional lenders.<\/p>\n\n\n\n<p>They are therefore subject to market-determined interest rates and fees that are generally higher than those of the Start Up Loan programme.<\/p>\n\n\n\n<p>Loans can range from \u00a325,001 to \u00a32 million, and the government provides a 70% guarantee to the lender, but the borrower remains fully liable for the debt.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-are-there-other-sources-of-funding-for-a-business\">Are there other sources of funding for a business?<\/h2>\n\n\n\n<p>If loans aren\u2019t suitable for your business, you have several other ways to secure funding.<\/p>\n\n\n\n<p>Some of the most common options include overdrafts, venture capital, crowdfunding, and personal loans.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-overdraft\">Overdraft<\/h3>\n\n\n\n<p>An overdraft happens when your business bank account has insufficient funds to cover a transaction, but the bank allows your business to continue withdrawing funds even when the available amount is below zero.<\/p>\n\n\n\n<p>Some banks offer overdraft protection, meaning they automatically pay overdrafts.<\/p>\n\n\n\n<p>You repay the overdrawn amount plus fees and interest.<\/p>\n\n\n\n<p>Similar to a line of credit, overdrafts can serve as an instant source of funding.<\/p>\n\n\n\n<p>Overdrafts are flexible, short-term solutions for managing cash flow but are not ideal for long-term borrowing due to variable interest costs.<\/p>\n\n\n\n<p>Be aware that exceeding your agreed overdraft limit may result in additional charges or declined transactions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-personal-loan\">Personal loan<\/h3>\n\n\n\n<p>A personal loan is financing that you apply for as an individual rather than as a business.<\/p>\n\n\n\n<p>It can be a practical option for sole traders, freelancers, or very new businesses that haven\u2019t yet built up a borrowing history\u2014something many business lenders require.<\/p>\n\n\n\n<p>However, it\u2019s important to note that not all personal loans allow business use, so you\u2019ll need to check the terms carefully before applying.<\/p>\n\n\n\n<p>Personal loans also tend to have lower maximum amounts than business loans and may not offer the same level of support or flexibility.<\/p>\n\n\n\n<p>Most importantly, if your business is unable to repay the loan, you are personally responsible\u2014meaning your own credit score and financial health could be affected.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-venture-capital\">Venture capital<\/h3>\n\n\n\n<p>Venture capital (VC) is a form of private investment that funds early-stage startups with high growth potential.<\/p>\n\n\n\n<p>It&#8217;s typically used to finance innovative or disruptive businesses that may not yet qualify for traditional lending due to limited revenue or profitability.<\/p>\n\n\n\n<p>VC firms manage pooled funds from investors\u2014known as limited partners (LPs)\u2014and invest in promising startups in exchange for equity (an ownership stake in the business).<\/p>\n\n\n\n<p>To maximise a return on the investment, VC firms often take an active role in the company\u2019s development, offering strategic guidance, mentorship, and access to business networks.<\/p>\n\n\n\n<p>Most startups raise venture capital through a series of funding rounds\u2014such as seed, Series A, B, C, and so on\u2014each aligning with a different stage of business maturity and funding need.<\/p>\n\n\n\n<p>Early rounds help with product development and market entry, while later rounds support scaling operations, expanding into new markets, or preparing for exit events like IPOs or acquisitions.<\/p>\n\n\n\n<p>As startups mature and seek larger sums to scale, they may attract the interest of private equity (PE) firms.<\/p>\n\n\n\n<p>PE firms typically invest in more established businesses and often seek a controlling stake, unlike VC firms, which tend to take minority stakes.<\/p>\n\n\n\n<p>The top UK venture capital firms include Balderton Capital, LocalGlobe, Octopus Ventures, and Seedcamp.<\/p>\n\n\n\n<p>Securing VC funding is highly competitive, time-consuming, and involves giving up partial ownership and control.<\/p>\n\n\n\n<p>Founders must be prepared for rigorous due diligence, pitch meetings, and the long-term implications of equity dilution.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-crowdfunding\">Crowdfunding<\/h3>\n\n\n\n<p>Crowdfunding allows a large number of individuals to contribute money toward your business\u2019s financing needs\u2014typically via an online platform.<\/p>\n\n\n\n<p>Instead of repaying contributors, your business might consider giving a product or service to each individual.<\/p>\n\n\n\n<p>This funding option suits businesses of all sizes and leverages the power of social media to build momentum, reach wider audiences, and generate interest in each project.<\/p>\n\n\n\n<p>Businesses can use these platforms to tell their story, engage potential backers, and create a sense of community and support around their brand.<\/p>\n\n\n\n<p>Most crowdfunding websites charge a platform fee (a percentage of the amount raised, typically 3-8%), as well as payment processing charges.<\/p>\n\n\n\n<p>Popular crowdfunding platforms in the UK include Crowdcube, Seedrs, Kickstarter, and GoFundMe, each open to all kinds of ventures, from equity-based investments to creative and social causes.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-business-loan-fees-will-i-have-to-pay\">What business loan fees will I have to pay?<\/h2>\n\n\n\n<p>Each loan type has its own set of fees and borrowing costs. These typically include arrangement fees, interest, and various charges depending on how the loan is structured.<\/p>\n\n\n\n<p>Input them into our commercial business loan calculator above to get an accurate assessment of the loan\u2019s actual cost.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-term-loans\">Term loans<\/h3>\n\n\n\n<p>Term loans generally include an arrangement fee, which covers the loan paperwork and application.<\/p>\n\n\n\n<p>This fee is often deducted from the loan proceeds, reducing the initial amount received. During the first half of 2025 arrangement fees have remained similar to those in place for 2024:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Between 1% and 2% of the loan amount, with minimum charges\u2014usually from \u00a3100 to \u00a3250<\/li>\n<\/ul>\n\n\n\n<p>Combining that with interest rates gives APR figures of:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>2% to 7% for secured loans (compared to 4%-7% in 2024)<\/li>\n\n\n\n<li>6% to 15% for unsecured loans (the same as in 2024)<\/li>\n\n\n\n<li>Actual rates will depend on factors such as your credit profile, loan term, and whether security is provided<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-government-backed-loans-nbsp-nbsp\">Government-backed loans&nbsp;&nbsp;<\/h3>\n\n\n\n<p>The Start Up Loan scheme carries a fixed interest rate of 6% per annum and repayment terms of 1 to 5 years.<\/p>\n\n\n\n<p>These are designed to support early-stage businesses and sole traders.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-microloans\">Microloans<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>6% to 20%\u2014or slightly more, depending on the lender and borrower risk profile.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-commercial-property-loans\">Commercial property loans<\/h3>\n\n\n\n<p>Commercial property loans during the first half of 2025 have ranged from 3% to 7% depending on the lender and property type.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-lines-of-credit\">Lines of credit<\/h3>\n\n\n\n<p>Lines of credit\u2014such as business overdrafts or revolving credit facilities\u2014often incur an arrangement fee when you first open them.<\/p>\n\n\n\n<p>This fee ranges from 1% to 3% of the agreed facility limit, though it can sometimes be a flat fee (e.g. \u00a3100\u2013\u00a3500 for smaller withdrawal limits).<\/p>\n\n\n\n<p>Lenders may also charge a commitment fee (e.g. 0.25% to 1% per annum) on the unused portion of the facility in the case of larger business overdrafts or corporate credit lines.<\/p>\n\n\n\n<p>Typical interest rates for business lines of credit range from 6% to 15% APR, depending on whether the facility is secured or unsecured, and the creditworthiness of the business.<\/p>\n\n\n\n<p>Lenders may also charge an annual fee, a maintenance fee to keep the line of credit open, and a draw fee when you make a withdrawal.<\/p>\n\n\n\n<p>Some also charge prepayment fees for paying off the line of credit early.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-business-credit-cards\">Business credit cards<\/h3>\n\n\n\n<p>Business credit cards often have annual administrative fees that you pay whether you use the card or not. The range is \u00a30\u200a\u2013\u200a\u00a3150+ per year.<\/p>\n\n\n\n<p>If you fail to pay back used credit by the due date, the interest rates are 14% to 27%.<\/p>\n\n\n\n<p>Most card issuers also charge late payment fees, cash withdrawal fees, foreign transaction fees and balance transfer fees if you make use of these functions.<\/p>\n\n\n\n<p>Credit card terms vary widely. Always check the card\u2019s representative APR and fees schedule.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-equipment-financing-0\">Equipment financing<\/h3>\n\n\n\n<p>Equipment financing providers charge interest at 4% and 10% APR.<\/p>\n\n\n\n<p>As for standard loans, the rates include an arrangement fee. Termination fees may also apply depending on your contract structure (e.g., hire purchase or leases).<\/p>\n\n\n\n<p>Note that some lenders charge prepayment penalties, adding to the cost of paying off the loan early.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-invoice-financing-0\">Invoice financing<\/h3>\n\n\n\n<p>Invoice financing usually has a service fee of between 0.2% and 2.5% of the invoice value.<\/p>\n\n\n\n<p>There is also a financing fee of 0.5% \u2013 5% per month and setup fees of \u00a3100 \u2013 \u00a3500.<\/p>\n\n\n\n<p>The service fee often increases after the first 30 days, but these arrangements usually only last a few months. On an annual basis the APR rate would equate to 18%\u201360%+ depending on duration and fees.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-invoice-factoring-0\">Invoice factoring<\/h3>\n\n\n\n<p>Here the fee structure is the same as with invoice financing: a charge of between 1.5% and 5% on the value of the invoice, often tied to the length of time until payment, plus a service fee of 0.2% to 2.5% and setup fees of \u00a3100 \u2013 \u00a3500.<\/p>\n\n\n\n<p>However, factoring providers usually charge towards the top end of those ranges because they have to cover the cost of chasing up customers and assume the risk of customers not paying.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-merchant-cash-advances-0\">Merchant cash advances<\/h3>\n\n\n\n<p>These advances are among the most expensive forms of finance and should only be used for short-term, high-margin funding needs.<\/p>\n\n\n\n<p>Merchant cash advances also have factor rates, which average between 1.1x and 1.5x times the cash figure borrowed. <\/p>\n\n\n\n<p>They will also charge setup fees equivalent to 1%\u20135% of the advance.<\/p>\n\n\n\n<p>Again, these are short-term arrangements, and on an annual basis the equivalent APR figure can range from ~30% to over 100%.<\/p>\n\n\n\n<p>Sources cross-referenced from <a href=\"http:\/\/mortgageable.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>mortgageable<\/strong><\/a>, <a href=\"https:\/\/www.rightmove.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>rightmove<\/strong><\/a>, <a href=\"https:\/\/www.tsb.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>TSB bank<\/strong><\/a>, <a href=\"https:\/\/www.finder.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>finder.com<\/strong><\/a>, <a href=\"https:\/\/www.money.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>money.co.uk<\/strong><\/a>, <a href=\"https:\/\/www.simplyfunded.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>simplyfunded<\/strong><\/a>, <a href=\"https:\/\/goodmoneyguide.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Good Money Guide<\/strong><\/a>, <a href=\"https:\/\/www.bestbusiness.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Bestbusiness<\/strong><\/a>, <a href=\"https:\/\/businessfinancing.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>BusinessFinancing<\/strong><\/a>, <a href=\"https:\/\/www.businessfinanced.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Business Financed<\/strong><\/a>, <a href=\"https:\/\/merchantmachine.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>MerchantMachine<\/strong><\/a>,&nbsp; <a href=\"https:\/\/invoice-funding.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Invoice Funding<\/strong><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-are-the-typical-terms-for-a-business-loan\">What are the typical terms for a business loan?<\/h2>\n\n\n\n<p>Business loan repayment terms can last anywhere from a few months to a few decades, depending on the type of finance, the lender, and the borrower\u2019s circumstances.<\/p>\n\n\n\n<p>While borrowers can often negotiate them to some extent, each financing type has its own standard term lengths.<\/p>\n\n\n\n<p>Typical repayment terms for business loans include:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><td><strong>Loan type<\/strong><\/td><td><strong>Repayment terms<\/strong><\/td><\/tr><\/thead><tbody><tr><td>Term loan<\/td><td>From 3-10 years<\/td><\/tr><tr><td>Start Up government scheme<\/td><td>From 1-5 years<\/td><\/tr><tr><td>Microloan<\/td><td>From 1-6 years<\/td><\/tr><tr><td>Commercial property loan<\/td><td>From 5-25 years<\/td><\/tr><tr><td>Line of credit<\/td><td>From 0.5-2 years<\/td><\/tr><tr><td>Equipment financing<\/td><td>From 1-7 years<\/td><\/tr><tr><td>Invoice financing<\/td><td>From 30-90 days<\/td><\/tr><tr><td>Invoice factoring<\/td><td>From 30-90 days<\/td><\/tr><tr><td>Merchant cash advance<\/td><td>From 4-18 months<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Terms for business credit cards are a little different.<\/p>\n\n\n\n<p>Most have a 28- to 31-day billing cycle.<\/p>\n\n\n\n<p>After the lender issues the billing statement, you have 15-25 days to make a minimum payment.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-business-loan-interest-rate-should-i-expect-to-pay\">What business loan interest rate should I expect to pay?<\/h2>\n\n\n\n<p>Business loan interest rates depend on several factors including loan type, length of time the borrower has been in business, and their business credit score or history.<\/p>\n\n\n\n<p>Interest rates also vary over time.<\/p>\n\n\n\n<p>Remember, the APR loan charging rate is the interest rate plus fees. Breaking each case down to the interest rate alone, we get the following table for 2025:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><td><strong>Loan type<\/strong><\/td><td><strong>Interest rate<\/strong><\/td><\/tr><\/thead><tbody><tr><td>Term loan<\/td><td>6.5%-12%<\/td><\/tr><tr><td>Start Up government scheme<\/td><td>6% (fixed rate)<\/td><\/tr><tr><td>Microloan<\/td><td>6%-13%<\/td><\/tr><tr><td>Commercial property loan<\/td><td>4.5%-8%<\/td><\/tr><tr><td>Line of credit<\/td><td>8%-25%<\/td><\/tr><tr><td>Business credit card<\/td><td>15%-30%<\/td><\/tr><tr><td>Equipment financing<\/td><td>5%-12% (25%\u201330% for unsecured deals or riskier credit profiles)<\/td><\/tr><tr><td>Invoice financing<\/td><td>1.5%-3% over Bank of England base rate (<em>one-off charge on the invoice; not interest<\/em>)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Sources cross-referenced from <a href=\"http:\/\/mortgageable.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>mortgageable<\/strong><\/a>, <a href=\"https:\/\/www.rightmove.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>rightmove<\/strong><\/a>, <a href=\"https:\/\/www.tsb.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>TSB bank<\/strong><\/a>, <a href=\"https:\/\/www.finder.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>finder.com<\/strong><\/a>, <a href=\"https:\/\/www.money.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>money.co.uk<\/strong><\/a>, <a href=\"https:\/\/www.simplyfunded.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>simplyfunded<\/strong><\/a>, <a href=\"https:\/\/goodmoneyguide.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Good Money Guide<\/strong><\/a>, <a href=\"https:\/\/www.bestbusiness.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Bestbusiness<\/strong><\/a>, <a href=\"https:\/\/businessfinancing.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>BusinessFinancing<\/strong><\/a>, <a href=\"https:\/\/www.businessfinanced.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Business Financed<\/strong><\/a>, <a href=\"https:\/\/merchantmachine.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>MerchantMachine<\/strong><\/a>,&nbsp; <a href=\"https:\/\/invoice-funding.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Invoice Funding<\/strong><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-much-do-business-loans-offer\">How much do business loans offer?<\/h2>\n\n\n\n<p>The amount you can borrow will depend on whether the loan is secured (backed by collateral) or unsecured, as well as the type of financing you choose, and your business revenue, creditworthiness, and time trading.<\/p>\n\n\n\n<p>In some cases, the type of lender can also affect the total loan amount.<\/p>\n\n\n\n<p>Here\u2019s a breakdown of the amounts you may be eligible to borrow:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><td><strong>Loan type<\/strong><\/td><td><strong>Loan amount<\/strong><\/td><\/tr><\/thead><tbody><tr><td>Term loan<\/td><td>\u00a325,000-\u00a35 million<\/td><\/tr><tr><td>Start Up government scheme<\/td><td>\u00a3500-\u00a325,000<\/td><\/tr><tr><td>Microloan<\/td><td>\u00a31,000-\u00a330,000<\/td><\/tr><tr><td>Line of credit<\/td><td>\u00a310,000-\u00a3500,000<\/td><\/tr><tr><td>Equipment financing<\/td><td>80-90% of the value of the equipment<\/td><\/tr><tr><td>Invoice financing\/factoring<\/td><td>70%\u201395% of invoice value<\/td><\/tr><tr><td>Merchant cash advance<\/td><td>50%\u2013200% of average monthly card sales<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Sources cross-referenced from <a href=\"http:\/\/mortgageable.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>mortgageable<\/strong><\/a>, <a href=\"https:\/\/www.rightmove.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>rightmove<\/strong><\/a>, <a href=\"https:\/\/www.tsb.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>TSB bank<\/strong><\/a>, <a href=\"https:\/\/www.finder.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>finder.com<\/strong><\/a>, <a href=\"https:\/\/www.money.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>money.co.uk<\/strong><\/a>, <a href=\"https:\/\/www.simplyfunded.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>simplyfunded<\/strong><\/a>, <a href=\"https:\/\/goodmoneyguide.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Good Money Guide<\/strong><\/a>, <a href=\"https:\/\/www.bestbusiness.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Bestbusiness<\/strong><\/a>, <a href=\"https:\/\/businessfinancing.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>BusinessFinancing<\/strong><\/a>, <a href=\"https:\/\/www.businessfinanced.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Business Financed<\/strong><\/a>, <a href=\"https:\/\/merchantmachine.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>MerchantMachine<\/strong><\/a>,&nbsp; <a href=\"https:\/\/invoice-funding.co.uk\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Invoice Funding<\/strong><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-can-i-fund-my-ltd-company-with-my-own-money-as-a-loan\">Can I fund my Ltd company with my own money as a loan?<\/h2>\n\n\n\n<p>Yes, you can use your own money as a loan to fund your Private Company Limited (Ltd) business.<\/p>\n\n\n\n<p>This is a common method for directors and shareholders to inject cash into their company\u2014especially in the early stages.<\/p>\n\n\n\n<p>Unlike external financing options, a director\u2019s loan does not require eligibility checks, credit applications, or arrangement fees.<\/p>\n\n\n\n<p>Plus, you can set your own repayment terms and interest rates.<\/p>\n\n\n\n<p>However, to ensure the loan is treated properly by HMRC and not mistaken for equity or income, you must:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Create a written loan agreement (recommended) outlining the loan amount, interest rate (if any), repayment schedule, and purpose.<\/li>\n\n\n\n<li>Keep proper records via your director\u2019s loan account in the company\u2019s books.<\/li>\n\n\n\n<li>Repay the loan according to the agreed terms.<\/li>\n<\/ul>\n\n\n\n<p>If you charge interest, it will be treated as personal income, and you\u2019ll need to declare it on your Self Assessment tax return.<\/p>\n\n\n\n<p>If the loan is not repaid or not documented, HMRC may view the funds as a capital contribution, which increases your shareholder equity in the Ltd rather than being a repayable debt.<\/p>\n\n\n\n<p>It\u2019s worth noting that a loan from a non-owner that isn\u2019t repaid would be considered as taxable income.<\/p>\n\n\n\n<p>It\u2019s also important to note that loaning money to your own business isn\u2019t a risk-free endeavour.<\/p>\n\n\n\n<p>If your business is unable to repay the loan on time or at all, your personal finances will be negatively affected.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-final-thoughts\">Final thoughts<\/h2>\n\n\n\n<p>With a well-rounded understanding of the available options, you can make an informed choice about the best loan type for your business.<\/p>\n\n\n\n<p>Use our business loan calculator to assess payment and loan costs, compare different offers, and choose the financing that best fits your needs and goals.<\/p>\n\n\n\n<p>To simplify on-time loan repayment, Sage offers&nbsp;<a href=\"https:\/\/www.sage.com\/en-gb\/accounting-software\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>accounting software<\/strong><\/a>&nbsp;that makes it easier to handle expenses, automate billing, and improve cash flow control.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><em>This article was verified by a UK-based Certified Public Accountant (CPA).<\/em><\/p>\n\n\n\n<p><em>Financial information can change frequently and we recommend you always seek advice from a qualified CPA, tax professional, or financial advisor before applying for a loan or funding.<\/em><\/p>\n\n\n\n<p><em>Rates and loan fees listed in this article were correct at the time of publishing but can change on a regular basis.<\/em><\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-b1a63862-3fa0-4a5e-bb67-c76b88bbc6b8\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n<section class=\"more-topics alignfull has-grey-light-background-color wp-block-sage-post-topics\">\n\t<div class=\"container\">\n\t\t<div class=\"row\">\n\t\t\t<div class=\"col col-12 col-lg-4\">\n\t\t\t\t<h3 class=\"more-topics__title h2\">Browse more topics from this article<\/h3>\n\t\t\t<\/div>\n\t\t\t<div class=\"col col-12 col-lg-8\">\n\t\t\t\t<ul class=\"post-tags__list\">\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/accountant-accounting\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tAccountant accounting\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/bookkeeping\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tBookkeeping\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/business-finances\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tBusiness finances\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t\t\t<li class=\"post-tags__item\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/tag\/grow-business\/\" class=\"post-tags__link button button--secondary\">\n\t\t\t\t\t\t\t\tHow to grow your business\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t<\/li>\n\t\t\t\t\t\t\t\t\t<\/ul>\n\t\t\t<\/div>\n\t\t<\/div>\n\t<\/div>\n<\/section>\n\n<div class=\"alignfull wp-block-sage-related-posts\">\n\t<section class=\"related-posts card-grid has-dark-background-color\">\n\t<div class=\"container\">\n\t\t\t\t\t<div class=\"row\">\n\t\t\t\t<div class=\"col\">\n\t\t\t\t\t<h2 class=\"related-posts__heading related-posts__heading--featured h1\">Explore more wisdom<\/h2>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\n\t\t\t<div class=\"row related-posts__featured\">\n\t\t\t\t<div class=\"col card-grid__item\">\n\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-0 post-30379 post type-post status-publish format-standard 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It was about pressure\u2014and the growing operational burden sitting underneath modern accounting firms.\t\t\t<\/p>\n\t\t\n\t\t\t<\/div>\n\n\t<\/article>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\n\t\t\t\t\t<div class=\"row related-posts__non-featured\">\n\t\t\t\t<div class=\"col col-12\">\n\t\t\t\t\t<h2 class=\"related-posts__heading related-posts__heading--more h4\">More on this Topic<\/h2>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-1 post-3675 post type-post status-publish format-standard has-post-thumbnail hentry category-growth-customers tag-grow-business tag-peter-jones-ambition business_type-small-business business_type-medium-sized-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/identify-useful-growth-opportunities\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img 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published\" datetime=\"2026-06-05T17:13:40+01:00\">5 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">7 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tHow to identify useful growth opportunities for your business\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t<div class=\"col col-6 col-lg-3 card-grid__item\">\n\t\t\t\t\t\t<article\n\t\tclass=\"card-post related-post related-post-2 post-1545 post type-post status-publish format-standard has-post-thumbnail hentry category-growth-customers tag-grow-business business_type-small-business business_type-medium-sized-business\"\n>\n\t\t\t<a\n\t\t\tclass=\"card-post__link\"\n\t\t\thref=\"https:\/\/www.sage.com\/en-gb\/blog\/10-steps-to-grow-your-customer-base\/\"\n\t\t\t\t\t>\n\t\t\t<figure class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1261563978-684x384.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1261563978-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1261563978-768x432.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1261563978-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-05T16:41:53+01:00\">5 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class=\"card-post__media\">\n\t\t\t\t\t\t\t<img decoding=\"async\" width=\"684\" height=\"384\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-740534235-684x384.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-740534235-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-740534235-768x432.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-740534235-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t<svg role=\"presentation\" aria-hidden=\"true\" focusable=\"false\" width=\"24\" height=\"24\" class=\"card-post__meta-icon svg-icon\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" 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src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-684x384.jpg\" class=\"card-post__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-684x384.jpg 684w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-768x512.jpg 768w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1128201585-1215x810.jpg 1215w\" sizes=\"auto, (min-width: 48em) 250px, (min-width: 30em) 100vw, 100vw\" \/>\t\t\t\n\t\t\t\n\t\t\t\t\t<\/figure>\n\n\t\t\n\t\t\t\t\t<div class=\"card-post__meta\">\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2026-06-02T16:58:53+01:00\">2 June, 2026<\/time><\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<span class=\"card-post__meta-text\"><span class=\"reading-time\">11 min read<\/span><\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\n\t\t<p class=\"card-post__title h5\">\n\t\t\tAccounts payable automation: How it works, key benefits, and why your business needs it\t\t<\/p>\n\n\t\t\t<\/a>\n\t\n\t\n\t\t\n\t\n\t<\/article>\n\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n<\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>With this business loan calculator, payments and costs are easy to assess at a glance. Read our guide for everything you need to know about business loans.<\/p>\n","protected":false},"author":1774,"featured_media":16456,"menu_order":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"sage_hide_published_date":false,"sage_hide_read_time":false,"sage_hide_share_buttons":false,"footnotes":""},"categories":[6,9],"tags":[223,23,135,15],"business_type":[4,115],"lilypad":[],"context":[],"industry":[],"persona":[67,73,74,75],"imagine_tag":[77,79,91,109],"coauthors":[355],"class_list":["post-24359","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","category-strategy-legal-operations","tag-accountant-accounting","tag-bookkeeping","tag-business-finances","tag-grow-business","business_type-small-business","business_type-accountants"],"sage_meta":{"region":"en-gb","author_name":"Yassir Malik","featured_image":"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2023\/09\/GettyImages-1058881454.jpg","imagine_tags":{"77":"Accounting software","79":"Business management","91":"Growing business","109":"Small business"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice UK","distributor_original_site_url":"https:\/\/www.sage.com\/en-gb\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/24359","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/users\/1774"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/comments?post=24359"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/posts\/24359\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media\/16456"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/media?parent=24359"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/categories?post=24359"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/tags?post=24359"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/business_type?post=24359"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/lilypad?post=24359"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/context?post=24359"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/industry?post=24359"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/persona?post=24359"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/imagine_tag?post=24359"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-gb\/blog\/api\/wp\/v2\/coauthors?post=24359"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}