Start with the purpose, not the product label
Separate a one-off investment from ongoing trading losses. Equipment that will be used for years has a different funding profile from stock expected to sell next month. A loan with fixed monthly payments may fit a predictable project, while a fluctuating need may call for a revolving facility.
Write down the full project cost, the cash the business can safely contribute and the reserve it needs afterwards. A £30,000 project with an £8,000 contribution leaves a £22,000 funding gap, before fees or a contingency. That calculation is not an eligibility assessment.
Which finance structures should a small business compare?
An unsecured loan does not require a specified asset charge, but a director may still need to give a personal guarantee. Secured borrowing puts accepted collateral at risk. Hire purchase can fund a particular asset, while invoice finance releases an agreed share of eligible business invoices.
A merchant cash advance is different from a conventional loan: collection follows eligible sales and the cost is often a fixed fee. A business credit card is revolving credit for permitted spending, not a lump sum with a fixed repayment end date.
Turnover alone does not tell you what you can afford
A business can have strong sales and still lack cash after wages, rent, tax, suppliers and existing debt. Build a forecast around the dates money actually arrives. Stress it for late customers, lower sales and an unexpected operating bill.
Compare the new payment with spare cash after existing commitments, not with gross revenue. Keep a buffer for seasonal lows. A lender’s maximum advertised amount is a product ceiling, not an amount a small company should necessarily borrow.
What to prepare for an application
Lenders may ask for business bank statements, accounts, trading history, ownership details and the intended use of funds. Management information matters where filed accounts no longer reflect the current business. Explain existing loans and any recent changes in trading.
A young business with little history may need a different route from an established SME. The government-backed Start Up Loans scheme is a personal loan for business purposes and has its own application process; it is not an ordinary company loan.
Compare the full cost and the downside
Ask for the net funds received, the payment dates, interest calculation, mandatory fees and total repayable. A longer term can reduce monthly payments while increasing total interest. Early settlement terms matter if the funding is intended to cover a short-lived gap.
Shareholder’s finance enquiry is a general referral journey. It does not establish eligibility for every product described here. Check the provider’s offer, any guarantee and its consequences before accepting, and use the calculator to compare like-for-like assumptions.
A few things worth knowing
Common questions
Are small business loans only for limited companies?
No single rule applies across the market. Some products accept sole traders or partnerships, while others require a limited company or LLP. Shareholder’s current finance form is designed for eligible UK limited companies and LLPs; check the product’s own application route.
Is a small business loan always unsecured?
No. Small businesses can use secured loans, unsecured loans and other facilities. An unsecured loan can still require a personal guarantee.
Can a new small business get finance?
Potentially, but products requiring an established trading record may not fit. Check start-up-specific funding and its personal affordability requirements.