Business loan interest rates in the UK
UK business loan interest rates in 2026 run from under 8% APR for strong secured borrowing to effective annual costs of 40% or more for merchant cash advances, with the Bank of England base rate at 3.75% setting the floor. Advertised rates are best-case: your actual price depends on security, trading history and the credit files of the company and its directors. Every figure on this page is either published by the named source and date-checked, or clearly labelled as an indicative range.
Founder & Managing Director, Muswell Rose, FundBiz
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind FundBiz. His background runs through commercial finance, mortgages and fintech, including as managing director of an invoice finance business. He oversees FundBiz's specialty finance comparison and the logic behind how businesses are matched to lenders.
Last reviewed: 14 July 2026
The Bank of England base rate now
- Current base rate
- 3.75%
- Effective from
- 18 December 2025
- Latest decision
- Held (announcement published 18 June 2026)
- Next decision due
- 30 July 2026
- Source
- bankofengland.co.uk
- Checked
- 14 July 2026
For context: the base rate peaked at 5.25% in August 2023 and has been cut in steps since. The current 3.75% took effect on 18 December 2025. This figure is refreshed automatically on FundBiz from the Bank of England's published data series, so the number above tracks the live rate rather than the date this page was written.
How the base rate feeds business loan pricing
The base rate is what the Bank of England pays on reserves, and it anchors the cost of money across the economy. Banks and PRA-regulated lenders typically price business lending as base rate plus a margin, so their variable facilities move automatically when the Monetary Policy Committee moves. Specialist and fintech lenders fund through capital markets and price predominantly on your risk, so the link is looser: a base rate cut lowers their funding costs over time but does not mechanically lower the quote in front of you.
The margin above base is where your business's story is priced: security offered, years trading, sector, existing debt load and credit history. That is why the spread between the best and worst quote for the same £100,000 is usually far larger than any base rate move.
Published UK lender rates, verified and dated
These are rates the named organisations publish on their own pages. Each row was checked live on 14 July 2026. Published rates are best-case or representative figures, not what every applicant receives.
| Lender / scheme | Product | Published rate | Source |
|---|---|---|---|
| Start Up Loans (government-backed) | Fixed-rate personal loan for business, £500 to £25,000, 1 to 5 years | 7.5% per year, fixed | gov.uk/apply-start-up-loan |
| Funding Circle | Fixed-rate business term loan, £10,000 to £750,000 | From 6.9% per year | fundingcircle.com/uk/business-loans |
| iwoca Flexi-Loan | Flexible credit facility, up to £1,000,000, up to 60 months | 3.33% per 30 days shown in its calculator (49% APR representative) | iwoca.co.uk/flexi-loan |
| Growth Guarantee Scheme (British Business Bank) | Term loans, overdrafts, asset, invoice and asset-based lending up to £2m | Rate set by each accredited lender; 70% government guarantee must be priced in | british-business-bank.co.uk |
Source: Each lender's own public pricing page, checked 14 July 2026
Start Up Loans is a government-backed unsecured personal loan for business purposes (the borrower is the individual, not the company); it is included as the clearest published fixed-rate benchmark in UK small-business lending. Representative APRs must by rule be offered to at least 51% of accepted applicants.
View as plain-text Markdown
### Published UK business finance rates, checked live at each named source on 14 July 2026 | Lender / scheme | Product | Published rate | Source | | --- | --- | --- | --- | | Start Up Loans (government-backed) | Fixed-rate personal loan for business, £500 to £25,000, 1 to 5 years | 7.5% per year, fixed | gov.uk/apply-start-up-loan | | Funding Circle | Fixed-rate business term loan, £10,000 to £750,000 | From 6.9% per year | fundingcircle.com/uk/business-loans | | iwoca Flexi-Loan | Flexible credit facility, up to £1,000,000, up to 60 months | 3.33% per 30 days shown in its calculator (49% APR representative) | iwoca.co.uk/flexi-loan | | Growth Guarantee Scheme (British Business Bank) | Term loans, overdrafts, asset, invoice and asset-based lending up to £2m | Rate set by each accredited lender; 70% government guarantee must be priced in | british-business-bank.co.uk | Source: Each lender's own public pricing page, checked 14 July 2026 Start Up Loans is a government-backed unsecured personal loan for business purposes (the borrower is the individual, not the company); it is included as the clearest published fixed-rate benchmark in UK small-business lending. Representative APRs must by rule be offered to at least 51% of accepted applicants.
Direct source links: gov.uk/apply-start-up-loan, fundingcircle.com/uk/business-loans, iwoca.co.uk/flexi-loan, british-business-bank.co.uk (Growth Guarantee Scheme).
Typical rate ranges by product (indicative)
These ranges are indicative, compiled from the lender terms tracked in the FundBiz UK Business Finance Lender Index and the product pages on this site. They describe where the bulk of the market sits, not the edges, and individual quotes fall outside them.
| Product | Indicative range | Note |
|---|---|---|
| Secured / asset-backed term loan | From around 7.5% APR equivalent | Security lowers the margin; property or hard assets required |
| Unsecured term loan | Roughly 6.9% to 26.9% APR | Wide band; credit strength and trading history drive position |
| Revolving / flexible credit facility | Roughly 0.9% to 3.5% per month on the drawn balance | Monthly pricing; annualised cost is far higher than the monthly figure suggests |
| Bridging finance | 0.55% to 1.5% per month | Plus arrangement and exit fees; priced on the exit, not the trading |
| Merchant cash advance | Factor rates roughly 1.06 to 1.50 | Not an interest rate: total repayment is fixed at advance × factor |
Source: FundBiz UK Business Finance Lender Index and FundBiz product pages, July 2026
Monthly rates and factor rates are not APRs. A flat monthly rate on a repayment loan implies an effective annual rate roughly double the flat arithmetic, and a factor rate fixes the total repayment regardless of speed. Convert before comparing.
View as plain-text Markdown
### Indicative UK business finance cost ranges by product, July 2026 | Product | Indicative range | Note | | --- | --- | --- | | Secured / asset-backed term loan | From around 7.5% APR equivalent | Security lowers the margin; property or hard assets required | | Unsecured term loan | Roughly 6.9% to 26.9% APR | Wide band; credit strength and trading history drive position | | Revolving / flexible credit facility | Roughly 0.9% to 3.5% per month on the drawn balance | Monthly pricing; annualised cost is far higher than the monthly figure suggests | | Bridging finance | 0.55% to 1.5% per month | Plus arrangement and exit fees; priced on the exit, not the trading | | Merchant cash advance | Factor rates roughly 1.06 to 1.50 | Not an interest rate: total repayment is fixed at advance × factor | Source: FundBiz UK Business Finance Lender Index and FundBiz product pages, July 2026 (https://fundbiz.co.uk/data/uk-business-finance-lender-index/) Monthly rates and factor rates are not APRs. A flat monthly rate on a repayment loan implies an effective annual rate roughly double the flat arithmetic, and a factor rate fixes the total repayment regardless of speed. Convert before comparing.
To convert a factor rate or monthly rate into an annualised figure, use the factor rate to APR converter. For what each product is and when it fits, see unsecured business loans, revolving credit facilities, asset finance, bridging and merchant cash advances.
What rate will YOU get: the six drivers
- Security. A charge over property or hard assets moves you into the cheapest band. Unsecured lending prices the absence of a fallback.
- Trading history. Two or more years of filed accounts opens bank-grade pricing; under a year confines you to specialists who price the uncertainty.
- Credit files, company and directors. CCJs, defaults and late filings widen the margin or shift you off the mainstream panel entirely; see bad credit business loans.
- Debt service cover. Lenders want profit comfortably above total repayments, commonly around 1.25 times or better; thin cover prices as risk. Run your own figure with the DSCR calculator.
- Sector. Lender appetite varies by sector, and the same numbers price differently in hospitality than in professional services.
- Term and product shape. Shorter commitments and flexible drawdown carry rate premiums; matching the product to the actual shape of the need, per our short term loans and fast business loans pages, avoids paying for flexibility you will not use.
Eligibility
FundBiz compares and introduces business finance for UK limited companies, LLPs and partnerships of 4 or more partners only. Sole traders are outside our scope. Checking eligibility uses a soft search with no credit-file footprint, so you can see your realistic rate band before any lender runs a hard search.
Frequently asked questions
What is the average business loan interest rate in the UK?
There is no single average worth using, because pricing spans from under 8% APR for strong secured borrowing to effective annual costs several times that for merchant cash advances. The honest framing is a range by product: secured term loans from around 7.5% APR equivalent, unsecured term loans roughly 6.9% to 26.9% APR, flexible facilities priced monthly, and MCAs priced by factor rate. Where your business lands depends on security, trading history and credit profile.
What is the Bank of England base rate now?
The Bank of England base rate is 3.75%, effective 18 December 2025, and was held at the Monetary Policy Committee's most recent decision. FundBiz refreshes this figure automatically from the Bank of England's published data.
Does the base rate set my business loan rate?
No. It sets the floor cost of money for regulated lenders, and bank-style loans are typically priced as a margin above it. But specialist and fintech lenders fund through capital markets and price mainly on your risk, so a base rate cut does not automatically cut the rate you are offered. It shifts the whole market slowly, not your quote directly.
Why is the rate I am quoted higher than the advertised rate?
Advertised rates are "from" rates or representative examples, which by definition reflect the strongest applicants. UK lenders advertising a representative APR need only offer it to at least 51% of accepted applicants. Your quote reflects your trading history, sector, security, existing debt and the credit files of the company and its directors. Fees also sit outside the headline rate, so always compare on total repayable.
Are business loan rates fixed or variable?
Most specialist term loans and short term loans are fixed for the term, which suits budgeting. Bank overdrafts, some bank term loans and many revolving facilities are variable, usually quoted as base rate plus a margin, so they move when the Bank of England moves. For terms beyond two years, the fixed versus variable choice matters materially; model both before committing.
What rate can a company with adverse credit expect?
Adverse markers such as CCJs or defaults push a file from the mainstream panel to specialists, and pricing rises to match the risk. The workable routes are usually secured or income-based products, where the security does the work a clean file would do, priced above the prime ranges shown on this page. Our bad credit business loans page sets out the trade-offs plainly.
See the rate band your business realistically sits in
Open the eligibility checker →Soft search, no credit-file footprint. Limited companies, LLPs and partnerships of 4+ only.
Last reviewed: 14 July 2026. Base rate auto-refreshed from Bank of England data; published lender rates checked live at the named sources on 14 July 2026. Rates change: confirm on the lender's own page before relying on any figure.