How has business lending changed over the past decade and what is now available to start-ups?


2018 marked the 10-year anniversary of the 2008 bank crash – when the economy took a serious hit and the country faced the worst recession for decades. Since then, we’ve seen the economy slowly grow, bringing increased job and business opportunities driven by consumer demand. Many start-up businesses have had the opportunity to flourish, perhaps due to a rise in alternative funding options to kick start their companies. Here, we’ll explore the various lending options available today for start-up companies and entrepreneurs looking to make a dent in their respective industries. If this is you, read on.

Institutional Lenders

As a small business owner, you may be able to get funding via institutional lenders rather than a traditional bank. This may be via insurance firms, pension funds or other lenders which charge interest in return for the capital. There are many forms this may come in, from unsecured loans to asset finance and more. Typically, these types of lenders can offer cash much more quickly than ‘traditional’ banks – which may be useful for businesses that have a cash flow issue or need money urgently.

Bad Credit Business Loans

Do you have a less-than-perfect credit history? Have you tried to go down the more ‘traditional’ lending routes in high-street banks, but got nowhere? Don’t panic – it’s not the end of the road for your business. Bad credit business loans are available for those who need financial support with their business but have been turned down by other lenders. Rather than solely look at your credit history, bad credit loan providers will use techniques to establish a broader picture of your business. For example, they may look at your customer reviews, ratings, reputation and how your business is performing to decide whether or not to lend you money.

Cash Advances

Like institutional lenders, cash advances may be most appealing to small business owners who need a fairly fast financial injection. This is because you will receive the money you need in advance, giving you the opportunity to pay for stock, wages or anything else on time. Then, you will pay the lender back a percentage of your business’ earnings, usually from your credit or debit card sales. The lender will continue to take this percentage from your earnings until the money has been paid back in full. The benefit of this is that the amount you pay back is dependent on your cash flow – if your business has a tricky month, your repayments will be less than on a strong month.

Government Start-Up Loans

If you’re just starting out, you may be able to apply for a government-backed start-up loan. Your business must be based in the UK, have been trading for less than 2 years, and you must be over 18 and live in the UK to be eligible. You can apply for a loan from £500 to £25,000 via an unsecured personal loan – which is different to a business loan. The money you borrow isn’t ‘secured’ against your assets such as your home or car, which typically means the interest you pay is higher than a secured loan. But the benefit is you won’t lose your house or other asset should you get into financial difficulty and be unable to make repayments.

With plenty of lending options now available for start-up companies, it’s important to establish the right route for you. There’s no “one size fits all” approach to business funding – so take a step back and establish what will work for you before applying.