What are typical business finance interest rates in the UK in 2026?
There is no single business finance rate, because each product prices in its own unit: term loans quote an APR, credit lines a monthly rate, invoice finance a discount fee and merchant cash advances a factor rate. The table below shows the typical ranges we see across Fundably’s 50+ lender panel.
| Product | Typical pricing (2026) | Priced as |
|---|---|---|
| Unsecured term loan | 6% to 40%+ APR | Annual rate on full balance |
| Secured term loan | From around 7% APR | Annual rate, security dependent |
| Credit line | 0.5% to 3% per month on drawn balance (roughly 6% to 43% APR) | Monthly rate on what you draw |
| Invoice finance | 3% to 12% equivalent APR, plus 0.5% to 3% of turnover service fee if factoring | Discount fee on funded balance |
| Merchant cash advance | Factor rate 1.09 to 1.50 | Fixed total repayment |
| Revenue-based finance | Factor rate 1.06 to 1.35 | Fixed total repayment |
| Asset finance | Usually below unsecured pricing, since the asset is security | Annual rate or fixed instalments |
| Start Up Loan (government) | 6% fixed | Annual rate, no fees |
All rates shown are indicative only and subject to individual lender assessment. The range within each product is wider than the gap between products, which is why the rate your business is offered matters more than the product’s reputation for being cheap or expensive.
Why is there no single business loan rate?
Lenders price risk, and risk lives in the specifics of your business. The same £50,000 unsecured loan can price at 8% for a five-year-old business with steady revenue and at 30% for a young business in a volatile sector. Since alternative lenders each have their own credit models, the same application can receive materially different offers on the same day, and lenders such as iwoca, Funding Circle and Nucleus Commercial Finance will not agree with each other about your business. That disagreement is exactly what a multi-lender application exploits.
How do you compare products that price in different units?
Convert everything to total cost of borrowing in pounds over the period you will actually use the money. Here is £30,000 for roughly 12 months under three different structures:
| Structure | Pricing | Total cost over ~12 months |
|---|---|---|
| Term loan at 12% APR, 12-month term | Interest on reducing balance | Roughly £2,000 |
| Credit line at 1.5% per month, fully drawn for 6 of 12 months | Interest only while drawn | Roughly £2,700 if fully drawn all year, half that if drawn for 6 months |
| Merchant cash advance at 1.25 factor rate | Fixed total repayment | £7,500 regardless of timing |
The comparison is not as one-sided as it looks. The credit line costs nothing in the months you do not use it, and the MCA’s repayments flex with your takings, so a quiet month never produces a missed payment. The point of the exercise is that an APR, a monthly rate and a factor rate cannot be compared directly: put them all in pounds over your realistic usage pattern first. Our guide to the types of business finance covers which structure fits which problem.
What determines the rate your business is offered?
Across the panel, five factors move pricing more than anything else:
- Trading history: most lenders price down meaningfully after 2 to 3 years of accounts; under 12 months restricts the panel
- Revenue level and consistency: steady monthly revenue prices better than the same total arriving in spikes
- Security: an asset or debtor book behind the facility typically cuts the rate versus unsecured borrowing
- Existing commitments: returned payments and heavy existing repayments are among the strongest negative signals in SME credit
- Sector: lenders maintain sector appetites that shift over time, which is another reason single-lender quotes mislead
How do you get a better rate?
Three moves reliably improve offers. First, compare rather than accept: applying through Fundably puts one application in front of 50+ lenders with a soft credit check at the matching stage, so collecting competing offers costs your credit file nothing. Second, offer security where you have it, since asset-backed and invoice-backed structures usually undercut unsecured pricing. Third, connect open banking data if you can: verified account data gives lenders certainty, and what open banking shows a lender is usually a stronger case than a folder of PDFs makes for the same business.
Compare real offers for your business across 50+ lenders
