Business loan rates: what's typical in today's market?

At Christie Finance, we help business owners find the most competitive funding available, navigating the complexities of UK business loan interest rates so you can make informed decisions with confidence.

What are business loan rates?

Business loan rates refer to the interest charged on the amount you borrow. They determine how much you’ll repay in total and are influenced by factors such as your business’s financial health, the type of loan, and the lender’s assessment of risk.

There are two main types of business loan interest rates:

• Fixed rate: The rate stays the same throughout your loan term, giving predictable monthly repayments.
• Variable rate: The rate can change with the market, meaning your repayments might rise or fall over time.

Typical business loan interest rates in the UK

As of today’s market, typical business loan rates in the UK generally fall between 7% and 15% APR for most small and medium-sized enterprises (SMEs). However, the exact rate depends on several factors including the loan amount, repayment term, and your business profile.

Here’s a quick overview of what’s common across different types of loans:

Type of Loan	Typical Interest Rate (APR)	Repayment Term
Unsecured Business Loan	8% – 15%	1–5 years
Secured Business Loan	6% – 10%	3–10 years
Asset Finance	6% – 12%	1–7 years
Merchant Cash Advance	Equivalent to 15% – 25%	Flexible (linked to turnover)
Commercial Mortgage	5% – 9%	Up to 25 years
Bridging Finance	0.6% – 1.5% per month	Up to 12 months

(These are illustrative ranges and can vary based on lender and credit assessment.)

What influences business loan interest rates?

Understanding what drives current business loan rates can help you secure better terms. Lenders consider several factors when setting interest rates:

1. Credit Profile

Lenders assess both personal and business credit scores to gauge reliability. A strong history of repayments can unlock lower interest rates.

2. Business Performance

Revenue, profitability, and cash flow all play a key role. Stable or growing financial performance signals lower risk to lenders.

3. Loan Type

Secured loans — such as retail commercial mortgages or asset finance — usually offer lower rates because they’re backed by assets. Unsecured or short-term finance typically carries higher costs due to increased lender risk.

4. Loan Term

Longer terms spread repayments but can increase total interest paid over time. Shorter terms may carry slightly lower rates but higher monthly costs.

5. Market Conditions

When the Bank of England base rate changes, it affects borrowing costs across the market. As interest rates fluctuate, lenders adjust their pricing accordingly.

Comparing business loan rates: fixed vs variable

When evaluating UK business loan rates, it’s essential to understand how each rate type suits your circumstances.

• Fixed-rate loans provide stability and make budgeting easier — ideal for businesses that prefer predictable repayments.
• Variable-rate loans can be advantageous when market rates fall but carry risk if rates rise.

Discussing your goals with an independent adviser can help you choose the structure that best aligns with your financial plans.

How to find the best business loan rates

You don’t always need to accept the first offer. Here are practical steps to help you secure competitive business loan terms:

1. Review Your Credit File

Ensure your business and personal credit records are accurate and up to date. Correcting errors can improve your creditworthiness.

2. Compare Multiple Lenders

High-street banks, challenger banks, and alternative finance providers all offer different products. Working with a broker gives you access to a wider panel of lenders.

3. Prepare Strong Financial Documentation

Providing clear management accounts, cash flow forecasts, and business plans demonstrates that your business can comfortably manage repayments.

4. Explore Alternative Finance Options

If traditional bank loans aren’t suitable, consider other funding methods like unsecured business loans, merchant cash advances, or commercial bridging finance. These can sometimes offer faster approval or more flexible repayment terms.

5. Seek Expert Advice

An independent finance adviser like Christie Finance can negotiate on your behalf, often accessing exclusive rates not directly available to businesses.

Read our step by step guide to getting a business loan in the UK and see how to prepare before you compare interest rates.

Short-term vs long-term business loan rates

Short-term loans (usually under two years) can have higher interest rates but faster approval and fewer restrictions. They’re ideal for bridging cash flow gaps or funding urgent opportunities.

Long-term loans, such as commercial mortgages or development finance, often have lower rates and structured repayment plans, making them suitable for property purchases or significant capital investment.

For instance, development finance helps fund construction and refurbishment projects, with rates tailored to the project’s scope and exit strategy.

Discover how revolving credit facilities are priced and when they may be more suitable than a standard term business loan in our guide.

How Christie Finance helps you secure better rates

At Christie Finance, we’ve supported UK businesses for over 45 years — connecting clients to tailored funding solutions across sectors like hospitality, healthcare, retail, and leisure.

Because we work with a wide panel of lenders, we can compare and negotiate on your behalf, ensuring you secure the most competitive business loan rates for your needs.

Our team takes the time to understand your business goals, guide you through every stage of the process, and provide independent, transparent advice.

Ready to explore your options?

If you’re reviewing business loan interest rates or exploring funding options for growth, our advisers are here to help.

Get in touch with Christie Finance today to discuss your requirements and discover the most suitable finance options available in today’s market.