Who is eligible for a business loan?  

Your eligibility for a new business loan will depend on the specific loan you’re applying for. Most will need you to be 18 or over and a UK resident. Others will also require your business to have been trading for a certain period of time.  

Lenders will look at your personal financial situation and that of your business. They will focus on your personal credit history and may also need to see a business plan (if your business is a recent start-up) or business accounts (if your business is more established). 

If you’re not eligible for a business loan or you’re looking for a personal loan, we can help at Asda Money. We offer access to personal loans through our trusted panel of lenders, that help fund everything from weddings and cars to holidays, home improvements and debt consolidation.  

If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay. 

Types of business loans  

There are different types of loans for businesses to consider, depending on your financial situation.  

Secured business loans: A loan that is secured against assets you own, such as assets like equipment in the business or even your home.  

Unsecured business loans: A loan from a lender that isn’t secured against any assets. The amount you can borrow and the loan length will depend on your personal financial situation and the creditworthiness of your business.  

Peer-to-peer lending: This doesn’t involve a bank or lender, with the money coming from individuals instead. There are a variety of peer-to-peer (P2P) lending platforms available with different criteria for each. Some will focus on limited companies, and others on sole traders.  

Pros  

• Once accepted for a new business loan, you will get the money quickly so you can invest it into your business immediately.  

• You retain control over your business. You won’t need to look for investors who will take a stake in your company.  
• Lenders sometimes offer repayment holidays, which can be essential if you have cash flow issues.  

Cons  

• Meeting monthly repayments for a business loan will be another overhead for your company.  
• Mainstream lenders often ask for ongoing updates about your business performance and require ongoing financial checks as part of the loan agreement.  

• You may face early repayment charges if you want to pay the loan back early.  

Business loan alternatives 

If a business loan isn’t right for you, there are alternatives. They include:  

Credit card: If you need to make a one-off purchase, a credit card could be a quicker way to access smaller sums of money.  

Borrowing from friends and family: You may be able to borrow from friends or family, depending on your relationship and their financial situation. You won’t need a credit check, and they may not ask for interest. A written loan agreement is a good idea and helps to make the loan more formal. This will ensure everyone agrees with the amount being borrowed and the repayment terms.  

Business overdrafts: Your business bank account may have an overdraft facility – either interest-free or with a small APR. It could be a good option if you need to borrow small amounts for short periods.  

Cash-flow finance: This allows you to advance yourself the cash locked up in your invoices. Some business banks offer it, but may charge a higher interest rate than a standard business loan.  

Invoice finance: Taking out a loan against the money your customers owe your business. If you’re waiting for customers to pay their invoices, it can be used as security to take out a loan to use straight away.  

Crowdfunding: You’ll find a variety of platforms that allow individuals and investors to pledge funds to your business. Many new businesses choose this route as an alternative to a business start-up loan.  

Government schemes and support  

Since the Covid-19 pandemic, the government has created a range of schemes to help businesses. Some have now closed, but you can still apply for the Recovery Loan scheme until June 2024..  

With the scheme, if you qualify for a business loan with a lender, the government will guarantee 80% of the loan. You’re responsible for paying the debt, but the guarantee makes it more likely the lender will accept your application.  

To qualify for the scheme, you need to show that your business is trading in the UK and has a turnover of less than £45 million. It also needs to be viable and not in difficulty.   

 At Asda Money, we offer personal loans. We work with a carefully selected panel of trusted UK lenders and can help you find the right loan at the right rate for your needs.  

You can borrow from £1,000 to £25,000. With just one eligibility check, you can compare loan offers from across our lender panel. If you need more information to understand your finances better and the borrowing options available to you, discover our Financial Support at Asda Money.   

Asda is in partnership with Aro which is a trading name of Freedom Finance Limited. Both Asda Money and Aro are credit brokers, not lenders. We offer our customers a different solution to borrowing money and finding a loan.

We work alongside Aro so we can provide our customers with their very best loan offer from a panel of handpicked trusted lenders.

With one simple eligibility check, our panel of lenders can provide you with a loan tailored to your needs. It’s also a safe way to find a loan without negatively affecting your credit rating.