There are many high street banks and alternative finance providers providing funding for SMEs. If you’re currently looking at lending options, bear in mind that Halifax business loans are managed by Lloyds Bank and Royal Bank of Scotland (RBS). As is Halifax business banking.
To assist you on your search, we’ve had a look at Lloyds Bank and RBS business loans and business banking for startups and growing enterprises. Here are the basics to get your started.
Lloyds Bank business loans
Loans offered by Lloyds Bank go up to £500,000, with the Base Rate Loan offering a minimum of £1,000 which is repaid over a term of up to 25 years. As the name suggests, the rate is linked to the Bank of England base rate. Be prepared for your repayments to increase if the base rate is put up. There's also a fixed rate product offering more predictability for your business finances.
Larger commercial loans are available from Lloyds, ranging from £50,001 to £500,000. The repayment terms spans 1 to 25 years, but there may be a fee for early repayments. In addition, the bank's SME Fixed Rate Loan – a secured loan – is available for the same amounts.
The bank charges an arrangement fee of up to 1.5% of the loan amount.
RBS business loans
RBS business loans – offered instead of Halifax business loans – are available for startups through to established businesses turning over millions. Firstly, fledgling enterprises and SMEs can apply for loans up to £25,000 with no arrangement fee. Applicants with a Royalties Business Current Account get a discount on borrowing rates.
For businesses turning over at least £2 million can apply for a Fixed Rate Business Loan between £25,001 and £250,000. They can also use RBS Invoice Finance – the bank is the UK's biggest invoice finance provider. Aldermore is another well-known provider of invoice discounting and factoring – it's a quick way of getting hold of short-term funding. Commercial mortgages are also available from RBS for bigger companies, repaid over a period of up to 25 years.
Tips for applying for bank loans
Both of the above banks need to see documentation to support loan applications, to ensure you're a viable business and reliable customer. So, get together your business plan, financial forecast, profit and loss sheets and other key documents needed for applications with the big banks.
You should also find out your current credit score. If it's bad, you could find it very difficult getting a loan from either of these banks, but you might have more luck with an alternative provider.
We recommend checking your rating on Noddle so you're aware of your position before making a decision as to which lender is more likely to consider your application. Or whether you need to go to an altfi lender; as a small business, you have a lot of options open to you, if you're turned down for a RBS business loan, Lloyds Bank business loan or a Halifax business loan.
Altfi business lenders
To expand your search beyond the banks, why not look through Fleximize's guide on public and alternative funding. It covers financing options like pension-led funding, revenue-based funding or crowdfunding, as well as more traditional government funding.