Match the loan to the need
The best small business loan depends on the amount, purpose, your trading history and whether you can offer security. Many small businesses combine sources. Here are the main options and who each suits.
1. Unsecured business loans
Borrow without putting up assets, based on your trading performance and creditworthiness. Best for established small businesses needing quick funding for growth or working capital — though a personal guarantee is often required.
2. Secured business loans
Backed by business or personal assets, allowing larger sums at lower rates. Best for bigger borrowing or businesses with assets to offer — see our business loans for bad credit guide if credit is an issue.
3. Government-backed loans
Schemes like the Start Up Loan (for new businesses) and other government-supported finance offer accessible terms and support. Best for newer businesses or those that struggle with mainstream lending.
4. Revolving credit facilities
A flexible credit line you draw on as needed and only pay interest on what you use. Best for managing fluctuating cash flow rather than a one-off lump sum.
5. Merchant cash advance
Repaid as a percentage of card takings, so it flexes with sales. Best for retail and hospitality with steady card sales — but check the total cost, which can be high.
Which is best for you?
- Quick growth funding: unsecured business loan
- Larger sums, have assets: secured business loan
- New business: government-backed Start Up Loan
- Fluctuating cash flow: revolving credit facility
- Card-based takings: merchant cash advance (check cost)
How to find the best business loan
A business finance specialist can compare options across lenders and match the right structure to your needs and stage. Find a business finance specialist through Nesto — free, no obligation.
Frequently asked questions
What's the best loan for a small business?
It depends on need and stage — unsecured loans for quick growth, secured for larger sums, government-backed loans for new businesses, and revolving credit for cash flow.
Do I need to secure a business loan?
Not always — unsecured loans exist, though they often need a personal guarantee. Secured loans allow larger sums at lower rates.
Can a new business get a loan?
Yes — the government-backed Start Up Loan is designed for new businesses, with fixed rates and mentoring.
What is a revolving credit facility?
A flexible credit line you draw on as needed, paying interest only on what you use — good for fluctuating cash flow.
Will I need a personal guarantee?
Often, especially for unsecured loans or newer businesses — it makes you personally liable if the business can't repay.