What is a business loan?
Business loans are similar to personal loans but they’re specifically intended for business purposes. With a business loan, you can borrow a lump sum to help manage your business’s cash flow or expand.
In return for the money, you agree to repay the entire sum to the lender plus interest. The interest rate is based on a number of different factors, including the health of your business and the amount you’re borrowing.
For information on how business loans work, see our in-depth guide.
What type of loans do you offer?
We offer two main types of loan:
- Small business loan – a short-term loan which you pay back with a fixed rate of interest
- Merchant cash advance – a short-term cash advance which you pay back as a percentage of your daily card sales
What’s the difference between secured and unsecured loans?
With a secured loan, you “secure” the money you’ve borrowed against an asset that you own (called collateral). If you aren’t able to pay the loan back, the lender can repossess the asset to make up the money. Whereas with an unsecured business loan, there’s no need to offer collateral at all.
Our business loans and merchant cash advances are unsecured. The only thing we ask for is a personal guarantee, which you can read more about here.
Applying for a loan
Do I qualify for a business loan from Boost Capital?
Our eligibility criteria are simple – you can apply for a loan as long as your business:
- has been operating for three years or longer
- and has an annual turnover of £70,000 or more
If you don’t meet these criteria, our merchant cash advance might be suitable instead.
What kind of businesses can get a loan?
Put simply, any small business! Rather than exclude whole industries, we provide funding based on each business’s individual merits.
Over the years, we’ve provided funding to the following types of businesses:
What can I use the loan for?
You can use the funds for almost anything you think is necessary for your business.
Some of the most common uses for our loans are:
- To help with cash flow
- Purchasing new stock, equipment or machinery
- Paying for new premises or other relocation costs
- Investing in staff training
- Investing in a marketing campaign
You can read more about the uses for a business loan in our post.
Can I get approved for a loan if I have a bad credit score?
When you apply for a business loan from Boost Capital, we carry out a soft credit check. Soft credit checks don’t appear on your record, and won’t affect your credit score.
However, you don’t necessarily need a good personal credit score to get approved for a loan. We base our decision on the health of your business. We do this by looking at your most recently bank statements.
Read more about getting a business loan with bad credit.
Will my credit score be affected if I apply?
No. As part of the approval process, we conduct a soft credit search only. Soft credit searches don’t affect your credit score at all and won’t show up on your file.
Do I need to be a homeowner?
No, all our loans are unsecured, which means we don’t need to consider any assets to provide you with funding. If you’re not a homeowner, that’s not a problem and won’t affect our decision.
What documents do you need to see?
Typically, we only ask for two documents to assess your loan application:
- Proof of your identify
- Last three months’ bank statements for your business
The quicker you can supply these documents to us, the quicker we can approve your application.
Will I need collateral?
How much can I borrow?
With Boost Capital, you can borrow from £3,000 for your business. The amount you’ll be able to borrow will depend on your company’s average monthly turnover and business health.
Will I need to sign a personal guarantee?
Yes, we’ll ask you to sign a personal guarantee. As our loans are unsecured, and we don’t ask you to put anything forward as collateral, a personal guarantee gives us extra reassurance that you’re confident you can make the repayments for your loan.
You can read more about what a personal guarantee is and how they work in our guide.
What happens if I take out more than one loan at once?
If you have multiple loans from different lenders outstanding at the same time, this is called loan stacking. And it can be a serious problem – for borrowers and lenders alike.
Loan stacking differs from refinancing because the subsequent loans haven’t been taken out to pay off and replace the first one.
Stacking most commonly occurs when a borrower applies and gets approved for a number of similar loans – with similar interest rates and payment terms – at the same time.
Loan stacking can cause the following problems:
- It puts added pressure on your business’s cash flow because you’ll have several loan repayments coming out at once
- It might violate the terms of your first loan agreement, which would force that loan into default
- Because loan stacking isn’t sustainable, defaults are more likely. This can have a knock-on effect on the interest rates lenders charge and their future ability to be able to offer credit
For these reasons, you may be ineligible for further funding from Boost Capital if, at the point of renewal or top-up, we find that you’ve taken out additional, similar unsecured finance from another lender.
Getting your funding
How quickly will I receive funding for my business?
Your business can get the money it needs in as little as two business days. Our application process is quick and easy, and we don’t ask for lots of documents to make our decision.
How will I receive my funds?
We’ll transfer the funds to your business bank account as soon as your application is approved.
What are the loan terms?
We tailor the terms to each business’s individual circumstances. Your business’s cash flow model will determine the repayment amount, which we’ll agree with you before we give you your funding.
What are your interest rates?
We don’t use interest rates – we use factor rates. A factor rate tells you how much interest you’ll pay on your loan expressed as a decimal rather than a percentage, and they range from 1.1 to 1.5.
To work out the total amount you’ll repay, multiply the amount you’re borrowing by the factor rate. For example, if you’re borrowing £50,000 and your factor rate is 1.3, the total amount you’ll pay back would be £65,000 (which is £50,000 multiplied by 1.3).
The factor rate you’ll need to pay depends on how much you borrow, the length of time you want to borrow across and the financial health of your business.
Try our business loan calculator to work out what your factor rate could be and compare our loans with other lenders.
Representative example: Borrow £10,000 for 12 months at 47.9% representative APR. Interest rate of 36.74% p.a. (fixed). Total amount payable is £12,100. Actual rate may vary on circumstances.
Paying off your loan
How do repayments work?
Unlike more traditional loans from the banks, our loans don’t have a rigid monthly repayment amount. Instead, you can choose to make either daily or weekly repayments.
With daily or weekly repayments, you can pay your loan off in bite-sized chunks rather than as a lump payment at the end of the month with your other bills.
The repayments on our merchant cash advance work differently – they’re taken as a percentage of your daily card sales. Read our page on merchant cash advances for more information.
Can I pay off my business loan early?
If you want to make an early repayment to settle your loan, you can do so. Just get in touch with us and we’ll tell you what to do.
We don’t charge a penalty for paying your loan off early. In fact, you may be eligible for a small discount on the remaining repayments.
Is there a deadline for paying off the merchant cash advance?
No, there’s no deadline for paying off a merchant cash advance. This is because you pay the loan off as an affordable percentage of your daily card sales.
Read more about how a merchant cash advance works here.
What if I can’t pay my business loan back?
If you think you won’t be able to keep up with your repayments, get in touch with us as soon as possible.
You can read more about what to do if you can’t pay your loan back here.
Topping-up or renewing
Can I apply for a second loan for my business?
Yes, you can top-up or renew your loan after you’ve paid back a certain percentage of your existing loan. 84% of our customers return to us for more funding, and some even use us as a revolving line of credit to sustain their business growth.
Getting additional funding is just as straightforward as the initial application. Just give us a call on 0800 138 9080 or contact us by email.
Are business loans tax deductible?
Yes, the interest you pay on a business loan is tax deductible as it’s classified as a business expense. This means that when your accountant does your end-of-year taxes, they’ll be able to deduct the amount of any interest you’ve paid from your overall tax bill.
I’m a commercial finance broker. Can I send you my deals?
Absolutely, get in touch today to join our commercial finance programme.
Can you tell me about the other kinds of business finance available?
If you want to learn more about the different forms of business finance available, have a look at our knowledge centre.
We’ve got guides on: