How much can my business borrow and what are typical repayment terms?

Short answer — how much you can borrow and what to expect

Your borrowing limit depends on lender type, your business profile, assets and purpose; amounts for UK SMEs commonly range from a few thousand pounds up to several million for asset-backed facilities. Typical repayment terms vary by product: short-term working capital lines repay within months, medium-term term loans usually run 1–5 years, and asset-backed or property financing can stretch to 7–25 years. To get a fast indication of what you might qualify for, submit a Quick Quote for an eligibility check or Decision in Principle.

How lenders decide how much you can borrow

Lenders combine quantitative checks (turnover, profit, cash flow, credit history) with qualitative factors (sector, contracts, management experience). A strong trading history, predictable cash flow and low existing gearing usually increase the size of facilities you can access. Lenders also use affordability and stress tests to ensure you can meet repayments under tougher conditions.

Security and collateral matter: equipment, vehicles, stock or property can raise borrowing limits because they reduce lender risk. Some lenders offer unsecured loans based solely on credit profile and turnover, but unsecured limits are frequently smaller than secured options. Specialist lenders may consider sector-specific risks and tailor limits for industries such as manufacturing, logistics or hospitality.

Product type strongly influences maximum borrowing. Invoice finance and asset finance often scale with the value of invoices or assets, while overdrafts and merchant cash advances are sized to daily or monthly cashflow. Commercial mortgages and large refinancing packages are assessed on loan-to-value (LTV) and debt-service coverage ratio (DSCR) metrics, which determine how much can be drawn against an asset or future income.

Typical borrowing ranges by finance type

Unsecured business loans: typically £2,000 to £500,000 for UK SMEs, with most mainstream unsecured offers clustered under £250,000. These are simple to apply for and suit short-to-medium term working capital or smaller capital investments. Interest rates vary widely by credit risk and lender type.

Asset finance and equipment loans: commonly from £5,000 up to several million, sized to the asset value and expected residual. Repayments are structured around the asset’s useful life and may include hire purchase or lease arrangements. This is a preferred route for capital expenditure without large upfront cash outlay.

Invoice finance (factoring or discounting): facilities typically start around £25,000 and can scale to millions depending on invoice book size and debtor credit quality. Funding is a percentage of outstanding invoices and grows with sales, making it ideal for fast-scaling B2B businesses. Fees are usually a blend of discount charges and service fees rather than a single interest rate.

Overdrafts and short-term lines: overdrafts can be small (a few thousand) up to £250,000 or more for established firms with strong banking relationships. Repayment is flexible — you repay as cash comes in — but fees and variable interest apply. Merchant cash advances are sized to card turnover and repaid via daily settlements.

Typical repayment terms and schedules explained

Short-term loans and lines: repayment periods are usually 3–12 months and may be repaid weekly or monthly. These products carry higher cost-per-annum but provide rapid access to cash for seasonal peaks or one-off needs. Early repayment may attract fees; always check terms before accepting an offer.

Medium-term term loans: most run from 12 months up to 5 years and are repaid monthly with either interest-only for a period or capital-and-interest instalments. Rates can be fixed or variable, and arrangement or facility fees are commonly charged at drawdown. Lenders may require a repayment schedule tied to projected cashflow milestones.

Long-term and asset-backed loans: secured facilities such as equipment finance or larger commercial loans often run 5–25 years, reflecting asset life and investment scale. Repayments are typically monthly and can include balloon payments or final instalments. For larger packages, lenders will set covenants and monitoring requirements to protect performance.

Invoice finance and merchant cash products use different repayment mechanisms: factoring repays as customers pay invoices, while merchant cash advances are repaid as a percentage of daily card takings. These solutions are designed to align repayment to income flow rather than fixed instalments, but fees and effective annualised costs can be high if turnover fluctuates.

Security, covenants and credit features that affect terms

Security and personal guarantees reduce perceived lender risk and often unlock larger or cheaper facilities. Common securities include fixed charges on named assets, floating charges over business assets, or debentures covering multiple assets. Directors’ personal guarantees are frequent in SME lending and increase lender recourse on default.

Covenants and reporting requirements influence both the amount you can borrow and repayment flexibility. Lenders may require cashflow forecasts, monthly management accounts, or minimum DSCRs. Breach of covenants can trigger re-pricing, requirement for immediate repayment, or additional security demands.

Fees and the total cost of credit are critical to compare. Arrangement fees, commitment fees, early repayment charges and default penalties should be assessed alongside headline rates. Because commercial loans are not always quoted as APR, ask for a clear total cost example and an illustration of payments over the term before committing.

How Best Business Loans helps you find the right amount and terms

Best Business Loans is an independent introducer that helps you identify likely borrowing sizes and realistic repayment terms from lenders and brokers matched to your profile. We do not lend directly; instead our AI-driven matching checks your business details and connects you with suitable providers. That connection saves time and helps you gather multiple offers without applying to dozens of lenders yourself.

Start with a Quick Quote for an instant eligibility check or Decision in Principle, which gives you a practical view of what facilities lenders are likely to offer. Our platform asks about turnover, sector, assets and borrowing purpose to estimate ranges and likely term lengths. If you prefer detailed guidance first, our support team can point you to the most appropriate product categories for your needs.

Use our service to compare likely terms, understand typical security requirements, and see examples of total costs for different loan types. We encourage transparency: we’ll flag typical fees and common lending conditions so you can make an informed choice. For a broader overview of business finance options we handle, see our business finance guide here: Business Finance.

How to start — quick practical steps

1. Complete a Quick Quote form with clear details about turnover, purpose and assets to get an eligibility check. 2. Review the Decision in Principle or quick offers from matched lenders and request full terms before signing. 3. Ask for a total cost example and read any covenant or guarantee requirements carefully.

Important compliance and transparency notes

Best Business Loans does not provide financial advice and is not authorised to lend; we act as an introducer to lenders and brokers. We aim to be clear, fair and not misleading in line with FCA and ASA guidance, but you should review offers and seek independent advice if you are unsure. All finance offers are subject to lender credit assessment and terms.

Key takeaways

Borrowing capacity depends on lender type, business strength, security and purpose; amounts can range from a few thousand to several million. Repayment terms vary from short monthly schedules for working capital to multi-year amortisations for asset-backed lending. Use a Quick Quote to get a fast eligibility check and a Decision in Principle to understand likely borrowing limits before applying.

Ready to see what your business could borrow? Complete a Quick Quote now for a free eligibility check and Decision in Principle to explore realistic loan sizes and repayment terms tailored to your business.