What repayment terms are typical—can I repay over 1, 3 or 5 years?

Q: Are 6–12 month loans available for UK SMEs?

Yes, short-term loans of 6–12 months are available for working capital or bridging needs. They suit time-bound opportunities or short cash flow gaps, though monthly repayments are higher than for longer terms.

Q: Can I change term length after I draw down?

Changes mid-term depend on provider consent. You may be able to refinance to adjust your term if your situation improves. Refinancing can incur fees, so weigh the total cost before proceeding.

Q: Can repayments be seasonal or deferred?

In some sectors, seasonal structures or initial payment deferrals may be available subject to lender criteria and affordability. Ask providers early if such flexibility is important to your plan.

Short answer

Yes, many UK business finance products allow repayment over 1, 3 or 5 years, but the “right” term depends on the product, your cash flow, and the asset or purpose being funded. Short-term working capital loans often run 3–12 months, general unsecured term loans commonly run 1–5 years, and asset finance can extend to 2–7 years to match the useful life of equipment or vehicles. Best Business Loans does not lend directly; we help you connect with lenders or brokers who can discuss suitable terms for your circumstances.

The essentials — what “repayment term” really means

What does “repayment term” mean?

The repayment term is the agreed length of time you will take to repay the borrowing, including any interest and fees. It shapes your monthly (or weekly) payments, your total cost of finance, and how the debt sits alongside your cash flow. Longer terms reduce monthly cost but typically increase total interest paid, while shorter terms do the opposite.

Can I repay over 1, 3 or 5 years?

In many cases, yes. One year is common for short-term cash flow loans or bridging working capital gaps, while three years suits broader investment in growth or refurbishments. Five years is common when funding higher-value assets, vehicles, or significant fit-outs where affordability over time matters.

Typical UK ranges at a glance

Short-term cash flow loans: 3–12 months.
Unsecured term loans: 1–5 years, with 2–3 years common.
Asset finance and vehicle funding: 2–7 years, aligned to asset life.
Invoice finance and revolving facilities: ongoing or 6–36 months reviewed.
Government-backed schemes (e.g., Growth Guarantee Scheme): commonly up to 6 years for loans and asset finance, and up to 3 years for overdrafts and invoice finance facilities.

Typical terms by finance type

Unsecured business loans and cash flow loans

Unsecured loans designed for general working capital tend to fall between 12 and 60 months. Some lenders offer shorter options of 3–12 months for quick cash flow smoothing or smaller ticket funding. Expect affordability checks, trading history assessment, and a term that aligns with foreseeable cash generation.

Asset finance and equipment finance

Asset finance (hire purchase, finance lease) typically runs 24–84 months, depending on the item’s useful life and residual value. Vehicles and heavy equipment are often funded over 3–5 years, and sometimes up to 7 years for longer-lived assets. Spreading the cost this way aims to match repayments with the productivity the asset generates.

Invoice finance and revolving credit

Invoice finance, overdrafts, and revolving credit facilities are flexible and don’t usually have a fixed “term” in the same way a loan does. They are commonly set up on a 12–36 month agreement with periodic reviews. You draw and repay as sales invoices settle, which can be more fluid than fixed-term borrowing.

Growth Guarantee Scheme and other supported options

Eligible UK businesses may access lenders participating in the government’s Growth Guarantee Scheme, typically with loan terms up to 6 years. Overdraft and invoice finance facilities often sit up to 3 years within these frameworks. We can introduce you to providers who participate where eligible and relevant to your needs.

What Best Business Loans does and doesn’t support

We help established UK businesses explore commercial finance such as unsecured term loans, asset finance, invoice finance, and related options. We do not currently support start-ups, sole traders, franchises, property finance, or commercial mortgages. For sector-specific guidance, see our resources and industry pages.

What determines the term you can get?

Affordability and cash flow

Lenders assess your ability to service repayments from trading cash flow, not just revenue. Strong margins and consistent collections can support shorter terms with higher monthly payments. Seasonal or variable cash flow often benefits from a medium or longer term to preserve headroom.

Security and asset life

When the finance is secured on an asset, the term often aligns with the asset’s useful life. Equipment, vehicles, or machinery may justify 3–5 years, and sometimes 6–7, if the item remains reliable. A shorter term is more likely when the asset depreciates quickly or has uncertain resale value.

Credit profile and trading history

Established businesses with good credit files and clean banking conduct are more likely to access broader term options. Newer businesses or those with credit blips may be offered shorter terms as a risk control. Demonstrating strong financial controls and up-to-date management information can improve outcomes.

Loan purpose and sector specifics

Lenders match term to purpose. Working capital is usually shorter, while investment projects call for mid-length terms to align costs with benefits. Some sectors can access tailored terms to suit their trading patterns.

Examples by sector

Manufacturing and engineering: 3–5 years for machinery, 12–36 months for working capital tied to purchase orders.
Logistics and transport: 3–5 years for HGVs and vans, often with structured balloon options subject to product type.
Agriculture and farming: 3–7 years to align with seasonal income and asset life; see our guide to agriculture business loans for more context.
Hospitality and retail: 12–48 months for fit-outs, POS systems, and refurbishments, depending on project scale.

Choosing between 1, 3 or 5 years

Short vs medium vs longer terms

One year: fastest way to clear the debt and reduce total interest, but highest monthly cost. Three years: a balanced option that eases monthly payments without excessive total cost. Five years: lowest monthly commitment but higher total interest over the life of the agreement.

Worked example to illustrate trade-offs

Suppose you borrow £100,000 at an illustrative fixed rate for comparison only. Over 1 year, your monthly payments will be much larger, but your total interest paid will be lowest. Over 5 years, the monthly payments drop significantly, but the total interest over time is higher due to the longer duration.

Early repayment, overpayments and fees

Some lenders allow early settlement or overpayments, sometimes with a fee or rebate calculation. Clarify whether there are fixed early repayment charges, notice periods, or interest rebates. If flexibility matters, ask about partial overpayment options to reduce the term or monthly amount.

Repayment frequency and seasonal structures

Monthly repayments are standard, but some providers offer weekly, fortnightly, or seasonal schedules. Seasonal repayment profiles can match slow and busy periods, which is useful in sectors with predictable peaks and troughs. Asset finance sometimes offers tailored structures such as stepped payments or annual instalments for specific industries.

Matching term to your goals with Best Business Loans

Simple steps to get matched

Step 1: Complete a Quick Quote with your company details, purpose of finance, and the term you prefer. Step 2: Our AI matching reviews your profile and suggests relevant lenders or brokers who operate in your sector. Step 3: You compare options, discuss term choices, and progress with the provider you feel confident in.

What you’ll typically need to share

Be ready with recent bank statements, filed accounts or management accounts, and information on existing finance. For asset finance, you may need an invoice or quote for the equipment or vehicle. For invoice finance, typical information includes debtor details, aged receivables, and customer concentration.

Compliance, clarity and fairness

All information we present is intended to be clear, fair and not misleading. We are an independent introducer, not a lender, and we do not provide financial advice. Any eligibility, terms, APRs and fees are set by the provider and will depend on your specific circumstances.

Key takeaways

Repayment over 1, 3 or 5 years is common in the UK, subject to product and provider.
Shorter terms reduce total cost, longer terms reduce monthly outgoings.
Unsecured loans often run 1–5 years; asset finance 2–7 years; revolving facilities are reviewed periodically.
Term suitability depends on affordability, asset life, purpose, credit profile and sector.
Use our Quick Quote to be introduced to finance providers who can tailor the term to your goals.

Frequently asked questions about business loan terms

Are 6–12 month loans available for UK SMEs?
Yes, short-term loans of 6–12 months are widely available for working capital or bridging needs. They suit time-bound opportunities or short cash flow gaps. Expect higher monthly repayments than longer-term loans.

Can I borrow over 7 years?
Some asset finance arrangements can run up to 7 years where the asset life supports it. General unsecured loans rarely exceed 5–6 years, though exceptions exist. Property-backed commercial mortgages can extend further, but we do not currently support property finance applications.

Can I change term length after I draw down?
Changes mid-term are not guaranteed and depend on provider consent. You may be able to refinance to adjust your term if your situation improves. Refinancing can incur fees, so weigh the total cost before proceeding.

Are there early repayment charges?
Some agreements include early settlement fees or specify how interest rebates are calculated. Others are more flexible and allow partial overpayments. Check the Key Facts documents and terms before committing.

Is the interest fixed for the whole term?
Many term loans are fixed-rate, providing payment certainty. Revolving facilities and some variable-rate products may move with a reference rate. Always confirm rate type, review frequency, and any caps or floors.

Can repayments be seasonal or deferred?
In certain sectors, seasonal structures or initial payment deferrals may be available. These features are subject to lender criteria and affordability. Ask providers early if such flexibility is important to your plan.

Start your search

Best Business Loans helps you explore suitable finance options and repayment terms quickly. Submit your Quick Quote for introductions to lenders or brokers who understand your sector and needs. It’s fast, secure, and free to enquire.

Information on this page is for general guidance only and is not financial advice. Eligibility, terms and costs are determined by individual providers and your circumstances. Best Business Loans acts as an independent introducer and does not lend. Updated October 2025.