In depth look at how small business loans work

Every business needs cash in its bank account to run properly. It doesn’t matter how big or small - cash flow is everything. It’s one of the few things that a corner shop and a massive international business have in common!

Naturally, that means some businesses need to boost their cash flow from time to time. Just like most people can’t afford to put several thousand pounds down for a new car instantly, a business owner also can’t afford to buy some of their assets up front either. That’s why they need a bit of help from a small business loan.

Flexible business finance gives business owners the time and resources to invest and keep growing. With that essential extra cash, those great opportunities will be within reach.

The facts about small business loans

The facts about small business loans

A small business loan can be a short or long term way to raise finance for your business. You can spend it on anything you need to grow and improve your service.

Small business loans don’t always work in the same way, they can vary massively from one lender to the next. Some business loans are designed for specific types of businesses, others are for businesses that have struggled to borrow cash in the past with perhaps less than exemplary credit files.

While a small business loan is a big financial commitment, it’s not all super serious. Business finance can be really easy to manage. The key is understanding how the process works and what your role as the business owner is. It’s also important to choose the financial product that works for you.

How much do you want to borrow?

How much do you want to borrow?

The amount you want to borrow, and the amount you can borrow, might be a bit different.

Every lender will restrict the amount depending on how much they think you can afford to payback. Lending you hundreds of thousands of pounds, when your average annual turnover would never be close to that, would be a bad idea for both of you. Instead, it needs to be an amount you can comfortably repay over time.

Short term or long term?

Short term or long term?

As a general rule, the lower the monthly payments, the longer it’s going to take to repay a loan.
Some small business owners choose to pay more over a short period so they can free up their
cash faster.

How to choose the right lender for your small business

How to choose the right lender for your small business

Look at the terms of the loan. How much will you have to repay?

Look at the repayment deadlines. How soon will they expect you to repay, and how

Check out their customer service. Can you get them on the phone when you need
them? Are they good at explaining terminology and answering your questions?


Make a note of perks and benefits. Will you get any extras, like online account

Can you raise finance with them again? If they’re good to work with, you might want
to apply for another loan in the future.

Your business’ credit history under the microscope

Your business’ credit history under the microscope

Did you know your business has a credit score just like you do? It’s based on a few different
factors, including:

● Your relationship with suppliers.
● How quickly you pay off your business credit card.
● The info you file with HMRC (and whether it’s on time or not).
● How many applications and searches you’ve made (both successful and unsuccessful).
● How much credit you already have.

This all builds up a picture of how creditworthy you and your business are. Some lenders will
also look at your personal credit score to make a decision.

How hard is it to get approval from lenders? It depends!

How hard is it to get approval from lenders? It depends!

The anxious wait for a ‘yes’ or a ‘no’. It’s not a great feeling! Some business owners avoid applying for finance because they’re not confident they’ll get it.

It’s actually much easier to get approval than you think. Business loan lenders want to work with small businesses, and they’ll usually find a way to accommodate them.

Your creditworthiness obviously has an impact, but as long as you’ve got your finances in order and feel confident about repayments, it’s worth getting a quote.

To be eligible for a Capify small business loan, you’ll need to:

To be eligible for a Capify small business loan, you’ll need to:

● Run a UK-based business as a limited company
● Process more than £10,000 a month through your business bank account
● Have at least 12 months’ trading records

The need for a guarantor or security

The need for a guarantor or security

Some lenders will ask for a bit of reassurance before they approve you for finance. They want to know that if something does make it difficult for you to repay, they can still get their money back.

Most of the time, your guarantor and security aren’t needed. They’re just insurance for the lender.


A cash deposit or a physical item that’s valuable to your business (e.g. property, equipment, ora vehicle).


Someone who vouches for your ability to repay the small business loan. They’re agreeing to step in and make the repayments for you if you can’t.


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Repay little and often with Capify’s small business loan

Repay little and often with Capify’s small business loan

Paying back your loan will take some time and planning. The repayment model will depend on the lender and how frequently they want to receive payments.

With Capify, you can repay little and often. Unlike a traditional loan, Capify’s is paid back in regular, small amounts. That can be every day, or every week. The repayments are completely automated so you don’t need to do anything.



Capify is proud to offer…


The personal touch

You’ll work with your own dedicated account manager, who’ll guide you through the application process and answer all your questions.

UK-based support

We’re based in South Manchester and work with small businesses all over the UK.

Manageable repayments

Make small, regular payments to repay your loan. You can focus on growing your business
without worrying about cash flow and affording repayments.



Our flexible small business loan


Our Small Business Loan is a great way to raise finance for your business. You can use the funds to carry out new plans – both essential and ambitious!

Many small business owners use the money to pay for renovation, place large stock orders, or hire new staff. Whatever they need to grow their business.


We’re trusted by thousands of small and
medium sized businesses.

We take pride in working with thousands of UK businesses, and we really appreciate what they say about our
products and services.