Business loans can be a powerful tool for UK businesses when used strategically. Whether supporting growth, managing cashflow, investing in equipment or navigating short-term challenges, the right loan structure can provide flexibility and stability at the right time.
At First Business Finance, we help businesses understand not just what funding is available, but which option is most appropriate for your circumstances. Below is an overview of the main types of business loans and how they can be used effectively.
Short-Term Business Loans
Short-term loans are designed to support immediate or temporary funding needs. They are commonly used for:
- Managing cashflow gaps
- Covering VAT or tax liabilities
- Bridging delayed payments
- Funding short-term opportunities
These loans typically run from a few months up to 1–24 months and offer quick access to capital, with repayments structured over a shorter timeframe.
Best suited for: temporary funding requirements or time-sensitive needs.
Long-Term Business Loans
Long-term loans provide funding over a longer period, often several years, making them suitable for larger or more strategic investments. They are often used for:
- Business expansion
- Recruitment and growth plans
- Large capital purchases
- Longer-term restructuring
- Purchasing assets from abroad
Spreading repayments over a longer term can reduce monthly commitments and improve cashflow stability.
Best suited for: planned growth and long-term investment.
Revolving Credit Facilities
Revolving loans (or revolving credit facilities) offer flexible access to funds up to an agreed limit. Businesses can draw down, repay and re-use funds as needed. They are commonly used for:
- Unexpected Expenses
- Temporary cash flow challenges – such as paying suppliers before invoice payments are received
- Ongoing working capital needs
- Managing seasonal trading
- Covering fluctuating cashflow
Interest is usually charged only on the amount drawn, making this a flexible option for businesses with variable funding requirements.
Best suited for: businesses needing ongoing access to flexible funding.
Government-Backed Loans
Government-backed loans are designed to support businesses that may not meet traditional lending criteria, by providing lenders with a level of security. These loans can support:
- Growth and expansion
- Investment in assets or premises
Availability and criteria vary, and suitability depends on the business’s circumstances and objectives.
Secured Business Loans
Secured loans are backed by business or personal assets, such as property, equipment or other tangible security. They often offer:
- Higher borrowing limits
- Longer repayment terms
- Potentially lower interest rates
However, assets used as security may be at risk if repayments are not maintained.
Best suited for: larger funding requirements where security is available.
Unsecured Business Loans
Unsecured loans do not require asset security, relying instead on the business’s financial position and affordability. They offer:
- Faster access to funds
- No asset security requirement
- Flexible use of funds
These loans typically run from 24 months to 84 months. Borrowing limits may be lower, and rates can be higher compared to secured lending.
Best suited for: businesses needing quick access to funding without providing security.
Development Finance and Bridging Loans
Bridging loans are short-term property finance solutions designed to provide fast access to funding while a longer-term exit, such as sale or refinance, is arranged. They are commonly secured against property and used where speed and flexibility are essential. They often offer:
- Fast funding decisions and quick completion
- Short-term borrowing (typically up to 24 months)
- Flexible interest options, including rolled-up interest
- Funding for purchases, refurbishments or development exits
A clear and viable exit strategy is required, and the property used as security may be at risk if the loan is not repaid as planned.
Best suited for: property investors and developers needing short-term finance to seize opportunities, bridge funding gaps, or transition to long-term lending. Finance starts are £200,000 up to £4-5 million.
Cash Back Credit Cards
Cash back credit cards provide flexible access to working capital while rewarding everyday business spending. They allow businesses to manage short-term cash flow, spread costs, and earn cash back on eligible purchases, all without committing to fixed borrowing. They often offer:
- Cash back on business spend, helping reduce overall costs
- Short-term interest-free credit on purchases
- Flexible use with no obligation to draw funds
- No charges if the card is not used
- A simple way to support day-to-day expenses and supplier payments
Used responsibly, cash back credit cards can support smoother cash flow management and provide an additional financial buffer without the need for asset-backed security.
Best suited for: businesses looking for flexible, short-term funding for regular expenses, while earning rewards on everyday spend and maintaining control over cash flow.
Choosing the Right Loan
No single loan type suits every business. The most effective funding solutions are built around:
- Cashflow and trading patterns
- Risk profile
- Growth plans
- Affordability and sustainability
At First Business Finance, we take a consultative approach – helping businesses understand their options and structure borrowing in a way that supports long-term stability, not short-term strain.
How First Business Finance Can Help
We work with a wide panel of specialist lenders and we provide clear, practical guidance and funding solution options that work around your business. Our goal is to provide straightforward, responsive funding solutions that align with your business’s specific circumstances. Our team is here to support your business with a wide range of flexible funding options tailored to your needs.
Contact Us On 01634 386869 or visit our calculator page.
This blog is for information only and does not constitute financial advice. All finance facilities are subject to status, affordability checks and individual business circumstances. Failure to meet repayment obligations may put your business or assets at risk. First Business Finance is authorised and regulated by the Financial Conduct Authority (FRN: 685879).