- APR (Annual Percentage Rate)
- The yearly cost of borrowing expressed as a single percentage, including interest and most mandatory fees. Useful for comparing the true cost of loans from different lenders on a like-for-like basis.
- Arrangement Fee
- A fee charged by a lender for setting up a loan, usually a fixed amount or a percentage of the loan value. Often payable regardless of whether other costs, such as valuation or legal fees, also apply.
- Asset Finance
- Finance used to fund the purchase of a specific business asset, such as machinery or a vehicle, with that asset itself acting as security. Distinct from a secured business loan, which lends against an asset the business already owns.
- Bridging Loan
- A short-term loan, usually secured against property, used to cover a funding gap quickly, such as completing a purchase ahead of a sale. Carries a higher rate than standard secured lending, reflecting the shorter term.
- Business Credit Score
- A score reflecting a business's creditworthiness, based on factors like payment history, existing debt and filings at Companies House. Central to unsecured lending decisions; carries less weight for secured lending, where the pledged asset offsets some of the lender's risk.
- Collateral
- An asset (such as property, equipment or vehicles) pledged to a lender as security for a loan. If the borrower defaults, the lender can seek to repossess and sell the collateral to recover what's owed.
- Companies House
- The UK's registrar of companies. Limited companies file their accounts and confirmation statements here, and lenders often check this filing history as part of assessing a business loan application.
- Default
- Failing to meet the agreed repayment terms of a loan. On a secured loan, default can trigger repossession of the pledged asset; on an unsecured loan, it can lead to a personal guarantee being called in and legal recovery action.
- Early Repayment Charge
- A fee some lenders charge if you repay a loan, in full or in part, before the end of the agreed term. Terms vary significantly by lender, so it's worth checking before you commit if early repayment is a realistic possibility.
- Financial Conduct Authority (FCA)
- The UK regulator for financial services. Business-purpose secured and unsecured lending to companies, LLPs and sole traders is generally unregulated credit and falls outside the FCA's regulated consumer credit and mortgage regimes.
- First Charge
- The primary legal charge registered against an asset, ranking ahead of any other lender for repayment priority if the asset is sold. Usually held by whichever lender financed the asset first, such as an existing mortgage provider.
- Fixed Rate
- An interest rate that stays the same for the life of the loan, giving predictable repayments. The alternative to a variable rate, which can move up or down over the loan term.
- Growth Guarantee Scheme
- A UK government-backed scheme, delivered through the British Business Bank and accredited lenders, that supports lending to smaller businesses that might otherwise struggle to meet standard lending criteria.
- Invoice Finance
- Finance that releases cash tied up in unpaid customer invoices, rather than requiring a separate pledged asset. Useful for businesses with a healthy but slow-paying customer base.
- Legal Charge
- A registered legal interest a lender holds over a specific asset for the term of a secured loan, giving them the right to force its sale to recover the debt if the borrower defaults.
- Lender Panel
- The group of lenders a broker works with to source terms for a client. A broader panel generally means a better chance of finding a suitable lender for a specific business or asset type.
- Loan-to-Value (LTV)
- The loan amount expressed as a percentage of the value of the asset securing it. A £150,000 loan against a £250,000 asset is 60% LTV. Lenders set maximum LTV thresholds by asset type.
- Merchant Cash Advance
- An advance repaid as a percentage of future card sales rather than fixed instalments, suited to businesses with strong, predictable card turnover. Priced differently from a conventional interest rate.
- Personal Guarantee
- A commitment by a company director to personally repay a business loan if the business itself cannot. Commonly required for unsecured lending, and often alongside asset security on secured lending too.
- Revolving Credit Facility
- A flexible line of credit you draw against as needed, up to an agreed limit, rather than a fixed lump sum. Suited to fluctuating working capital needs rather than a one-off investment.
- Second Charge
- A legal charge registered against an asset that already has an existing (first) charge, such as a secured business loan taken out against a property that already carries a mortgage. Ranks behind the first charge for repayment priority.
- Start Up Loans
- A UK government-backed personal loan scheme for new and early-stage businesses, delivered through the British Business Bank, aimed at businesses that don't yet meet mainstream lending criteria.
- Trading History
- How long a business has been actively trading. A key factor in unsecured lending decisions; carries less weight for secured lending, where a pledged asset can offset a shorter trading history.
- Turnover
- The total value of a business's sales over a given period. Lenders often size unsecured business loans as a multiple of monthly or annual turnover, since there's no asset value to size the loan against instead.
- Unregulated Business Lending
- Lending arranged for genuine business purposes with limited companies, LLPs and sole traders, which generally falls outside the FCA's regulated consumer credit and mortgage regimes. Most secured and unsecured business loans fall into this category.
- Variable Rate
- An interest rate that can rise or fall over the life of a loan, usually tracking a benchmark rate. Repayments can change during the loan term, unlike a fixed rate.
- Working Capital
- The funds a business uses to cover its day-to-day operating costs, such as stock, wages and short-term cash flow gaps, as distinct from finance used for a larger one-off investment.