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Commercial Finance for Small Businesses and Sole Traders

Commercial Finance for Small Businesses and Sole Traders 3

Securing the funds you need to start or expand a business can be a daunting prospect. However, there are plenty of options to explore for all types of proprietors.

Comparing the market with the support of an independent broker will help you find the ideal product for your requirements and budget. Examples of commercial finance include the following:

Business loans

A business loan is a specialist financial product issued by banks and lenders exclusively for business purposes, eligibility is typically determined on the basis of your company’s financial position and track-record to date, though your own credit history and financial status may also be taken into account.Commercial Finance for Small Businesses and Sole Traders 4

Invoice finance

Invoice financing is a facility that enables money to be borrowed against client invoices that have yet to be paid. This way, the business is able to access money it has owed earlier than it would, for which a commission-based fee is collected by the lender when the invoices are settled.

Business overdrafts

Business overdrafts can be provided by specialist lenders at a much lower rate of interest than a typical overdraft; they may also be provided with a much higher credit limit than a personal overdraft in order to meet the needs of most small businesses.

Business credit cards

Business credit cards can be particularly useful for transferring existing debts, as they are often available with an introductory 0% interest period of up to a year. After which, preferential interest rates are usually available for eligible businesses with instant-access credit limits of up to £10,000 or more.

Startup loans

This is a specialist product for new business startups, typically issued with a maximum loan value of £25,000 and repayable over five years at a competitive rate of interest. It is a government-backed facility that is available exclusively for new businesses, with eligibility being determined on the basis of expertise and business potential. 

Commercial mortgage

A commercial mortgage works in a similar way to a conventional mortgage, though typically requires an initial deposit of 25% to 30%. Eligibility is assessed along the same lines as a residential mortgage, with similar repayment periods of up to 25 years and comparable rates of interest.

Hire purchase

Hire purchase (HP) falls within the bracket of asset finance, enabling a business to finance the purchase of equipment and assets for gradual repayment over a number of years; ownership of the equipment is transferred to the business at the end of the loan period, though remains the property of the provider until then. 


The popularity of crowdfunding has skyrocketed over the past few years, which enables businesses to secure capital from an extensive pool of investors, each of which contributes a small amount. Platforms like Kickstarter, Seedrs, Crowdcube and IndieGoGo have made crowdfunding a more attractive and accessible option for thousands of smaller businesses.


Small businesses in some niche sectors may be able to qualify for non-repayable government grants of anything up to £1 million; more information can be found on the UK government’s small business grants page, including full eligibility guidelines.

To find out how we can help with your commercial and business finance needs, please contact UK Property Finance today.

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