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Business loans

If you’re considering a business loan, there are a lot of things you need to keep in mind. With a wide range of loans on the market and various products designed for speed, short terms, growth projects, or small businesses, it’s hard to know where to start. There are also many different lenders on the market — you can get a business loan from banks, , online lenders, and small local specialists.

With so many products and providers, the eligibility criteria, interest rates, and overall costs can vary significantly. Let’s take a look at everything you need to know about business loans.

Types of business loan

Business loans is a broad category, and can refer to lots of different products including:

  • Secured loans
  • Unsecured loans
  • Revolving credit facilities
  • Business cash advances

Within these product categories, you’ll find loans designed for specific situations:

Fast loans

Some products are designed for speed, so you get the cash as fast as possible.

How fast a loan is largely depends on how prepared you are. Lots of lenders require detailed documents such as filed accounts, business financials and forecasts, and your ability to get these documents together can make the difference between a couple of days or a couple of weeks.

Short term business loans

Some loans are designed for the short-term, with agreements between 3 months and 2 years. Term loans of more than 2 years would be considered medium- or long-term. If you’re considering a loan for a very short term, it’s also worth considering revolving credit facilities and other business overdraft alternatives.

Loans for small businesses

Some lenders cater for small businesses specifically. Small business loans have historically been challenging to get from the banks, but with the range of alternative finance available these days, there are many more solutions out there.

Business loans for bad credit

It’s often possible to get a business loan if you have a poor credit rating. Although it’s certainly more challenging to borrow money with bad credit in the background, it’s still very much worth exploring — and you might be surprised at the choices potentially still available.


There’s a huge range of lenders offering loans to businesses, and this means there are lots of different eligibility criteria, application processes and interest rates to go through.

We’re specialists in helping firms find the lender that’s right for them from the whole market — so get in touch with us or apply online if you’d like help finding the best business loan for you.

Here’s a summary of what you can expect from different business lenders:


We all know that the banks aren’t lending to businesses as much as they used to — the effects of the credit crunch and new banking regulations are still being felt years later — and lots of firms aren’t suitable for bank lending.

If you approach a major bank for a business loan, they’ll want to see a strong balance sheet, significant security and a long trading history. For those that are eligible for bank funding, it’s usually the cheapest option in terms of interest rates — but many other firms find it’s a long application process that leads to a ‘no’.

Independent lenders

At the forefront of alternative finance, the larger independent lenders offer some of the best alternatives to the banks. These providers are large and established, with plenty of cash to lend, but don’t have the same restrictions as banks and are prepared to lend to a much broader spectrum of businesses and sectors.

Some are focused on one particular product while others offer the full range of business finance. In this area of the market you can expect more flexible criteria and much faster applications — the major downside being that they’re usually more expensive than banks.

Smaller specialists

Smaller specialist lenders are another important part of the alternative finance category, usually focusing on one or two types of lending. Their business loans are highly specialised, often designed for one particular sector, but this means the costs can vary widely.

Many of the smaller lenders offer very fast online processes, meaning you can potentially get a loan within a day or two. Best of all, instead of rigid criteria they’re much more likely to take a case-by-case view of your application for a loan.

Eligibility and criteria for business loans

With so many different lenders and products on the market, the eligibility criteria for business loans vary. In an initial consultation, expect to be asked about:

  • Turnover and profit
  • Bank statements
  • Filed accounts
  • Loan amount vs. turnover
  • Trading history
  • Payment history 

While there are no set ‘standard’ criteria for business loans, there are a few basic factors that most lenders look at when assessing your business. Here are a few rules of thumb to bear in mind before you apply for a loan:

  • The loan amount is less than 25% of your annual turnover
  • Your business is profitable
  • More than 24 months trading history (for most products)
  • No outstanding or late payments
  • Your business is based in South Africa

All of these factors help lenders build up a picture of your business. Generally, lenders are unwilling to lend more than 10-20% of your annual turnover, and they’ll want to see enough revenue to demonstrate affordability. If you’re not making much profit or making a loss, it’ll be difficult to get a loan, and a short trading history (less than 2 years) can make things more difficult too.

Having said that, you might be surprised by what’s still available to your business, and many of the lenders we work with are more flexible than the banks.

If you’d like to find out more about what kind of business loan you may be eligible for, starting an application with HMT Capital Finance is the quickest way to find out your options.

Security and personal guarantees

Business loans fall into two main categories: secured and unsecured. For secured loans, you’ll need some security to offer, while for unsecured loans lenders will normally want a personal guarantee.

You can use a variety of assets as security for a secured business loan, including commercial property, plant and machinery, vehicles, and stock. Lenders have different criteria for what they’ll accept as assets.

Unsecured loans, on the other hand, don’t require physical security but will often require a personal guarantee. Normally, lenders will want the guarantor to have good personal net worth and be a South African homeowner, demonstrating affordability.

If you’re interested in a secured loan, you’ll need to think about the security you have available. For unsecured loans, it’s important to consider the implications of offering a personal guarantee.

Interest rates

The interest rates you can expect to pay vary depending on your business profile. There are various risk factors that the lender will consider, and generally speaking the higher the risk, the higher the cost of the finance.

Your credit score is one of the best indicators of what interest rate you’ll pay for a business loan. If your credit history is poor, you’re likely to pay a much higher interest rate. Risk is also partly determined by the term length you need and the security you’re able to provide.

Part of the interest rate calculation is also driven by characteristics such as how established your business is and its profitability, because these factors have implications for your affordability.

It’s important to remember that headline interest rates can hide a range of costs such as arrangement, termination and penalty fees.