Lloyds vs NatWest vs Barclays vs HSBC: business loans compared

They suit different needs, and the right one depends on your amount, term and plans to repay early. NatWest’s Small Business Loan reaches £100,000 at a fixed rate over up to 7 years, with no set-up or early repayment fees. Lloyds offers terms of up to 10 years online and publishes an 11.2% representative APR on £1,000 to £25,000, but says a fixed-rate loan may carry a fee if you repay early.

Lloyds’ representative example is £8,000 over 60 months at 10.65% fixed: £172.55 a month, £10,353.00 in total. NatWest’s product page shows its representative example through a loan calculator, so check it for the amount you want. A representative APR is the rate a lender expects at least 51% of accepted applicants to get, so your rate may differ. Our guide to APR explains what the figure includes.

• Lloyds vs Barclays. Both publish 11.2% APR representative on loans of £1,000 to £25,000 over up to 10 years. Barclays says it charges no arrangement or early repayment fees and offers a repayment holiday from the start; Lloyds can go above £25,000 online, up to a personalised limit, and offers variable as well as fixed rates.
• Lloyds vs HSBC. HSBC caps its Small Business Loan at £25,000 with two representative APRs, 11.3% up to £10,000 and 8.6% above. It lets you defer the first repayment by 3 or 6 months. On early repayment, HSBC rebates interest less one month and 28 days’ interest.
• NatWest vs HSBC. NatWest’s small loan reaches £100,000 but over a maximum of 7 years; HSBC’s stops at £25,000 but runs up to 10 years.

For detail on individual banks, see our guides to the NatWest small business loan, the HSBC small business loan and RBS business loans, whose Small Business Loan matches NatWest’s.

Above £25,000 the banks quote rates and fees case by case. HSBC says arrangement fees may apply and are negotiated, and that a prepayment fee or fixed-rate break fee may apply. NatWest says security fees are charged under its tariff. For premises, Barclays publishes commercial mortgages from £25,001, which our commercial mortgages page covers.

No, but each sets its own conditions:

• Lloyds. You can apply without a Lloyds business current account; if you don’t open one, it opens a fee-free loan servicing account. Applicants must be at least 18, borrowing for business, and a sole trader, partner or director authorised to borrow.
• NatWest. You need a business current account with any provider. You must be 18 or over, a director of the business, and free of bankruptcy, County Court Judgments and Court Decrees.
• Barclays. You need a business account with another bank if not with Barclays, and the business must be based in the UK. Businesses with turnover of £6.5 million or more are directed to its corporate banking.
• HSBC. No HSBC business current account is needed unless the bank requires a debenture or a fixed charge over book debts.

On start-ups, Barclays says its loans can suit start-ups; the other banks’ loan pages we read do not set out start-up criteria. If a bank declines you, Lloyds Bank, Barclays and HSBC all describe lending appeals or referral routes.

All four say security may be needed, and none publishes a fixed rule for small loans:

• Lloyds. Says it seeks security only where appropriate, case by case, reflecting risk and the type of facility, and warns that property given as security, which may include your home, may be repossessed.
• NatWest. Says a personal, director or member’s guarantee may be required on its Small Business Loan.
• Barclays. Says borrowing over £100,000 needs a secured business loan.
• HSBC. Says security may be required, with an administration fee if it is, and that a debenture or fixed charge over book debts would mean opening an HSBC account.

Our guide to personal guarantees for business loans explains what a guarantor takes on.

• Under £25,000: compare the representative APR band for your amount, and early repayment terms if you might settle early.
• £25,000 to £100,000 unsecured: NatWest and Lloyds publish online routes to this size; Barclays moves to secured lending above £100,000.
• Long terms: Lloyds, Barclays and HSBC go to 10 years on small loans; NatWest stops at 7.
• Breathing space at the start: on small loans, HSBC and Barclays publish repayment holidays; NatWest describes them on its larger loans.

Lloyds, NatWest and Barclays each say you can get a quote or check eligibility without affecting your credit score. Our guide to comparing business loan lenders shows how to read the offers. If the banks turn you down, the Growth Guarantee Scheme and unsecured lenders outside the banks are alternatives, and our directory of business lenders sets out other lenders’ published terms.

Capzy is a credit broker, not a lender, and is paid by the lender. You can check your options with a soft search that does not affect your credit score; a full application to any lender may involve a hard search.