Co-operative Bank business loans: what the bank offers

The Co-operative Bank publishes two business loans and a set of related facilities. Its co-operative loans for businesses are the Variable Rate Loan and the Fixed Rate Loan; it also lists a commercial mortgage, a lending fund for charities and co-operatives, a renewable energy scheme, an overdraft and business cards.

The bank does not publish its interest margins or arrangement fees; it says both are discussed on application. Compare any offer on the total amount repayable, as our guide to comparing business loan lenders explains.

• Variable Rate Loan. The rate is the Bank of England Base Rate plus a margin set by your business's financial status, and for sole traders and partnerships your personal finances too. Repayments move when Base Rate moves. Interest is charged monthly. The bank advertises a repayment profile of up to 25 years, which its page ties to residential investment portfolios. The bank names buying a van, office refurbishment and growth projects among its uses.
• Fixed Rate Loan. The rate is fixed for 1 to 5 years, so repayments stay the same, and interest is charged monthly or quarterly. It starts at £250,000; the bank says fixed rate loans of £249,999 or under are not currently available. Break or amendment costs may apply if you repay early or change the terms during the fixed period.

Below £250,000, therefore, the published choice is the variable loan. Applications of £250,000 or more go through a Relationship Manager, and the bank says businesses with turnover of at least £2 million, deposits above £1 million or borrowing needs above £250,000 should contact one.

Yes. Each loan page lists holding a Co-operative Bank business bank account as a requirement, and says repayments must be made from it. If you bank elsewhere, borrowing from the Co-op means moving your banking, which takes time.

The bank's other published conditions are:

• Applicants are 18 or over and UK resident, with a business or charity address in the UK.
• You are authorised to borrow for the business or charity.
• The loan is for business use only, and assets bought must be in the borrower's name, not a director's or shareholder's.
• Pension funds and businesses based outside the UK cannot apply.
• Lending is subject to a satisfactory credit assessment, with credit checks on the business and key individuals.

Usually. The bank says its lending is typically secured, usually with a personal guarantee, though other security may be accepted, and that unsecured lending may be considered. Where property is the security, it publishes a maximum loan to value of 70% of market value depending on sector, or 80% for vacant possession properties. Security fees apply when security is taken, for example to register a legal charge.

Our page on personal guarantees for business loans explains what you are agreeing to.

The Co-operative Bank says it introduced its Ethical Policy in 1992, was the first UK bank to have one, and that the policy is customer-led. It says it is committed to not providing banking services to businesses and organisations that conflict with the policy, and that its screening has stopped an organisation joining because of involvement in fossil fuel extraction and declined businesses that conflict with its stance on human rights and animal welfare.

In practice, the policy is a gate before credit. If your sector could fall foul of it, read the full policy on the bank's site before you apply, because a strong set of accounts will not change the answer. For charities, co-operatives and community businesses, the bank's Charity and Co-operative Lending Fund is aimed at you: it is open to registered charities, co-operatives, credit unions, community interest companies and other not-for-profit organisations.

For loans under £250,000, the bank asks you to gather:

• Your Co-operative Bank business account details and the business's tax status.
• Details of existing borrowing.
• Personal financial details for the account signatories.
• Three years of annual accounts and six months of bank statements.
• Optionally, a 12-month cash flow forecast and aged debtor list.

You complete the application form and an assets and liabilities form and send them by email or post. The bank says it aims to contact you within 2 business days and to give a decision within 10 business days of a full application. Our business loan requirements guide covers how to prepare these documents. A cash flow forecast helps even where the bank lists it as optional.

Look elsewhere if you do not want to move your banking, need less than £25,020, or need an answer faster than a bank process allows.

• Smaller or faster loans. Online lenders publish unsecured business loans from a few thousand pounds, usually with a personal guarantee.
• Government-backed lending. The Growth Guarantee Scheme runs through accredited lenders; the guarantee is to the lender and you remain fully liable.
• Property. For premises, compare commercial mortgages from several lenders.
• Short-term cash flow. A business overdraft or invoice finance may fit better than a term loan.

Capzy is a credit broker, not a lender, and we are not connected to the Co-operative Bank. The lender pays us when a facility completes. You can see what other lenders publish in our lender directory, or check your funding options with a soft search that does not affect your credit score. A lender's full application may involve a hard search, and all finance is subject to status and lender criteria.