Sole Trader Loans

If you're a sole trader, you might come up against a few barriers when it comes to finding suitable business funding. Although many alternative finance (Altfi) providers tend to lend over £25,000 to sole traders, there are other lenders who'll provide a few hundred or few thousand. The likes of peer-to-peer lending, specialist SME lenders and government funding schemes can all be sources of money for sole traders.

Best loans for sole traders

Firstly, it’s important to know that as a sole trader, you'll probably be asked to provide a personal guarantee against a loan. This provides the lender with assurance that they'll be able to recover the money.

Secured and unsecured loans

Secured and unsecured loans are both possibilities - with the first you'll need to provide company assets as security, but that's not required for the latter. Which ever you choose, you could be also asked for a personal guarantee. Also, an unsecured loan is ideal for short-term lending; it’s helpful for easing cash flow when you’re waiting for customers to pay invoices for example. It's also typically easier to apply for.

Other sources of sole trader funding

More good news for sole traders: you can also go to peer-to-peer (P2P) platforms like Funding Circle, Ratesetter and Zopa to borrow money from investors. Again, check their minimum borrowing thresholds for sole traders.

Basically, P2P lending – or debt crowdfunding – lets investors lend you money via an online platform. Even if they just lend a small amount each, when a large number people are contributing, the amount could add up, possibly resulting in hundreds of thousands of pounds.

There’s a lot of competition among small businesses on P2P sites, so you’ll need a great idea and a compelling pitch to attract investors. But if you’ve got something truly innovative and unique, this could be the right choice for you.

Apply for a sole trader loan

Researching business loans in the UK

Below are key online search tools designed to help sole traders and other SMEs find financing:

Startuploans.co.uk

Alternativebusinessfunding.co.uk

Betterbusinessfinance.co.uk/finance

Gov.uk/business-finance-support-finder

If you’re specifically looking for funding that you don’t need to pay back, read about small business grants. Otherwise, there’s plenty more information on business funding like reward crowdfunding, pension-led financing and invoice discounting in our guide to alternative finance.

How to apply for a sole trader loan

If you're looking for a sole trader loan of more than £25,000, Fleximize might be able to help. You can fill in our short online form, or call our experienced team on 0207 100 0110 to find out more about our business loans.