Commercial Loans UK: A Complete Guide for Business Owners and Investors

Whether you're expanding your business, purchasing commercial premises, or investing in commercial property, a commercial loan can provide the funding you need to move forward. However, the UK commercial lending market is complex and varied — and finding the right product for your needs requires expert insight.

At Friends Capital Ltd, we specialise in helping businesses and investors across the UK secure the right commercial finance. In this guide, we’ll explain what commercial loans are, how they work, the different types available, and the key factors to consider before applying.

What Is a Commercial Loan?

A commercial loan is a type of finance used by businesses or investors to fund:

  • The purchase or refinance of commercial property
  • Business expansion or investment
  • Equipment or asset purchases
  • Working capital
  • Property development or refurbishment

Unlike residential mortgages, commercial loans are assessed on the strength of the business, the asset being financed, and the borrower’s experience. They are typically secured against property or other business assets, but unsecured options are also available in some cases.

Types of Commercial Loans Available in the UK

1. Commercial Mortgages

Used to buy or refinance commercial premises such as offices, warehouses, retail units, or mixed-use properties. Available to owner-occupiers or investors.

2. Buy-to-Let for Limited Companies

A specific type of commercial mortgage for landlords operating through a limited company.

3. Bridging Loans for Commercial Use

Short-term loans used for fast purchases, auction buys, or refurbishment projects.

4. Development Finance

For ground-up construction or major refurbishment projects. Staged funding is released as the project progresses.

5. Asset Finance

Used to purchase business-critical equipment, machinery, or vehicles.

6. Unsecured Business Loans

Typically smaller, short-term loans not backed by property but based on business turnover and creditworthiness.

Who Can Apply for a Commercial Loan?

Commercial finance is available to:

  • Limited companies
  • Sole traders
  • Partnerships
  • LLPs
  • Property investors and developers

Each lender has its own criteria, but most will require a solid business plan, trading history (where applicable), security, and evidence of affordability.

How Are Commercial Loans Assessed?

Unlike residential mortgages, commercial loans are evaluated based on:

  • Business performance and profit
  • Cash flow forecasts
  • Value and type of security
  • Borrower's credit profile
  • Loan-to-value (LTV) ratio
  • Exit strategy (for short-term loans)

At Friends Capital, we take time to understand your business and match you with lenders who will take a realistic and supportive view of your goals.

Typical Loan Terms and Amounts

  • Loan amounts: From £25,000 to £20 million+
  • Terms: From 6 months to 25 years
  • Interest rates: Vary depending on product type, security, and risk profile (fixed and variable rates available)
  • Loan-to-value: Typically up to 75% for commercial mortgages, higher for development finance with staged release

What Documents Will You Need?

While requirements vary, you’ll usually need to provide:

  • Business accounts and/or management accounts
  • Bank statements
  • Business plan or development appraisal
  • Proof of identity and address
  • Property details (valuation, lease agreements, etc.)

Our team will help you gather the right documents and present your application professionally to give you the best chance of approval.

Most Searched Questions About Commercial Loans in the UK

What is a commercial loan used for?

A commercial loan can be used to buy property, grow your business, invest in assets, cover short-term cash flow needs, or fund development projects.

How much deposit is needed for a commercial mortgage?

Most lenders require a deposit of 25%–40% of the property value, depending on the asset and risk involved.

Can I get a commercial loan with bad credit?

Yes, but your options may be limited. Specialist lenders may still offer finance based on the value of the property or business performance.

How long does it take to get a commercial loan?

Commercial mortgages typically take 4 to 8 weeks. Bridging or short-term commercial loans can complete in as little as 7 to 21 days.

Are commercial loan rates higher than residential?

Yes, commercial loans usually carry higher interest rates because they are considered higher risk and often more complex to underwrite.

Speak to a Commercial Finance Expert Today

Commercial finance is never a one-size-fits-all solution. Whether you're purchasing business premises, expanding your portfolio, or seeking capital to grow your operations, it’s important to structure the deal correctly.

At Friends Capital Ltd, our experienced advisers will:

  • Assess your needs and eligibility
  • Compare options from high street banks, challenger lenders, and specialist funders
  • Manage the application process from start to finish
  • Help you secure funding at the best possible terms

Get in touch with one of our expert mortgage and commercial finance advisers today to explore your options and find the right product for your business or investment needs.