Sole Trader Loans

As a sole trader, you carry on business as a self employed person using your own name; there is no separation between your personal and professional lives. Being a sole proprietor has numerous advantages, such as complete control over your funds and flexibility, but there are also a few disadvantages, particularly when it to obtaining financing.

A limited company is thought to be “lower risk” than a sole trader business. And as a result of this risk, you might already be having trouble getting financing. You’ll need to find particular lenders prepared to lend to you as a sole trader; don’t worry, we can assist! You should choose alternative business finance over more conventional funding options like a bank loan, such as a sole trader business loan.

Finding the right lender for sole trader loans

You’ve come to the perfect place if you’re seeking for business capital. When you most need financial support, a sole trader loan may be the loan for your business you have been searching for. Here at Smart Funding Solutions, as a credit broker, we will pair you with a suitable lender and finance options available to sole traders.

With over 300 lenders on our panel, we’re never short of a line of credit for our clients, we’ll help you achieve a sole trader business loan in no time.

A secured loan, an unsecured loan, or asset financing are the three types of funding available. To learn more about the differences between the three, continue reading.


How do sole trader loans work?

A lone proprietor loan functions essentially just like any other loan. The lender will examine your financial situation to decide whether you can actually afford to repay the loan. Therefore, you must present the lender with your company’s financial information.
In the end, you’ll pay the loan out in monthly payments over a certain period of time, usually a few years, along with interest.

What can a sole trader loan be used for?

In the UK, there are 3.5 million sole proprietors, so it can be difficult to stand out and maintain your business in trying times. A single proprietor loan acts as a cash infusion and can be used to pay for a number of business expenses. It can help you as you expand into new markets or cover weaker months.

Use your sole trader’s funding for:

What are the benefits and drawbacks of loans for sole traders?

There are benefits and drawbacks to a sole trader loan, just like there are to any source of capital. You must carefully consider whether the advantages for your company exceed the disadvantages.

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The benefits of sole trader loans?

Custom financing: Unlike traditional finance, a sole trader loan is designed expressly to meet the needs of lone proprietors.
Several various funding alternatives: Both unsecured and secured loans are an option.
Cash injection: Lenders have many finance options that may provide you with a cash infusion to assist you to keep or expand your business.

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The drawbacks of financing for sole traders

Perhaps a personal guarantee is required: Your personal credit score may be at risk if you provide a personal guarantee.
Potential loss of assets: With a secured loan, late or missed payments might lower your credit rating or result in the repossession of an asset.
There are borrowing limits: Since a limited business has considerably lower liability than a sole trader does, you might not be capable of borrowing as much money.

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How does it work?

Fill in our form​

A member of the team will be in touch to collect some basic information. This helps us understand the type of funding that would best suit your business.

We find the best funding for you

We use the information you provided to source the best funding options for you and your business using our panel of over 250 lenders.

We present your options

We’ll then present you will all of the funding options available to you and give you time to decide which one you would like to proceed with.

What financial options are open to a sole trader?

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Unsecured business loans

The less dangerous choice for you as a sole trader is an unsecured loan. This kind of loan is not backed by an asset, most likely your property. The drawback is that, despite being less hazardous, it is unquestionably the more expensive alternative, with greater interest rates and compressed payment durations both being potential drawbacks.
Options range from a fixed rate term loan, merchant cash advances, online business loans, invoice finance and revolving credit facilities. The source of finance will depend on the amount of money you wish to borrow, affordability by way of cash flow and how long you have been trading in the United Kingdom.

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Secured business loan

An asset, such as real estate or another item, must be used to guarantee a secured loan by the borrower. Loans with collateral minimise risk for the lender but dramatically increase the risk for the borrower. You will profit more from cheap interest rates and better payback terms the lesser your risk is to lenders. But keep in mind that a secured loan carries a very significant risk. It’s not a decision to be made lightly since if you don’t make payments, the lender may decide to use your asset as collateral.
Despite the fact that the loan is backed by an asset, you could still need to give a personal guarantee. Before making a choice, you must spend some time researching the requirements of each lender.

Can I get a sole trader loan if I have bad credit?

You can, indeed. Fewer lenders will be ready to lend to you if your credit history is poor since they view you as a “high risk” borrower. Be ready for the possibility that lenders will seek a personal guarantee in order to reduce the risk. Loans for bad credit are becoming wider in variety, if there are no options for you, consider looking at a business credit card to build up your credit profile.

Fill in our form, and we’ll match you with all possible lenders for poor credit because we work with a range of UK lenders

How can I apply for a loan as a sole trader?

Fill out our quick quote form first. Following submission, we’ll review your application and find you the best lenders.

To discuss your lending alternatives, they will get in touch with you personally by phone or email. There is no cost associated with the indicative terms you receive, and you are under no obligation to accept any of them.

You will deal with a lender from our panel directly to finish your application and get the money if you decide to accept a loan offer from them.

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Should I compare loan providers for sole traders?

To ensure you receive the greatest loan offer available, you should constantly try to compare any financing offers you receive. How can you know if a better offer is waiting around the way without comparing UK lenders?
To give you peace of mind when comparing sole trader loan offers, we work with a large panel of UK lenders, and we always attempt to get you at least one other quote to compare against.
You’ll have to be a sole trader registered in England, Wales, Scotland or Northern Ireland.

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Can every sole trader get a business loan?

To qualify for a loan, you typically need to be in business for more than six months or have a minimum annual sales of £60,000+.
If your business is relatively new, there will be limited loan options for sole traders that you can explore Why not, however, have a look at our start-up business loan options? They might currently be a better match for your business. Start-up business loans can be achieved via secured funding or the government backed start up loans website (

Can I get a sole trader loan without having a business bank account?

The lender will determine this. A business bank account is typically not required to apply for a sole proprietor loan. However, since it can assist in separating your professional and personal finances, it might make the procedure simpler.

You may browse and compare sole trader bank accounts online if you’re self-employed and seeking to open a new account or leave your current provider.

Why Smart Funding Solutions?

Since we are a broker, you can use our comparison tool for free. We work hard to offer a fair loan comparison service for single proprietors.

We are aware of the hassle that comes with looking for funds; it’s not enjoyable, and because there are numerous different loan types, it can be exhausting to look through them all to locate the right one.

As the only employee in your company, you have to wear several hats. As a result, your small business shouldn’t lose valuable time while you study and compare alternative loan choices.

You can apply online here to check your eligibility, supplying a small amount of information. Upload your last 3 months bank statements and we’ll simply come back to you within 24 hours with some indicative loan options for you to consider.

Let us handle the effort for you while you concentrate on providing your products or services; we’ll connect you with the UK’s most eligible lenders.

Want to find out more? Head over to our frequently asked questions section of our website. Here you’ll finds the answers to all your business funding questions along with the types of loans we deal with.

Smart Funding Solutions are authorised and regulated by the financial conduct authority, FRN: 972740.

More Frequently Asked Questions

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A Sole Trader Loan is a type of business loan designed for sole traders. These loans can be tailored to support your business-specific needs, ranging from capital for starting up, to expansion, or for maintaining cash flow.

Just like any other loan, a Sole Trader Loan involves borrowing a sum of money from a lender, which you then repay over a specified period, together with any interest and fees levied by the lender.

Any self-employed person operating as a sole trader can apply for a Sole Trader Loan, provided they meet the lender’s eligibility requirements.

Loan amounts typically depend on the strength of your application and the specific policies of the lender. Amounts can range from a few thousand pounds up to a few hundred thousand.

The speed of approval and access to funds will vary depending on the lender. Some online lenders offer quick decision-making processes with funds transferred soon after approval.

Interest rates can greatly vary depending on the type of loan, your credit score, and other factors such as the loan term and amount borrowed. Always make sure to compare offers from different lenders.

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Lenders typically require proof of a steady income, good credit history, and information on your business income and expenses.

Although the loan is provided on the basis of your trade, the funds can be used for a variety of purposes. However, it’s generally recommended that the funds be used for business-related purposes to help your business prosper.

Repayments are typically made through regular instalments over the agreed term of the loan, comprising a portion of the loan principal and interest.

Most lenders will allow early repayment of a loan, but this may be subject to an early repayment charge. Make sure to check the specific terms of your loan agreement.

Failing to repay your loan could lead to added fees, damage to your credit score, and even legal action. If you’re having difficulty making repayments, you should contact your lender as soon as possible to discuss your options.

Sole Trader Loans can be very beneficial to individual business owners in need of financial support. However, the decision should be made carefully, considering your individual business needs and ability to make repayments.

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