HSBC review: business loans for UK businesses

HSBC UK is one of the country's largest high street banks, and its business loans range from small, fixed loans for sole traders through to large, structured facilities for established companies. If you are weighing up an HSBC loan, Smart Funding Solutions is an independent broker that can set it alongside offers from the rest of the market so you can see whether it really is the best fit.

01About HSBC business lending

HSBC UK serves businesses of every size, from start ups and sole traders to large corporates. Its business lending is split into a few clear products, each with its own size band. Smaller loans can be applied for online through Business Internet Banking by existing customers, while larger facilities are usually arranged with a relationship manager.

One practical point worth knowing: HSBC says you do not need to open or keep an HSBC Business Current Account for its loans unless it takes a debenture or fixed charge as security. That makes it more open to non customers than some banks, although existing customers with a good account history will usually find the process smoother.

HSBC is one of the lenders on our panel. Smart Funding Solutions is an independent broker and is not part of HSBC.

02What HSBC funds

HSBC's public product pages describe three main business loans. Figures below are taken from those pages and can change, so treat them as a guide.

The Small Business Loan lets you defer the first repayment for a few months or take an annual January repayment holiday, which can help seasonal trades. The Commercial and Flexible loans can include capital repayment holidays of up to 24 months, subject to status. The Commercial Business Loan cannot be used to buy or develop property or land, so if that is your aim you would look at a commercial mortgage instead.

03Who HSBC suits (and who it may not)

An HSBC loan tends to suit a business that:

• has a solid trading record and filed accounts showing it can afford the repayments
• wants a longer term, up to 10 years on a standard loan, to keep monthly payments manageable
• values the stability of borrowing from a large bank and may want other banking services alongside
• has a planned purchase or project rather than an urgent cash gap

It may be less suitable if you need money within days, have a short trading history, have had recent credit problems, or want to borrow against property. High street banks usually have tighter appetite than specialist lenders, and decisions on larger amounts can take longer. In those cases an unsecured business loan from an alternative lender may be quicker, even if the overall cost differs.

04What HSBC looks at

HSBC states that lending is subject to credit approval and that security may be required, with each case considered on its own merits. For loans of this kind, banks typically look at:

• your latest filed accounts and, for newer firms, management accounts and forecasts
• recent business bank statements
• existing borrowing and how it is being repaid
• the purpose of the loan and how it will be repaid
• business and personal credit history of the owners or directors

Where a bank wants comfort beyond the figures, it may ask for a personal guarantee or a debenture over the company. Our guide to how lenders assess business loan applications explains each of these in more detail.

05Pros and cons of HSBC business loans

Pros

• Clear product ladder from £1,000 up to multi million pound facilities
• Long terms available, up to 10 years on standard loans and longer on the Flexible Business Loan
• Repayment holiday options on several products
• No requirement to hold an HSBC business account unless security is taken

Cons

• Bank credit appetite can be cautious for young or recovering businesses
• Larger facilities often need a relationship manager, which can slow things down
• Security may be required, and the Commercial Business Loan excludes property purchase and development
• One bank's offer gives you no benchmark for whether the terms are competitive

HSBC states that lending is subject to credit approval and that security may be required, with each case considered on its own merits.

06Applying through a broker vs going direct

You can apply to HSBC yourself, and if you already bank there that may be the obvious first step. The risk is that a decline, or a mediocre offer, leaves you with nothing to compare it against and a fresh search on your credit file.

When you come to us, we search the market across our panel of 300+ lenders, including high street banks like HSBC, challenger banks and specialist lenders. We look at your accounts and purpose up front, present the case to the lenders most likely to approve it, and let you compare offers side by side with one application. It is free to enquire; any broker fee is disclosed separately before you proceed. To see what is available, start with our instant quotes tool.

You can also check HSBC's own product details on the HSBC UK business website.

07Alternatives to HSBC

• NatWest: another large high street bank, worth comparing if you want a mainstream bank loan and already hold accounts there.
• Allica Bank: a business focused bank that can suit established small and medium firms that want a more personal approach.
• LendingCrowd: an alternative lender for established limited companies borrowing larger unsecured sums, often with a quicker decision than a bank.

If you are also looking at other big banks, see our page on Barclays business loans for a direct comparison.