NatWest review: business loans and invoice finance for UK businesses

NatWest is one of the UK's best-known high street banks, offering everything from small unsecured business loans to large term loans, commercial mortgages and invoice finance. NatWest is one of the lenders on our panel, and as an independent broker we can compare what it offers with specialist and challenger lenders, so you can see whether the bank route is really the best one for your business. You can read more on NatWest's own website.

01About NatWest

NatWest serves businesses of all sizes, from sole traders to large corporates. Its business finance falls into three broad groups: loans and overdrafts, property and asset finance, and what it calls alternative funding, which includes invoice finance.

A detail many business owners miss is that NatWest's invoice finance is provided by RBS Invoice Finance Limited on behalf of NatWest and Ulster Bank, and you do not need to hold a NatWest business current account to use it. Asset finance, such as hire purchase and leasing for vehicles and equipment, is offered through Lombard.

Smart Funding Solutions is an independent broker and is not part of NatWest.

02What NatWest funds

The table below summarises the main business products NatWest describes on its website. All are subject to approval.

Product	What it is for	Typical size	Typical term
Small Business Loan	Unsecured borrowing for everyday business needs	£1,000 to £100,000	1 to 7 years
Fixed and variable rate loans	Larger investment, expansion or refinancing	From £25,001; up to £10m on a fixed rate	Up to 25 years
Business overdraft	Short-term cash flow cover	£500 to £50,000	Up to 12 months, then reviewed
Commercial mortgage	Buying or refinancing business premises	From £25,001	1 to 25 years
Invoice discounting	Releasing cash tied up in unpaid invoices	From £300,000 annual turnover	Ongoing facility
Asset based lending	Borrowing against invoices plus stock and equipment	From £6.5m annual turnover	Ongoing facility

With invoice discounting, NatWest says you could receive up to 90 per cent of the value of outstanding invoices within 24 hours. You keep control of collecting payment from your customers, which keeps the arrangement confidential, but it does mean your credit control and ledger need to be in good order. Facilities are managed online through a platform called FacFlow.

For larger businesses, asset based lending combines your sales ledger with other assets such as stock and machinery. NatWest notes this can support acquisitions as well as day-to-day cash flow.

NatWest also offers social and community capital loans of £30,000 to £500,000 for trading charities and social enterprises that cannot get mainstream loans.

03Who NatWest suits (and who it may not)

NatWest's invoice finance team says it works with sectors including haulage, manufacturing and recruitment, where long payment terms tie up cash. More broadly, NatWest tends to suit:

• established businesses with filed accounts showing steady profits
• companies with turnover of £300,000 or more looking for confidential invoice finance
• businesses that want a long repayment term or a large fixed-rate loan
• borrowers who can offer security on larger facilities, if asked

It may be harder going if your business is very new, has recent losses or adverse credit, or needs money within days. Smaller businesses below the invoice discounting turnover threshold may be better served by factoring or selective invoice finance from a specialist.

The table below summarises the main business products NatWest describes on its website.

04What NatWest looks at

Every application is subject to status. For loans, banks typically look at your filed accounts, recent management figures, business bank statements, existing borrowing and the credit history of the business and its directors. Larger loans and commercial mortgages usually involve a fuller review of cash flow forecasts and any security being offered.

For invoice discounting, the lender will want to see an aged debtors list, details of your customers and payment terms, and how you manage credit control. NatWest warns that security may be required and that property or assets could be at risk if repayments are not kept up.

05Pros and cons

Pros

• A wide range under one roof, from small loans to commercial mortgages.
• Long terms available on larger loans and property finance.
• Invoice finance does not require a NatWest current account.
• Confidential invoice discounting with online management.

Cons

• High street bank criteria can be strict for newer or loss-making businesses.
• Invoice discounting starts at £300,000 turnover and asset based lending at £6.5m.
• Decisions on larger or secured facilities can take longer than with specialist lenders.
• Security may be required.

06Applying through a broker vs going direct

Many businesses go straight to their own bank, and if NatWest says yes on good terms, that may be the right answer. But a decline from a bank does not mean no lender will help, and a bank offer is not automatically the best on the market.

When you come to us, we search the market across our panel of more than 300 lenders, including banks and specialists. We present your case properly, approach the lenders most likely to approve it, and explain the offers clearly so you can compare them. It is free to enquire; any broker fee is disclosed separately before you proceed. Our Instant Quotes tool lets you compare lenders in minutes.

07Alternatives to NatWest

• HSBC: another high street option for established businesses wanting loans or invoice finance, worth comparing for international trade.
• Lloyds Bank Commercial Finance: a strong alternative for invoice discounting and asset based lending for larger turnovers.
• Close Brothers: often more flexible than a high street bank for businesses with a less straightforward story.

If a smaller unsecured loan is all you need, our guide to unsecured business loans explains how bank and non-bank options compare.