Business growth often requires more than ambition, it needs capital. For small and medium-sized enterprises (SMEs) in the United Kingdom, business loans can be a powerful tool to unlock new opportunities, manage cash flow, and stay competitive. But how do business loans work, and how can they be used to fuel long-term success?

This guide breaks down the essentials: From types of business loans to their benefits, key considerations and how a lender like Bizcap can support your growth journey in 2025.

A recent study discovered that 55% of Bizcap customers achieved a growth opportunity thanks to a Bizcap loan.

What is a business loan?

A business loan is a form of financing that gives companies access to funds they can use for a range of purposes: expanding operations, buying equipment, hiring staff, or even covering day-to-day expenses. In return, the borrower agrees to repay the loan over a specified period, usually with interest and fees.

Repayment terms can be daily, weekly, or monthly—depending on the lender and your business’s financial profile.

How do business loans work?

Here’s a simple breakdown:

  1. Apply through a lender or business loan adviser (advisers can help compare options across multiple lenders).
  2. Get assessed based on your credit profile, revenue, business age and other factors.
  3. Receive a loan offer with terms including loan amount, repayment period, fees, and interest rate.
  4. Repay over time on a set schedule or flexibly, depending on the product.

Many lenders, including Bizcap, now offer fast approvals and tailored loan structures, helping businesses access capital without the delays of traditional banks. See the business loan process below.

Types of business loans available in New Zealand

Whether you’re just starting out or scaling up, there’s likely a loan suited to your needs. Common options include:

1. Line of credit

A line of credit provides flexible, ongoing access to funds up to a pre-approved limit. You can draw on it as needed and only pay interest on what you use.

  • Ideal for cash flow gaps, payroll, or unexpected expenses
  • Reusable as you repay—no need to reapply
  • Interest-only or principal-plus-interest repayments, depending on structure

Best for: Businesses that experience seasonal fluctuations or need a financial safety net.

2. Equipment financing

Need to invest in tools, machinery, or vehicles without draining your working capital? Equipment financing allows you to acquire business-critical assets while spreading the cost over time.

  • The equipment itself usually serves as collateral
  • Tax-deductible interest and depreciation benefits
  • Preserves cash for other operating needs

Best for: Trades, manufacturers, or any business that relies heavily on physical assets.

3. Merchant cash advance

A merchant cash advance (MCA) gives you a lump sum upfront, repaid through a percentage of your daily or weekly sales. It’s fast, flexible, and moves in sync with your revenue.

  • Quick approval and funding—sometimes within 24 hours
  • No fixed repayments; repayments scale with sales volume
  • No collateral required

Best for: Retail, hospitality, and service businesses with strong card or EFTPOS sales.

4. Bridging finance

Bridging finance is short-term funding designed to “bridge the gap” between now and a future financial event—like a property sale, asset refinance, or large payment coming in.

  • Fast access to capital for time-sensitive opportunities
  • Typically secured with an asset
  • Higher costs, but useful when timing is critical

Best for: Businesses managing property transactions, asset purchases, or one-off cash flow crunches.

5. Fast business loan

When you need funds urgently, a fast business loan provides a lump sum with a streamlined application and rapid approval process.

  • Funds available within hours or 1–2 business days
  • Minimal documentation needed
  • Loan amounts from £5K to £750K

Best for: Emergencies, growth opportunities, or working capital needs that can’t wait.

6. Refinance business loan

Refinancing allows you to pay off an existing loan by replacing it with a new one—ideally on better terms or with additional capital.

  • Lower interest rates or longer repayment periods
  • Consolidate multiple debts into one manageable payment
  • Unlock equity for reinvestment into the business

Best for: Businesses aiming to improve cash flow, reduce repayments, or simplify their finances.

Each loan type has pros and cons, so it’s important to choose one that aligns with your business’s goals and cash flow.

Compare business loan solutions here.

Key benefits of business loans

When used strategically, business loans can be a catalyst for growth. Benefits include:

  • ‍Capital for growth: Launch new products, open new locations, or enter new markets. In fact, a recent study found that 55% of Bizcap customers were able to take advantage of a growth opportunity thanks to their loan, highlighting just how powerful the right funding can be.‍
  • Cash flow support: Smooth out revenue fluctuations and maintain day-to-day operations.‍
  • Credit building: On-time repayments can improve your business’s credit rating.‍
  • Maintain ownership: Unlike equity financing, loans don’t require giving up control of your business.

Pro Tip: Use loan funds with intent. Whether it’s inventory or expansion, track ROI and make sure every dollar is moving the needle.

What to consider before you apply

Before applying, ask yourself the following:

1. What’s the purpose of the loan?

A clear plan for how the funds will be used makes it easier to choose the right loan and get approved.

2. Can I manage the repayments?

Look at your cash flow to ensure you can repay the loan without overextending the business.

3. What are the loan terms?‍

Review the fees, interest rates, repayment structure, and flexibility of early repayment.

4. Should I use a business loan adviser?

A adviser can help you navigate multiple lenders and find the best terms for your situation.

How Bizcap can help

Bizcap is one of the UK's most accessible and responsive lenders for SMEs. Whether you need a quick cash injection, a loan to grow, or want to refinance an existing loan with more favourable terms, Bizcap can help.

Why choose Bizcap?

  • Fast Approvals and Funding: Apply online and get funded as soon as the same day.
  • Flexible Loan Amounts: Borrow between £5K to £750K with terms that suit your business.‍
  • Tailored Loan Structures: Work with our team to design a repayment plan that fits your cash flow.‍
  • Refinance Support: We help businesses simplify repayments and access better terms through refinancing.

No matter your industry or business size, Bizcap is ready to support your next big move.

Apply now or speak with our team to explore your options.