Sole trader loans – Compare options for your business
Running a business as a sole trader means wearing many hats – managing customers, suppliers and finances. Access to funding can help smooth cash flow, invest in growth or handle unexpected expenses.
A sole trader loan is a form of business finance tailored for self-employed individuals. Funding Options by Tide works with 80+ UK lenders and has supported more than 17,000 businesses, securing over £1bn in funding. Compare sole trader loans in minutes and find the right option for you.
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What are sole trader loans and how they work
What are sole trader loans?
Sole trader loans are funding solutions available to self-employed people running their own business. They work like other business loans but are tailored to individuals who don’t operate through a limited company.
These loans can provide working capital, support marketing campaigns, buy stock or cover one-off expenses.
How do sole trader loans work?
Apply online with details of your trading history, turnover and purpose.
Lenders assess your credit profile, bank statements and income stability.
If approved, receive funds as a lump sum or flexible line of credit.
Repay in instalments, usually monthly, with interest.
Unlike personal loans, business loan eligibility is based on trading activity and the health of your business.
The different types of sole trader loans available
Secured
A secured business loan is taken out against an asset. An example of a secured loan is a mortgage. In this case, the property is the asset against which the loan is secured and if you miss repayments, the lender may repossess the property.
Unsecured
An unsecured loan is taken out without collateral. Unsecured loans sometimes require personal guarantees. This is a good option if you do not own any assets, however, this option can be more pricey when compared to secured loans. An example of an unsecured loan is an overdraft. With an overdraft, the institution you bank with allows you to borrow a limited amount of money which you can tap into once you have depleted your account.
Asset finance
With asset finance, you can spread the cost over a set period when you purchase or lease equipment, vehicles, or technology.
Bridging loans
A bridging loan is a short-term loan designed to bridge the gap between purchasing a property and finding funding, for example, getting accepted for a mortgage or the sale of the property going through.
Invoice finance
Need to release the money from unpaid invoices? Invoice finance enhances cash flow by giving you access to that money now, rather than in 30, 60, or 90 days.
Credit cards
Business credit cards can be used day-to-day to make purchases. The funds are then paid back in at the end of each month.
Lines of credit
This type of loan provides flexible access to funding, you get a pre-approved borrowing limit and only pay interest on what you use. Lines of credit suit short term working capital needs.
Microloans
There’s a reason these are called micro. They are smaller loans and can be easier to access and qualify for than traditional bank loans. These types of loans can provide a great way to make inventory purchases or inject money into marketing efforts.
Peer-to-peer lending
With P2P lending, you can borrow money from individual investors, usually this type of lending occurs on an online platform.
How does Funding Options work?
Tell us how much you need
We’ll ask a few questions about your business and the reason for your loan.
Get quotes instantly
Our smart technology will compare quotes from up to 80+ lenders to help you find the ideal business loan.
Apply for a Business Loan 🎉
We'll be there to guide you through every step of the process.
Estimate your costs today
If you're ready to take your business to the next level, use our business loans calculator to get an idea of what you can afford.
Want to understand the cost of your loan?
Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
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Financial product information
Representative example*
• 7.63% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,252.94. The total amount payable is £54,070.56
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 2.75% APR
Repayment period
1 month to 30 years terms
Pros and cons of sole trader loans
Sole trader loans can be useful, but it’s important to weigh the benefits and risks before applying.
Pros | Cons |
Access working capital to support business growth | Sole traders are personally liable for debt |
Wide choice of products and lenders | May require a |
Can be approved quickly | Higher interest rates if credit profile is weak |
Keep control of your business | Risk of damaging personal credit if repayments are missed |
Eligibility criteria for sole trader loans
Lenders will look at:
Length of trading history (often 6–12 months minimum)
Annual turnover and profit
Credit score and repayment history (see bad credit business loans)
Bank statements and tax returns
Security or guarantees if required
Alternatives to sole trader loans
Personal loans
Personal loans Can be used but may lack business protections
Credit cards
Credit cards are useful for smaller day-to-day costs.
Overdrafts
Flexible but often with lower limits.
Equity finance
Equity finance may suit growth businesses but involves giving up ownership.
How to apply with Funding Options by Tide
No fees for comparing and no obligation to proceed.
Tell us about your business and the funding you need.
Compare tailored offers from 80+ UK lenders.
Provide documents for underwriting.
Finalise your facility and receive funds quickly.
Find out more about sole trader business loans
Can sole traders get business loans?
Yes, sole traders are eligible for business loans. Approval depends on turnover, credit profile and trading history.
Do I need to provide security?
Some loans are unsecured, while others require assets or a personal guarantee. See our guide to secured loans.
What can sole trader loans be used for?
Anything that supports your business: cash flow, stock, marketing or equipment.
Will a sole trader loan affect my personal credit?
Yes, as a sole trader your business and personal finances are linked. Missed repayments can impact your personal credit record.
Why choose Funding Options by Tide?
Funding Options by Tide helps UK SMEs find fast, tailored business finance by connecting them with over 80 trusted lenders. Backed by Tide and FCA-regulated, the service is free and easy to use.
Compare 80+ lenders
Access a wide range of trusted lenders: from high street banks to alternative finance providers.
No fees or obligations
Our service is completely free to use. You’re in control of who you borrow from.
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Get real-time matches based on your business profile and funding needs.
Expert support when you need it
Our team is here to help — by phone, chat, or email.
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.
Joe Morley
Business Finance Lead
Joe has been helping UK businesses secure the funding they need since 2015. Over the years, he’s supported hundreds of SMEs in accessing millions of pounds for everything from purchasing essential assets to unlocking working capital for day-to-day operations. As Head of Sales at Funding Options, Joe leads a large team of expert Business Finance Specialists dedicated to finding the right solution for every customer. His goal is simple - to make securing finance straightforward, stress free, and tailored to each business’s needs.