A Guide To Allica Bank's Business Loan Options For Established UK SMEs

Allica Bank has enjoyed rapid growth over the past few years, earning a reputation as a big supporter of established UK businesses, combining digital lending and relationship banking. If you’re seeking tailored funding solutions to drive growth, Allica Bank business loans could be a viable option for your company.

In this article we explore the different loan options offered by Allica Bank, including key features, benefits and eligibility considerations, plus the innovative lending technology at play.

What business loans does Allica Bank offer?

Allica Bank recently topped Deloitte’s 2024 UK Technology Fast 50 Awards list and was named the fastest growing start-up in Europe by Sifted in 2024. The bank is one of several recent success stories in the UK fintech space, alongside Starling, Monzo and Revolut. 

Helping UK SMEs thrive is a key focus for the burgeoning banking brand. Allica Bank is dedicated to serving established businesses (organisations with 5-250 employees) and has lent over £3 billion since March 2020. Business loans are part of its Growth Finance facility, which includes term loans and revolving credit. 

Let’s explore the ins and outs of Allica Bank’s business loans and other business finance options it offers.

Allica Bank Growth Finance business loans

Allica Bank's Growth Finance facility offers access to working capital to help small and medium-sized businesses to achieve their growth ambitions. 

Here are some of the key details of Allica Bank business loans, including borrowing limits, fees and repayment options:

Key finance product details and features

• Agreement options: Secured business loans, including revolving credit, allowing businesses to draw and repay funds when required, and term loans, which involve an initial drawdown with agreed amortisation.
• Amount you can borrow: £1-£10 million.
• Repayment periods: Monthly repayments for between 3 and 5 years.
• Interest rates: Fixed and variable rates are available, but specific rates or APR are not advertised publicly. As the facility is bespoke, loan structure and rates are determined by your circumstances, requirements and creditworthiness.
• Fees: Allica charges an arrangement fee of 2% on its Growth Finance loans. This fee can be added to the loan balance for loans up to £3 million. Allica has a sliding scale of early repayment charges, depending on the year of the term you want to exit (between 5% and 1%). You may have to pay a security fee, depending on your collateral.
• Flexibility: The finance agreements are tailored to suit business needs, based on working capital requirements, credit ratings and growth aspirations.

• Security/collateral: Allica Bank business loans are secured by collateral, such as property, fixed assets, inventory and receivables, but the loan doesn’t have to be 100% asset-backed.
• Other considerations/features: A dedicated Relationship Manager will tailor finance agreements to your needs and provide ongoing expertise and support.

Typical use cases

• Business expansion, enabling owners to invest in new equipment, infrastructure, product lines, locations or other growth opportunities.
• Acquisition of other businesses to strengthen corporate aspirations.
• Supporting management buy-in or buy-out to secure future growth.
• Refinancing to restructure existing debt or release capital from owned assets.

What other business finance products does Allica Bank offer?

Allica Bank has other business finance products to help growing businesses, including asset finance and commercial property finance (including bridging loans). Here is an overview:

Asset finance from Allica Bank

Allica Bank Asset Finance enables businesses to purchase the latest tools and equipment to improve operations and fuel expansion. The facility uses modern technology and specialist expertise to provide suitable asset finance solutions.

Key finance details and features

• Agreement options: Asset/equipment finance, secured against the assets, where you pay monthly instalments to use the asset, rather than a big cost upfront. After the last repayment, you’ll own the asset outright. Allica Bank also offers asset refinancing for hard assets to restructure an existing loan or fund a new business purchase or project.
• Amount you can borrow: £25,000-£1 million.
• Repayment periods: 1-7 years. The longer terms are largely for hard assets.
• Interest rates: Ranging from 7-9%, depending on asset type, term length and cost of borrowing. See Allica’s Asset Finance product sheet for a full range of rates* for different asset values, types and term lengths.
• Fees: A documentation fee of £295, a £199 + VAT option to purchase fee, and an asset substitution fee of £100 + VAT. There are no annual service fees, but you may be charged arrangement and security fees, based on the loan’s value and asset required.
• Flexibility: Allica’s Asset Finance agreements cover numerous assets and equipment across industries.

• Security/collateral: As the finance is typically secured against the asset being purchased, if you fail to make repayments, Allica can repossess the asset.
• Other considerations/features: You get a dedicated Relationship Manager, while the bank’s innovative technology speeds up decision-making and helps match finance agreements with specific business needs. Also, Allica Bank is approved to provide asset finance through the UK government’s Growth Guarantee Scheme. Allica will consider VAT deferrals for all hard asset qualifying deals.

Typical use cases

• Funding materials, equipment and vehicles required to deliver key services.
• Upgrading legacy systems and bolstering business assets.
• Kitting out sites for new business projects.
• Purchasing vital assets to expand operations or enter new markets.
• Refinancing existing assets and outdated equipment.

Types of assets funded

A wide range of hard, medium and soft assets, including the following:

• Manufacturing and production equipment
• Transportation/vehicles
• Materials handling equipment
• Plant, machinery and construction equipment 
• Robotics
• Agricultural equipment
• Textile equipment
• Medical equipment
• Telecoms and IT equipment
• Industry-specific equipment, from catering and hospitality to health and gyms, and much more

*The rates shown on the Asset Finance product sheet represent minimum net yield to Allica.

Commercial Property Finance from Allica Bank

Allica Bank offers long- and short-term Commercial Property Finance options to help companies reach their growth ambitions. This includes owner-occupied mortgages, investment mortgages and bridging loans.

Key finance details and features

• Agreement options: Commercial owner-occupied mortgages, commercial investment mortgages, bridging finance and property refinance options.
• Amount you can borrow: £150,000-£10 million. The maximum loan-to-value (LTV) is 80% (or 75% if for a bridging loan).
• Repayment periods: 5-25 years for owner-occupied mortgages, 5 years for investment mortgages and 3-24 months for bridging loans.
• Interest rates: Variable rates (from 2-5% margin over the Bank of England base rate), or 5-year fixed rates ranging from 6-9% (depending on mortgage type, property type and LTV). For the full list of rates, see Allica’s Commercial Mortgages product guide.
• Fees: There are arrangement fees of between 1.5% and 2% and a commitment fee of £500 (refunded upon completion), plus various fees that come with buying properties, such as valuations, surveys, legal fees and administrative costs – details included in Allica’s Commercial Mortgage tariff sheet. Early repayment charges apply – businesses are charged 3% for the first 5 years for variable rate mortgages, while 5-year fixed rate breakage costs are 1-5%.
• Flexibility: Overpayment of 10% per year is allowed, but you’ll pay early repayment charges, as detailed above. Choose between fixed or variable rates, with access to a Relationship Manager.

• Security/collateral: Security is required, using “first legal charge” over the freehold or long leasehold title, while debentures and guarantees are reviewed case-by-case. 
• Other considerations/features: There are various commercial property finance options, which Allica’s Relationship Managers can help you navigate. Allica Bank’s bridging loans are short-term finance options that help bridge gaps to reach your commercial property goals.

Typical use cases

• Owning a business premises (if currently renting property) to gain greater control over locations.
• Generating new revenue streams through real estate investment and buy-to-let opportunities.
• Funding refurbishment costs and raising capital for other investments by refinancing existing commercial property.
• Bridging gaps in finance to complete commercial property purchases.

Key benefits of Allica Bank’s business loans for UK companies

Allica’s business loans and finance options support established UK company needs, with significant capital (up to £10 million) available. The Growth Finance business loans have terms of 3 to 5 years, while Asset Finance can be secured between a year and 7 years. Commercial Property Finance agreements, like most mortgages, can run for 25 years.

Primarily offering secured, fixed-term finance solutions, Allica Bank business loans deliver the following benefits:

• Tailored loan agreements powered by innovative lending technology and dedicated relationship banking.
• Significant working capital to enhance business operations and improve cash flow management
• Enabling businesses to invest in future growth
• Funds to purchase vital business assets, equipment and infrastructure
• Tax incentives – many investments and assets offer tax relief/allowances, while business loan interest and certain agreements are tax deductible

How do Allica Bank’s loan features and costs compare with other financing options?

Allica Bank’s business loans are uniquely positioned in the market, specialising in established SMEs moving into their next growth stage. This is reflected in Allica’s Growth Finance facility, which has a funding range of between £1-10 million for periods of 3 to 5 years. Banks like Barclays and NatWest have SME-focused unsecured loans, but with lower borrowing thresholds. For example, with Barclays, small businesses can borrow up to £25,000, and NatWest’s small business loans offer £1,000-£100,000.

While these banks provide access to dedicated experts, Allica’s Relationship Managers are one of its key selling points in its tailored approach. 

Cost-wise, while most banks offer competitive business loan interest rates, secured business loans like Allica’s are typically lower than unsecured offerings. However, you should be mindful of the additional fees Allica charges, such as arrangement fees, security fees and early repayment fees, which not all banks or lenders charge, 

For a wider range of business finance options and greater flexibility, consider exploring alternative loan solutions from private lenders.

What should business owners consider before applying for an Allica Bank business loan?

When applying for an Allica Bank business loan, review your financial position, forecasts and credit score, gauge what assets could be used as security and be clear about Allica’s fees (to calculate the total cost of borrowing). 

Also, you need to know the eligibility criteria and documentation required to avoid delaying loan applications. 

What are the eligibility criteria and documentation requirements?

To be eligible for a business loan with Allica Bank, you must be a limited company, LLP, partnership or sole trader trading in the UK for at least two years, with a viable business proposition and no financial difficulties. Allica’s finance applications require various financial records and business information to help the bank’s system and specialists judge your suitability and risk level.

Here are the types of documentation you need when applying for an Allica Bank business loan:

• Registered company number, legal status and address.
• Details of the individual applying on behalf of the business (who must be an authorised director or partner).
• Purpose of the loan and amount sought.
• Financial records like cash flow, profit/loss statements and balance sheets.
• Historic bank statements from your current business account.
• Details of existing loans and credit agreements.
• Business plans and financial forecasts.

How quickly can I access funding with an Allica Bank business loan?

Approval decisions usually take 2-3 days, although a DIP (decision-in-principle) could be issued by the next working day. Once a formal business loan offer is issued and terms have been agreed, funds can be released in a matter of days. The timeline depends on the type of loan chosen and capital amount – typically between 24 and 48 hours.

How does Allica Bank leverage digital innovation in its lending process?

Allica Bank recently rebranded to help communicate how it’s transforming finance for established businesses. As a new bank, Allica isn’t burdened by fragmented legacy systems that have seen incumbent banks navigating complex digital transformations.

Allica’s automated decisioning system (incorporating machine learning) allows its specialists to reduce time spent on administrative processes and focus more on providing value. The system leverages automation and AI to streamline its lending process and accurately determine a customer’s likelihood to default on repayments.

Using alternative data sources to assess creditworthiness

Allica Bank looks beyond the credit score, using cash flow analysis and insights into stability and growth potential, considering the following factors:

• Sector risks
• Market conditions
• External economic factors
• Management experience
• Business plans
• Historical performance.

This comprehensive approach ensures lending decisions align with long-term viability and finance solutions support sustainable growth.

Alternatives to Allica Bank’s business loans

Allica Bank’s primary focus is on established SMEs. If you’re a newer or smaller business without a significant financial track record, you may want to explore alternatives to Allica Bank.

While Allica’s approach may stand out from other banks, many alternative business finance providers provide fast, flexible lending processes and tailored solutions. For example, digital lenders like iwoca enable businesses to apply for flexible business loans online in minutes, with fast approval decisions – applications are assessed without the usual rigmarole and exhaustive documentation involved in most bank loan applications.

Digital lenders also often put less onus on your business credit score, and look at business plans, cash flow, revenue potential, and many more factors, meaning higher approval rates for new businesses and companies without stellar credit scores.

Explore our Flexi-Loan solutions for small businesses

iwoca is a leading flexible loan provider for UK SMEs, offering short-term funding solutions to ease financial pressure and power business growth. Our Flexi-Loan solutions unlock timely working capital and funds to invest in future growth. 

Borrow £1,000-£1,000,000 for a few days up to 60 months, with manageable monthly repayments, aligned with your cash flow. We don’t charge fees for early loan repayment and you only accrue interest on the funds drawn down. You can use our business loan calculator to see your likely repayment costs.

Find out how to get a business loan from iwoca online. You’ll receive a swift approval decision (usually within 24 hours) and funds are often transferred a few hours after approval.

Sources:

• Deloitte’s UK Technology Fast 50 Awards: 2024 Winners [Deloitte]
• Sifted 250 (2024) [Sifted]
• Allica Bank’s Bold New Look Signals Next Phase of Growth [Fintech Finance]
• Allica Bank Growth Finance Solutions [Allica]
• Allica Bank Asset Finance Solutions [Allica]
• Allica Bank Commercial Mortgages Loans [Allica]
• Allica Bank Bridging Loans [Allica]
• Technology at Allica: Building a New Type of Business Bank [Allica]
• Brokercast: Tech, AI, and APIs in Commercial Lending [Allica]

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