The pros and cons of a Natwest Business loan for UK companies

Limited working capital is one of the main barriers to business growth, with cash flow being a common challenge, particularly in certain industries. NatWest offers small business loans and other financing options to help UK companies overcome cash flow issues and reach their growth ambitions. 

This article explores the ins and outs of NatWest business loans, including the terms, rates, limits, repayment options and key eligibility considerations.

Exploring NatWest business loan options

The well-known high street bank has a range of borrowing options to suit diverse needs, from business overdrafts, credit cards and loans to specific finance products like invoice finance, asset finance and commercial mortgages.

The main types of business loans offered by NatWest are:

• Small Business Loans
• Fixed Rate Loans
• Variable Rate Loans
• Green Loans

Let’s look at each loan option and their key features and benefits.

NatWest Small Business Loans

NatWest’s Small Business Loans are designed for small to medium-sized companies looking for a cash injection to fund operational needs, with manageable repayments and terms that are easy to understand.

Key loan details and features

• Borrowing limits: Between £1,000 and £100,000.
• Repayment period: 1-7 years.
• Interest rates: Typically 10-15% – your specific rate depends on individual circumstances and required borrowing amount. The representative APR for loans between £10,000 and £19,000 is 12.24% (as of Q1 2025).
• Loan format: Unsecured term loan with a fixed rate of interest.
• Additional fees/charges: No arrangement fees or charges for early repayment.
• Other considerations: You can't take the loan in instalments or get a repayment holiday.

Benefits for UK businesses

• Tailored loan repayment terms, based on your financial circumstances. 
• Fixed interest rate for consistent monthly repayments and easy cash flow management.
• No early repayment penalties (which many banks and loan providers charge) or arrangement or security fees.
• Loans are unsecured, so you don’t need collateral to secure the capital.

NatWest Fixed Rate Loans

Businesses looking for consistent monthly repayments and access to larger sums of capital may favour NatWest’s Fixed Rate Loans.

Key loan details and features

• Borrowing limits: Between £25,001 and £10 million.
• Repayment period: Up to 25 years. 
• Interest rates: NatWest business loan rates are customised, based on the repayment profile chosen, amount borrowed, term length and individual circumstances. You can fix interest rates for 3, 5, 6, 10 or 15 years.
• Loan format: Secured and unsecured loans with a fixed interest rate and flexible repayment options.
• Additional fees/charges: Arrangement and security fees may be applied, depending on the loan structure, but you can make free early repayments.
• Other considerations: Different repayment profiles are available and you can take a Capital Repayment Holiday (a temporary pause in repayments), subject to approval. You may need to provide collateral or guarantees, depending on loan conditions and scope.

Benefits to UK businesses

• Access to capital to fund large business purchases, such as new equipment, infrastructure or property.
• Fixed rate of interest to enjoy predictable ongoing debt servicing costs
• Flexible repayment profiles to suit different needs
• Options to pause capital repayments for an agreed period and no early repayment fees.

NatWest Variable Rate Loans

If you don’t want to be locked into a fixed rate, you may want to explore NatWest’s Variable Rate Loans. There are flexible repayment options with variable interest rates offering access to higher borrowing amounts.

Key loan details and features

• Borrowing limits: Minimum loan amount of £25,001 with no upper limit.
• Repayment period: From 3 months to 25 years. 
• Interest rates: Variable rates that rise and fall per NatWest’s base rate. 
• Loan format: Secured and unsecured loans with variable rates and several repayment profiles.
• Additional fees/charges: No fees for early repayment but an arrangement fee may be charged, depending on the loan amount and complexity. Plus, if you’re required to provide collateral or guarantees, you could pay a security fee.  
• Other considerations: As interest rates vary, your monthly repayments will change during the loan term. Depending on the deal agreed, you may need to provide collateral as security.

Benefits to UK businesses

• Access to large sums of capital to support high value purchases, fund a new project or invest in future growth opportunities.
• If the NatWest Bank base rate falls, your total repayments will decrease.
• Choose from different repayment profiles, such as capital only and interest only options, or combinations. 
• If needed, you may pause capital repayments for an agreed period, and there are no charges for early loan completion.
• Tranche drawdowns are available in some cases.

NatWest Green Loans

If your company needs to fund business assets for buildings, energy, transport and agriculture solutions, you may be eligible for NatWest Green Loans. You can borrow between £50,001 and £10 million for 3 months to 25 years. Fixed and variable interest rate loans are available. 

As with other NatWest business loans, there are no early repayment charges and you can choose from several repayment options. Also, there is no arrangement fee for eligible UK businesses with an annual turnover of less than £25m, and you can take a Capital Repayment Holiday (subject to approval). 

See NatWest’s Climate and Sustainable Funding and Financing page for more details on eligibility criteria and what counts as green assets.

How do NatWest business loans compare to loans from alternative lenders?

The main advantages of alternative finance lenders over banks are the ease of applications, fast access to funds and flexible finance products. Plus, bank loans typically have more rigid terms and eligibility/documentation requirements – although NatWest provides more flexibility than most – and put more onus on credit ratings. 

Interest rates from alternative lenders vary widely, but banks tend to have lower rates, particularly for longer borrowing terms. Most private lenders offer both secured and unsecured loans with fixed and variable rate options – variable rates are influenced by the Bank of England base rate.

At iwoca, we understand the urgency of small business funding needs, so our applications are quick and easy, requiring far less documentation, and approved businesses can expect funds on the same day. Plus, we look beyond the credit score, focusing on other factors, like business plans and revenue potential. Also, like NatWest, we don’t charge fees for early repayments.

Learn more in our high street banks vs. alternative lender loans comparison article.

NatWest business loan application process

To apply for a NatWest business loan, you’ll need to speak to a lending specialist. However, if you’re an existing NatWest business customer, you can apply online through your business account.

Key steps involved in applying for NatWest business loans

For most of NatWest’s business loan options, you’ll go through the following application steps:

• Speak to the NatWest team (or a Relationship Specialist if applying for a Fixed or Variable Rate Loan) to discuss your finance requirements and options.
• You’ll need to provide various business and financial information – details outlined below – before your application is forwarded to the credit team.
• After reviewing your application and credit file, NatWest will confirm the outcome and agree the terms.
• Once terms have been agreed, conditions have met and documents are signed, the funds will be released to your account. 

Check your eligibility for NatWest’s Small Business Loans without affecting your credit rating. 

Eligibility criteria

To be considered for a NatWest business loan, applicants must:

• Be 18 years of age or older
• Be a director of the company
• Not have any County Court Judgments (CCJs) or Court Decree, or have been declared bankrupt
• Be a business current account holder of any provider

These are the minimum eligibility requirements for NatWest business loans but eligibility for certain loan terms/options are influenced by various factors, listed below.

Documentation required

For a small business loan from NatWest, you’ll need the following documentation:

• Partner or director details
• The date your business began trading
• Your address history for the past 3 years
• Business turnover and net profit in the last 12 months
• Projected turnover in the next 12 months
• Details of any existing business loans or overdraft repayments
• Records of personal loans, mortgages, overdrafts or credit card repayments
• Confirmation of any business current account held with any provider

For NatWest business loans with larger borrowing amounts and longer repayment schedules, you may be required to provide additional documentation, including potential assets that may be used as security.

Factors influencing business eligibility for NatWet business loans

• Business credit score and risk rating.
• Financial track record.
• Length of time in operation.
• Income and profitability.
• Personal credit history – if a personal guarantee is required.
• Accuracy of financial details and records provided.
• Extensiveness of your business plans.

If creditworthiness may be an issue, explore these ways to improve your credit score.

How quickly can I access the funds, and what’s the likely application timeline?

NatWest states that online applications for small business loans can take as little as 10 minutes and, once approved, you can get the funds on the same day, if loan documents are signed by 16:30 (Monday – Friday). However, this is for existing NatWest customers. Non-customers must speak directly to the NatWest business finance team, meaning the application process is much longer. 

The timeline for non-customers will vary, depending on how quickly you provide the required information (after your call with NatWest) and the time it takes for details to be reviewed by the credit team. Alternative digital lenders, like iwoca, enable businesses to apply online in minutes – our approvals are often made within 24 hours with funds transferred in hours after approval.

Understanding total cost of borrowing with NatWest business loans

To understand your total borrowing costs, decide how much you need and for how long and find out what other potential fees you may be charged.

The NatWest business loan calculator on the bank’s Small Business Loans page makes it easy to visualise likely monthly repayment amounts and total costs, as it’s a fixed interest rate and there are no arrangement, security or early repayment fees.

For NatWest’s other business loans, consider the following factors:

• Do you want a fixed or variable interest rate?
• What repayment profile do you want (interest only, capital only, etc.)?
• Do you need a secured or unsecured loan?
• What security fees will be charged for the assets you use as collateral?
• Will your loan type incur an arrangement fee?

NatWest doesn’t publicly advertise arrangement and security fees for its Fixed Rate and Variable Rate loans, or its specific interest rates, as these are all customised to your circumstances, so get a quote from NatWest, after discussing your requirements.

What is the cost of a NatWest business loan, including interest rates and any hidden fees?

The cost of using a NatWest business loan varies, depending on the loan type, repayment option and term length, as this impacts the interest accrued and whether you’ll need to pay additional costs, such as arrangement or security fees.

With NatWest, you won't incur charges for early repayments and certain business loans don’t include arrangement fees. If you’re interested in a small business loan, use the NatWest Small Business Loan calculator to predict the total borrowing costs.

Fixed vs. variable interest rates

In a fixed rate loan, your rate stays the same throughout the loan period, giving you consistent monthly repayments. Using a loan with a variable interest rate means the rate can fluctuate, based on whether the NatWest Bank base rate goes up or down.

Usually, the longer the fixed rate loan term, the smaller your monthly repayments, but you’ll pay more overall. While a variable rate may start lower than a fixed rate, you’re subject to higher rates if the base rate rises significantly.

What happens with my NatWest business loan if my financial circumstances change?

If your financial circumstances change, loans can be amended. For example, if you want to repay your NatWest business loan early, you can for free. On the other hand, if you’re struggling to make monthly repayments due to cash flow issues or unexpected costs, certain NatWest loans come with a repayment holiday option (with pauses of up to 6 months) and you may be able to adjust repayment terms.

Note: With iwoca business loans, you only pay interest on the funds you draw down, which is a more cost-efficient borrowing approach.

Do NatWest business loans require personal guarantees?

You may be asked to provide a personal guarantee, depending on your circumstances and loan type. It can be requested if you’re a new business or start-up without the financial track record to judge your ability to repay the loan. Or if you don’t have a great credit rating. A personal guarantee reduces the lending risk.

Differences between secured and unsecured NatWest loans

NatWest Small Business Loans are unsecured, while other NatWest business loans may require collateral or guarantees as security, depending on your required loan amount, borrowing period, industry type and financial circumstances.

A secured business loan requires you to use assets as collateral, such as commercial assets, equipment or property, or provide a guarantee to secure the capital. This reduces lender risk as, in the event of defaults on monthly repayments, the assets or guarantor can fund any shortfalls. 

Unsecured business loans don’t require collateral or guarantees, usually due to lower amounts and/or shorter repayment periods, as there are fewer risks of recouping funds. Generally, interest rates will be higher for unsecured loans.

Risks of personal guarantees and using assets as security

• Business assets may be seized in the event of repayment defaults.
• Personal funds may be affected by business debt issues.
• Business and personal credit records may be negatively impacted.
• Relationships with guarantors could be damaged.
• You may experience knock-on effects on business stability.

Industry-specific lending options and restrictions at NatWest

While NatWest doesn’t have industry-specific loans beyond its main business loan products, there are specialised finance options to explore, such as: 

• Asset finance, which can be ideal for manufacturing, retail and construction, for funding key business equipment, machinery and vehicles)
• Invoice finance, which provides fast access to funds tied up in client invoices to businesses in sectors impacted by seasonality, like hospitality and retail, or construction businesses affected by lengthy project and payment timelines
• Green loans – as mentioned earlier, NatWest has loan options catered to sustainability projects and assets related to green initiatives
• Commercial property finance options for various business property and real estate investment needs

Working in certain high-risk industries might impact your ability to get approved for a NatWest business loan, as will funding requirements not aligned with ESG policies.

Alternatives to NatWest business loans like iwoca’s Flexi-Loans

Many businesses seek alternative lenders due to perceived barriers to finance with traditional bank loans. This includes limited options for those with poorer credit ratings, slow application processes and rigid loan conditions/eligibility requirements. 

iwoca’s Flexi-Loans break down the barriers, offering fast access to finance, simple online applications and flexible repayment options tailored to business needs. Our flexible loan solutions are designed to support SME growth, ease cash flow management and simplify business finance access and use.

You can borrow £1,000 to £1,000,000 for a period of days up to 5 years, with no early repayment charges and swift approval decisions (usually within 24 hours). Funds can be in your account in a matter of hours.  Find out how to get a business loan from iwoca or learn more about our flexible business loan offerings.

Sources:

• NatWest Business Loans and Finance Options [NatWest]
• NatWest Small Business Loans [NatWest]
• NatWest Fixed and Variable Rate Loans [NatWest]
• NatWest Green Loans [NatWest]
• Climate and Sustainable Funding and Financing [NatWest]
• Small Business Loan Calculator [NatWest]‍
• Business Loans Comparison: High Street Banks vs. Alternative Lenders [iwoca]