OakNorth Bank offers tailored business loans from £1 million+, designed for ambitious, fast-growing UK companies. We break down what they offer, how their AI-driven approach works and where iwoca might be a better fit for more flexible or smaller-scale funding.
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The UK business banking landscape is changing fast, moving away from traditional high-street banking and towards more flexible alternative banking and finance. OakNorth Bank is one such challenger bank, providing large-scale borrowing to businesses that need funding fast to grab the next growth opportunity.
OakNorth provides debt finance services to businesses across a range of sectors, but with growth and scale-up opportunities at the heart of the bank’s lending.
Let’s take a more detailed look at the types of business loans that OakNorth offers and who these debt finance products are most suitable for.
OakNorth is a different kind of bank, with a specialised approach to debt finance and lending. The bank was founded by two entrepreneurs who’d faced difficulties funding their own analytics company and wanted to create an alternative to the usual funding routes. That entrepreneurial spirit is key to the OakNorth offering.
You can apply for various kinds of debt finance with OakNorth, including both secured and unsecured business loans, property finance and acquisition finance for companies that are planning mergers and buyouts.
Here’s a rundown of what’s offered by OakNorth’s business loans:
Loan amounts typically start from £1 million and can go up to tens of millions, depending on your working capital needs and the financial viability and revenue potential of your business.
OakNorth offers loans designed for property investments, mergers & acquisitions, growth and expansion and working capital needs.
Secured and unsecured loans are available. Secured loans will require you to offer collateral against the loan amount. This will usually be a business asset, such as property, equipment or machinery. Unsecured loans do not require collateral, but will usually offer smaller loan amounts, higher interest rates and shorter repayment terms.
OakNorth’s focus is not on historic accounts and past payment history etc. Loans are approved based on the future potential of your business.
Using bespoke AI technology, the bank uses data to measure your future viability and revenue generation potential. This then informs credit intelligence decisions on how much you can borrow and what your terms and repayment plan will look like.
OakNorth has a very specific focus and target customer. This is not the bank for you if you’re looking for small-scale funding or you’re a brand-new business.
The bank’s aim is to help fund mid-sized UK businesses that are growing fast, have a reasonable trading history and need working capital solutions to scale the company.
Here’s a breakdown of the main eligibility criteria for an OakNorth business loan:
If OakNorth sounds like a good fit for your funding needs, the next stage is to complete a loan application. This is the process of communicating your need for finance, your plans for the capital and the business data needed to prove your identity and viability as a business.
The loan application process is entirely digital, so it’s fast and simple.
Here are the key steps:
As part of the loan application process, you’ll be asked to share more detailed information about your business and finances. These are likely to include;
OakNorth Bank has a tailored approach to business lending, so repayment terms are highly individualised. The repayment terms you’re offered will depend on the specific loan and your business's needs and financial viability.
Key factors influencing your repayment terms will include:
OakNorth doesn’t specifically mention early repayment fees within the terms and conditions for their business loans. However, as the terms of each loan are tailored to the specific business and loan purpose, penalties may apply for some loans.
It’s best to check the early repayment penalties in the small print of your loan agreement before finalising and signing the deal.
Unlike the major high street banks, OakNorth doesn’t advertise a specific interest rate or average percentage rate (APR).
The cost of your loan – including the interest you will pay over the term of the loan – is based on the kind of borrower you are and the data you supply to OakNorth. This risk profile determines the interest rate, terms and overall cost of the loan. It will depend on factors like your credit history and industry sector.
OakNorth’s unique selling point is the speed, flexibility and competitive terms of their business loans, not the price and cost of the loan.
OakNorth uses artificial intelligence (AI) and data-driven underwriting to gain a deeper understanding of your business's financial health and potential. This leads to faster, more accurate, and more tailored lending decisions than the average lender.
Using a proprietary credit intelligence system, OakNorth’s AI systems review and analyse the business data you provide to gauge the future financial performance of your business. While the bank does include credit checks within this process, their loan approval process is based more on your future potential as a viable and profitable business – rather than payment and accounting history, like many banks.
If you’ve been overlooked by the high-street lenders, the OakNorth approach could offer a route to funding that may not previously have been available.
OakNorth’s funding process is generally faster and simpler than the big banks. The use of data-driven underwriting simplifies the process, reduces paperwork and delivers more tailored, data-driven offers and deals.
Initial offers can be received extremely quickly and final funding can be available in days or weeks, rather than months like some traditional lenders.
By having the relevant company registration details, business plan and digital bank statement data available, you can speed up the process further.
Do OakNorth Bank business loans require collateral or personal guarantees?
OakNorth Bank provides a range of debt finance solutions, including both secured and unsecured business loans. Secured loans will require you to offer collateral to secure the loan. This will usually be a business asset, such as property, equipment or vehicles etc. If you default on the loan, these assets could be at risk.
Personal guarantees are usually requested for companies that are new, or have limited trading history. If you’re a start-up, you may be asked to provide a personal guarantee against any business loan. This makes you liable for the loan, if the business were to fold, or was unable to repay the loan.
As one of a growing number of UK digital challenger banks, OakNorth’s approach to business lending is very different to the traditional debt finance model. As a lender, OakNorth is more tech-savvy, faster and specialises in lending to mid-sized businesses that have an urgent need for working capital.
Here’s a breakdown of the key differences:
If you’re a mid-sized UK business looking for large scale finance, OakNorth could be an excellent fit for your funding needs.
However, businesses often need finance on a more flexible basis as they grow. No matter the size of your business, an iwoca Flexi-Loan can help you adapt to market changes, manage working capital and embrace growth opportunities as they arise.
Our Flexi-Loan is perfect for companies that need a highly flexible and agile business loan to quickly fund a growth opportunity, or boost your working capital.
