A guide to long-term business loans

What is a long-term business loan?

A long-term business loan is a lump sum you borrow and repay over an extended period - typically two years or more. You repay in fixed monthly instalments, which makes it easier to budget alongside your other costs.

Unlike short-term business loans (repaid within a few months), long-term loans spread the cost over years. This lowers your monthly repayments but means you'll pay more interest overall.

Long-term loans suit larger investments where you need time to see a return - things like expansion, equipment, or property. iwoca offers two longer-term products designed for exactly this:

• Flexi-24: Repay over 24 months, ideal for medium-term investments where you want lower monthly payments than a 12-month loan.
• Flexi-60: Repay over 36 - 60 months, ideal for larger investments where you want the lowest possible monthly cost.

Both come with fixed interest rates (so your repayments never change), no early repayment fees, and the option to top up after you've repaid just 15% of your balance.

If your needs are shorter-term - bridging a cash flow gap, buying seasonal stock, or handling an unexpected cost - iwoca's Flexi-12 loan lets you borrow over 12 months with no fees at all. It's often the better fit when you'll only need the funds for a few weeks or months.

How much can I borrow with a long-term business loan?

With iwoca, you can borrow up to £1 million. We typically offer up to 10% of your annual turnover. The exact amount depends on your business performance, trading history, and credit profile. For more on larger loans, see our large business loans page.

What can you use a long-term business loan for?

A long-term loan works best when you're investing in something that will pay off over a number of years. Here are some of the most common uses:

• Business expansion - Opening a new location, entering a new market, or scaling your operations. A longer term gives you breathing room while the new revenue stream builds up.
• Equipment and asset purchases - Machinery, vehicles, technology, or fit-outs that will serve you for years. Spreading the cost over the asset's useful life keeps your cash flow healthy.
• Commercial property - Buying or renovating premises. Property is a long-term investment, so a long-term loan matches the payback timeline.
• Hiring and recruitment - Growing your team ahead of demand so you're ready when it arrives. Salaries are an ongoing cost, so lower monthly repayments help you absorb them alongside payroll.
• Refinancing existing debt - If you have several short-term debts with different repayment dates, consolidating them into one long-term loan simplifies your finances and can reduce your total monthly outgoing.

The key question to ask yourself is: Will this investment generate enough value over the loan term to justify the cost of borrowing? If you just need to bridge a short-term cash flow gap, a short-term business loan may be a better fit.

Advantages and disadvantages of long-term business loans

Advantages

• Lower monthly repayments - Spreading the cost over 24 to 60 months significantly reduces what you pay each month compared to a 12-month loan, easing pressure on your cash flow.
• Access to larger amounts - Lenders are often willing to lend more when repayment is spread over a longer term, giving you the capital needed for major investments. ‍
• Long-term fixed rates - iwoca's Flexi-24 and Flexi-60 loans have fixed interest rates, so your monthly repayment stays the same from first month to last. No surprises from rate changes.
• Predictable budgeting - With iwoca's long-term loans, your first repayment is due 30 days after you draw down the loan, then monthly from there. This supports predictable long-term budgeting.
• Flexibility built in - With iwoca's loans, if you want to repay early then you can at anytime without facing any early repayment fees. Or if you want to borrow more, you can apply for a top-up once you've repaid 15% of your balance - your credit limit can grow as your business grows.

Disadvantages

• Higher total interest cost - Since you are borrowing for longer, the total interest paid over the life of the loan is higher than a short-term alternative. That said, if the loan is funding an investment that generates strong returns, the overall cost can still make sense. And with iwoca, there are no early repayment fees on any term - so if your circumstances improve, you can clear the balance sooner and pay less interest. ‍
• Long-term commitment - You'll be committed to making regular repayments throughout the full term. Before committing, make sure your cash flow projections can support this.

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Types of long-term business loans

Long-term business loans fall into one of two categories: Secured loans and unsecured loans.

Secured long-term loans

Secured loans are backed by collateral - usually property, equipment, or other business assets. Commercial mortgages are a popular type of secured loans, typically in the form 10-25 year loans secured against a property owned by the business. Secured lenders may be willing to offer larger amounts and lower interest rates because the collateral provides extra security in the event of non-payment.

However, this is the big downside for borrowers: if you can't keep up with repayments on your secured loan, the lender has the right to take control of the business assets used as collateral for the loan. Additionally, secured loans tend to take longer to arrange because the lender needs to value your collateral. They're best suited to businesses with significant assets who want to borrow large amounts at the lowest possible rate with the time to navigate a longer application process.

Unsecured long-term loans

Unsecured loans do not require collateral, which means you don't have to risk business assets to get one. They're typically quicker to arrange and involve less paperwork. Interest rates may be slightly higher because the lender takes on more risk. But the speed and simplicity often make up for it - especially if you don't have property or high-value assets to offer.

iwoca's Flexi-24 and Flexi-60 products are both unsecured loans - you won't need to put up any business as security. Instead, a personal guarantee from a company director is required.

Long-term vs short-term business loans

We've put together this handy comparison between iwoca's short-term and long-term business loans, to help you decide which product is best for your needs.

Is it harder to qualify for a long-term loan compared to a short-term loan?

Long-term loans often have stricter eligibility criteria than short-term loans. Lenders often want to see strong credit history, steady income and proven debt management. As the lender is enabling a longer repayment period, they’ll want greater assurance that you can maintain consistent payments for the loan’s duration. With iwoca, you can apply for your desired amount and we'll assess you for both a short-term and long-term loan simultaneously; no need to apply for one at a time.

If you're still unsure which term is suitable for your needs, use our business loan calculator to compare what monthly repayments would look like across different loan terms.

Eligibility criteria

To be eligible for an iwoca loan, you must meet these three criteria:

• Be at least 18 years old
• Be based in the UK
• Be a Limited Company or Limited Liability Partnership (LLP)

To make a decision, we look at the full picture of your business - how much revenue you're generating, how long you've been trading, and your overall financial health - not just your credit score.

Will applying for a long-term business loan impact my credit score?

When you apply, we run a soft credit check - this won't show up on your credit file or affect your score. A full credit check only happens if you decide to accept a loan offer.; this will show up on your credit file. But there is no downside to checking what you're eligible for.

How to apply for a long-term business loan with iwoca

1. Check your eligibility

Tell us about your business and how much you'd like to borrow. We'll run a soft credit check (no impact on your score) and let you know what you could be eligible for. We've designed the process to be as simple as possible; most applications take just a few minutes.

2. Upload documents

We may ask you to upload some documents. We'll typically ask to see your business's bank statements, and may also ask to see company statements and VAT returns.

Unlike some banks, we don't need to see business plans or financial forecasts to make a decision.

3. Get a decision

We review your application quickly - most customers hear back within 24 hours, and many get an instant decision.

4. Access your funds

Once you've reviewed your offer - including your rate, term, and repayment schedule - you can accept it online. You can draw down your funds as soon as you're approved.

How iwoca can meet your funding needs

At iwoca, we've funded over 100,000 UK businesses since 2012. Here's why they choose us for longer-term borrowing:

• Purpose-built longer-term products - Flexi-24 and Flexi-60 are designed specifically for businesses with long-term finance needs looking to spread the cost over many monthly repayments.
• No early repayment fees - Clear the balance early and you'll simply pay less interest
• Dedicated Account Manager - A real person assigned to your account who can help with top-ups, questions, or support if you're struggling

Remember, we also offer short-term business loans with the same benefits of our long-term loans: No early repayment fees, repay anytime, top ups available.

Apply for an iwoca loan today.