Business loans
Best Business Loans in Europe 2026
Financing for companies and SMEs.
Updated 2026-05-19
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What are business loans?
## What are business loans?
Business loans provide financing for companies to fund operations, growth, equipment purchases, or working capital. They range from small microloans for freelancers to large credit facilities for established SMEs.
In Europe, business lending comes from three main sources: traditional banks, government-backed development banks (like the EIB and national equivalents), and alternative lenders (fintech platforms and peer-to-peer lending). The EU actively supports SME financing through programmes like InvestEU, which provides guarantees that help lenders offer more favourable terms.
Business loans in the EU are governed by national consumer and business credit regulations, with additional protections for smaller businesses under the European Small Business Act. Interest rates, collateral requirements, and eligibility criteria vary significantly between countries and lender types.
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How it works in Europe
## How business loans work in Europe
The application process depends on your lender type. Traditional banks require detailed financial statements, business plans, and often collateral. Alternative lenders typically offer faster decisions based on revenue data and credit scoring.
**Common loan types:**
- Term loans: fixed amount repaid over 1 to 10 years, used for equipment or expansion
- Lines of credit: flexible borrowing up to an agreed limit, ideal for managing cash flow
- Invoice financing: borrow against outstanding invoices, typically 80 to 90% of face value
- Government-backed loans: subsidised rates through national development banks
**Typical terms and rates:**
- Interest rates range from 3% to 12% depending on risk profile and collateral
- Loan amounts from EUR 1,000 (microloans) to EUR 5 million+ (bank facilities)
- Repayment terms from 3 months (working capital) to 10 years (property/equipment)
- Arrangement fees of 0.5% to 2% are common
**Eligibility requirements typically include:**
- Registered business in an EU/EEA country
- Minimum trading history (6 months for alternative lenders, 2+ years for banks)
- Positive cash flow or revenue trajectory
- Personal guarantee may be required for smaller businesses
Frequently asked questions
Speed depends on the lender type. Online alternative lenders (like Funding Circle or October) can approve and disburse within 24 to 72 hours. Traditional banks typically take 2 to 6 weeks due to more thorough documentation requirements and manual underwriting. For urgent working capital needs, invoice financing or a business line of credit may be faster options.
Not always. Unsecured business loans are available from many fintech lenders for amounts up to EUR 50,000 to EUR 100,000, though they carry higher interest rates (6% to 12%). Larger loans from traditional banks usually require collateral such as business assets, property, or a personal guarantee. Government-backed loan schemes (like those through the EIB) can sometimes reduce collateral requirements.
Startups face stricter lending criteria because they lack a trading history. Traditional banks usually require at least 2 years of financial statements. However, government-backed microloans (EUR 1,000 to EUR 25,000) and startup-specific lenders are more accessible. Many EU countries offer subsidised startup loans through national development banks. Crowdfunding and revenue-based financing are alternative options for early-stage businesses.
The EU offers several SME financing programmes. InvestEU provides guarantees that help banks offer better loan terms. The European Investment Fund (EIF) backs microfinance institutions across Europe. National programmes include the KfW in Germany, Bpifrance in France, and Qredits in the Netherlands. These often offer below-market interest rates and more flexible eligibility criteria than commercial lenders.
Business loan interest in Europe is typically quoted as an annual percentage rate (APR) ranging from 3% to 12%, depending on the loan type, term, and risk profile. Fixed rates lock in your repayment amount for the entire term, while variable rates track a base rate (like EURIBOR) plus a margin. Always compare the total cost of borrowing, including arrangement fees (0.5% to 2%) and any early repayment charges.
Yes, interest paid on business loans is generally tax-deductible as a business expense in all EU countries. This effectively reduces the real cost of borrowing by your marginal tax rate. For example, if your corporate tax rate is 25%, a loan at 8% interest effectively costs 6% after the tax deduction. Arrangement fees and other borrowing costs are also usually deductible. Consult your accountant for country-specific rules.
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