- A term loan means fixed monthly repayments over 1–5 years; settling early usually reduces the total cost.
- Revenue-based finance is an advance repaid from a slice of future sales at a fixed total cost (a "factor rate"), typically cleared in 4–8 months.
- A loan usually costs less in pounds; an advance flexes with trade and is over sooner.
- We lend our own money up to £75,000 and arrange larger facilities through our lending partners — one application, one decision. Ltd and LLP companies only.
The two products in plain English
Unsecured business loan
Your company borrows a lump sum — arranged for you through one of our lending partners — and repays it in fixed monthly instalments over one to five years. Interest is charged on the balance, so the faster you repay, the less the borrowing costs. There's no charge over business assets, but most lenders ask a director for a personal guarantee. It's the product to reach for when you value predictability: the payment is the same in January as it is in June, whatever your takings do.
Revenue-based finance / merchant cash advance
The provider advances your company money against future sales and you repay a fixed total, agreed up front. Pricing is quoted as a factor rate rather than an interest rate: at Solvo, £50,000 at a factor of 1.48 means you repay £74,000, full stop. A 5% arrangement fee is deducted at funding, so £47,500 reaches your account. The total does not move afterwards, and there is no rebate for settling early.
Solvo Funding lends its own money for advances of £10,000 to £75,000, repaid by a fixed weekly Direct Debit over 20 or 26 weeks. The weekly amount is the same every week — it does not rise or fall with your takings — and both the total and the end date are fixed before you sign. The full costs, on both terms, are set out on our pricing page.
Side by side
| Unsecured term loan | Revenue-based finance (MCA) | |
|---|---|---|
| How you repay | Fixed monthly direct debit | % of takings, or fixed daily/weekly collections |
| Typical term | 1–5 years | 4–8 months |
| How cost is priced | Interest rate on the reducing balance | Factor rate — one fixed total repayable |
| If sales dip | Payment stays the same | %-based repayments shrink with revenue |
| Early settlement | Often reduces total cost | Total is usually fixed regardless (some lenders discount) |
| Security | No charge over assets; director's personal guarantee usual | No charge over assets; personal guarantee common |
| Suits best | Steady turnover, longer-term projects | Strong card/online sales, short-term needs, seasonal trade |
Worked example: £50,000 both ways
Numbers make the difference obvious. Say your company raises £50,000 — a round figure chosen for illustration — and compare a 24-month term loan at an illustrative 12% a year against a Solvo advance at a 1.48 factor rate over 20 weeks, repaid by fixed weekly Direct Debit.
| Term loan (24 months, 12%/yr) | Solvo advance (factor 1.48, 20 weeks) | |
|---|---|---|
| Amount approved | £50,000 | £50,000 |
| Arrangement fee (5%, deducted at funding) | None in this example | −£2,500 |
| Paid to your account | £50,000 | £47,500 |
| Total repayable | ≈ £56,488 | £74,000 (fixed) |
| Cost of funds | ≈ £6,488 | £26,500 |
| Repayment | ≈ £2,354 a month, fixed | £3,700 a week, fixed |
| Time in the agreement | 24 months | 20 weeks |
| A quiet month | Still £2,354 | Still £3,700 a week — the amount is fixed |
Illustrative only. These figures are examples, not quotes or offers. Your pricing, term and eligibility depend entirely on underwriting — ours where we are the lender, or a lending partner's where we introduce you — and we can't guarantee an offer, or that it will match these numbers.
Read the table both ways. The loan costs less than half as much in pounds and takes far less cash out of the business each month. But the advance is finished in twenty weeks rather than two years, the weekly amount and the end date are both fixed before you sign, and the total cost is known to the penny on day one.
So which is "cheaper"?
Usually the loan, in absolute terms — and it's worth being blunt about the annualised picture too. A 1.48 factor plus a 5% arrangement fee means paying about £26,500 on the £47,500 that actually reaches your account, for money held for twenty weeks. The equivalent annual rate is far higher than a 12% loan. Nobody should pretend otherwise.
Businesses still choose revenue-based finance for rational reasons: the commitment is short, the decision rests on bank-statement strength rather than on filed accounts, nothing is secured against business assets, and the fixed total removes any interest-rate uncertainty. If the funding generates a fast return — stock for a busy season, a fit-out that opens more covers — a dearer but shorter facility can be the right commercial call. If the money is working over years, loan-style pricing usually wins.
The other half of the answer is availability. A term loan is not offered to every company that wants one, and the companies that are offered it are usually the ones that could have waited for it. An advance is priced for speed and for access, not for being cheap — that is what the difference buys, and it is worth being clear-eyed that you are paying it. If you may want more money part-way through, read how topping up an advance works, and what it costs, before you start rather than after.
See both products priced for your company
One three-minute application, no documents, no obligation — we'll tell you which of the two fits your company, price it, and show you the arithmetic side by side.
No cost to check your options. Where we lend, a 5% arrangement fee is deducted at funding. UK Ltd & LLP companies only.Who each product tends to suit
A term loan tends to suit
- Steady, predictable monthly turnover
- Longer-term spending: refurbishment, equipment, expansion
- Owners who budget around a fixed monthly figure
- Keeping the pound cost of borrowing as low as possible
Revenue-based finance tends to suit
- Strong card, online or invoiced sales — hospitality, retail, e-commerce, salons
- Seasonal or lumpy revenue that makes fixed payments uncomfortable
- Short-term, fast-return spending: stock, marketing, a VAT bill
- Companies whose bank statements are stronger than their filed accounts
Where we fit in
Solvo Funding is a UK direct lender and a finance intermediary. We work exclusively with UK limited companies and LLPs. Revenue advances of £10,000 to £75,000 come from our own book — one application, one decision, made by our own underwriters. Above £75,000, and for unsecured term loans, we arrange the facility with one of our lending partners. Where we lend, a 5% arrangement fee is deducted from the advance at funding and there is nothing else to pay us; where we introduce, the lender pays us a commission and you pay us nothing. We don't provide advice or recommendations, and everything is subject to status and underwriting.
If timing matters as much as product choice, read our guide to how fast a UK limited company can actually get funding, or check the honest eligibility checklist before you apply.
Frequently asked questions
Is revenue-based finance the same as a loan?
No. A term loan is borrowing with interest, repaid in fixed monthly instalments over an agreed term. Revenue-based finance is an advance against your company's future sales: the provider agrees a fixed total repayable up front, and you clear it through a share of takings or fixed daily/weekly collections. The practical differences are the repayment pattern, the timescale and how the cost is expressed.
What is a factor rate?
A single multiplier that fixes the total you repay. £50,000 at a factor of 1.48 means £74,000, agreed at the start. A 5% arrangement fee is deducted at funding, so £47,500 reaches your account. It is not an annual interest rate — because the advance is typically cleared in months rather than years, the equivalent annualised cost is usually much higher than the headline number suggests. Always compare the total repayable in pounds.
Which is cheaper — a business loan or a merchant cash advance?
In pound terms a term loan is usually cheaper: in our illustration the loan costs about £6,500 and the advance £26,500. But cost is not the only variable — the advance clears in months and flexes with your sales. Which offers your company actually receives, and at what pricing, depends on each lender's assessment. We cannot guarantee that either product, or any particular price, will be available.
Can my company have both at the same time?
Sometimes — for example a term loan for a refurbishment alongside a short advance for stock. Lenders look at total repayments against turnover, and stacking several advances on top of each other is a red flag that narrows your options. Always disclose existing borrowing; it will show in your bank statements anyway.
Will the directors have to give a personal guarantee?
Most unsecured business loans and many revenue-based finance agreements ask for a director's personal guarantee. It does not place a charge over business assets, but it does mean a director personally agrees to repay if the company cannot. Read the guarantee terms in any offer carefully before signing.
Can sole traders use either product through Solvo Funding?
No. We work exclusively with UK limited companies and LLPs — that is a firm rule, not a preference. We lend our own money to UK limited companies and LLPs for advances of £10,000 to £75,000, and introduce companies to our lending partners for larger facilities and term loans. Where we lend, a 5% arrangement fee is deducted from the advance at funding; where we introduce, the lender pays us a commission and you pay us nothing.
Keep reading
How fast can a UK limited company actually get funding?
A realistic hour-by-hour timeline — and what genuinely speeds an application up or slows it down.
Read the guide → GuideBusiness funding eligibility: the honest checklist
Time trading, turnover, sector, CCJs, soft vs hard checks — and why we're Ltd/LLP only.
Read the guide →Ready to compare real offers?
Apply in about three minutes. No documents to start, and no obligation to accept anything. There is no fee to apply and no fee to receive an offer; where we are the lender a 5% arrangement fee is deducted at funding, and where we introduce you to a lending partner the lender pays our commission.
Subject to status and underwriting. We lend up to £75,000 ourselves and arrange larger facilities through our partners.