Virgin Money Business Loans: Eligibility, Costs & Key Features

Sourcing a business loan is a common step for small and growing businesses as they seek to invest in expansion plans, purchase vital assets and equipment or manage cash flow in key financial periods. Virgin Money has several business loan products that may suit your needs and growth aspirations.

We explore what Virgin Money business loans are available to UK companies, including their main features, costs, eligibility criteria and suitability considerations.

What types of business loans does Virgin Money offer?

Virgin Money offers a selection of short- and long-term business loans for different finance needs and flexibility requirements, including fixed and variable loan terms. Businesses can borrow as little as £30,000 to as much as £10 million. Virgin Money also has other business finance solutions, including asset finance, invoice finance and business overdrafts.

In late 2024, Nationwide completed a takeover of Virgin Money. As Britain’s largest building society, this acquisition strengthens Nationwide’s proposition and broadens its range of services. The Virgin Money brand remains and falls under Nationwide’s promise of keeping branches open until at least 2028. 

Nationwide Chairman, Kevin Parry, says the organisation is committed to delivering “market-leading standards of customer service” in a time when we’re seeing swathes of other bank branch closures in the UK (including Santander’s recent announcement of 95 branch closures).

Let’s look at the Virgin Money business loan products and what features and options to expect to help judge their suitability for your funding needs.

Base Rate Loan

Virgin Money’s Base Rate Loan is a flexible business loan linked to the Bank of England (BoE) base rate. So, it has variable interest rates that fluctuate according to economic change and market conditions. The rate you’re quoted will be above the BoE base rate, and your monthly repayments can go up or down, depending on the base rate’s movement.

Key loan features

• The amount you can borrow: Between £30,000 and £10 million.
• Repayment terms: Borrow money for up to 20 years, depending on the loan’s purpose and amount required. Businesses can pay interest monthly or quarterly and choose an interest-only or capital-interest combo option.
• Interest rates: The business loan interest rates are influenced by the BoE base rate and your specific circumstances.
• Other loan fees: You may need to pay an arrangement fee, and other relevant fees, depending on your circumstances and the loan term. Early repayment is free, although Virgin Money may set a minimum overpayment amount.

• Security/collateral: Secured and unsecured business loans are available, but any security requirements depend on your situation. 
• Other considerations: Interest rates for variable-rate loans are typically lower than fixed-rate loans. Funds must only be used for business purposes.

Who does the Base Rate Loan suit?

• Business owners who are comfortable with the risk of interest rates going up during the loan period or believe rates will decline.
• Companies with strong cash flow management, stable revenue and agile operations for responding to fluctuating rates and market conditions. 
• Businesses with assets that can be used as collateral, as you may need them as security against the loan (based on your circumstances).

Fixed Rate Loan

Virgin Money’s Fixed Rate Loan offers shorter-term solutions for businesses who want more consistent monthly repayments. While applicants can borrow the same amount as the Base Rate Loan, the fixed rate can only be locked in for up to 5 years. 

Key loan features

• The amount you can borrow: Between £30,000 and £10 million.
• Repayment terms: You can agree to a fixed rate agreement for up to 5 years, but if you want a longer borrowing period, you’ll be moved onto the Base Rate Loan for the remainder of your term, which can be up to 20 years.
• Interest rates: Virgin Money doesn’t advertise an APR for its Fixed Rate Loan product, due to the wide variance in loan amounts and diverse business needs, but you can expect competitive rates. Interest can be paid monthly or quarterly. 
• Other loan fees: You may be charged an arrangement fee, depending on the scope of your loan conditions, and Virgin Money states that repaying the loan early can incur an early repayment fee.

• Security/collateral: Again, based on your funding needs and financial history, security against the loan could be required, so consider the risks of using business assets as collateral.
• Other considerations: Loans must be used purely for business purposes but you can enjoy flexibility in having a fixed rate for the first 5 years, before moving onto a variable rate for subsequent years (if required).

Who does Fixed Rate Loan suit?

• Businesses that require more predictable monthly outgoings.
• Small businesses that want to lock in business loan interest rates for more financial stability.
• Companies with shorter-term borrowing needs (unless looking to use the Fixed Rate Loan initially, before transferring to the Base Rate Loan structure).

SONIA Loan

This loan product is designed specifically for businesses with a turnover of more than £6.5 million that want to borrow at least £2.5 million. SONIA stands for Sterling Overnight Index Average, which reflects the average costs financial institutions pay to borrow from each other. So, using Virgin Money’s SONIA business loan means accepting fluid interest rates on the capital borrowed.

Key loan features

• The amount you can borrow: There is no upper limit, but the minimum borrowing limit is £2.5 million.
• Repayment terms: Periods and conditions for loan repayments are flexible and will be tailored to your specific needs.
• Interest rates: SONIA business loan interest rates (and changes) are published daily, and are compounded during the interest period. You can pay the interest monthly or quarterly.
• Other loan fees: As with Virgin Money’s other business loan products, you may be required to pay an arrangement fee, but you can expect lower premiums due to reduced lender risks.

• Security/collateral: Assets can be used to secure a SONIA loan agreement.
• Other considerations: This type of loan offers transparency over interest rates due to how they’re calculated and tied to market conditions.

Who does the SONIA Loan suit?

• Large organisations with strong credit history, high turnover and appetite for variable rates.
• Financial institutions and investment firms that deal with high volumes of transactions.
• Businesses in sectors like real estate, utilities and manufacturing, with large-scale expenditure needs.

What other lending products does Virgin Money offer?

Beyond its business loans, Virgin Money also offers the following business finance solutions:

• Business overdrafts: Virgin Money offers overdrafts of up to £25,000 to help companies cover temporary shortfalls and unexpected expenses, with businesses only paying interest on the amount borrowed. 
• Invoice finance: Existing Virgin Money customers can leverage an invoice finance facility to unlock working capital tied up in unpaid client invoices.
• Asset finance: You can arrange a hire purchase or lease finance agreement with Virgin Money to fund key assets and equipment, spreading the costs of the asset purchase or use, if you don't have the necessary funds upfront.

What are the eligibility criteria for obtaining a business loan from Virgin Money?

All Virgin Money business loan approvals are subject to your financial status, credit history and funding requirements. 

To be eligible to apply for a Virgin Money business loan you’ll need to be:

• 18 or over
• Based and operating in the UK (excluding the Channel Islands, Isle of Man & Northern Ireland)
• Have a clear and viable business plan, outline of the purpose of your loan application and in what areas you plan to use the capital
• Provide assets or guarantees as security, where required, for certain loans and individual circumstances

These are just the standard requirements. Virgin Money’s lending team will consider various factors and assess the information provided in your application to determine your business loan eligibility and what terms they’re prepared to offer. See the typical documentation evaluated during loan approval decisions.

What interest rates and fees are associated with Virgin Money business loans?

Virgin Money business loan interest rates vary, based on the loan option you choose, and numerous influencing factors. Arrangement fees, security fees and early repayment charges may be applied, depending on certain loan conditions and individual circumstances. 

Look at the main features of Virgin Money’s business loan products to see what rates and fees you should expect and calculate your likely monthly repayments and total cost of borrowing. 

Virgin Money’s business loan application process

You can apply for Virgin Money’s business loans in-branch or online (via a dedicated loan application form). Below we outline the key elements, considerations and required documentation in the business loan application process.

How long does it take for Virgin Money to process a business loan application?

The time it takes for Virgin Money to process a loan application and make an approval decision varies with every application, as the scope of funding needs and business circumstances can be diverse. However, Virgin Money commits to responding to loan enquiries within 7 days.

Documentation required for Virgin Money business loan applications

When applying for Virgin Money business loans, you’ll be prompted to provide various data and documentation (to judge business loan eligibility), such as:

• An outline of your finance requirements
• Details about the loan’s purpose and intended use of funds
• Your business status and operating history  
• Recent trading activity (at least the last 12 months)
• Financial accounts, cash flow statements and/or revenue projections
• Current assets and liabilities
• Business plans and feasibility

Does Virgin Money require a personal guarantee for business loans?

Depending on your business type, the industry you operate in, the amount of money sought and the purpose of the loan, plus your credit score/risk rating, Virgin Money may request a personal guarantee. Start-ups and new businesses (without a long track record) or those with poorer credit scores are more likely to need a personal guarantee to secure a loan.

Will my business loan application affect my credit score?

Virgin Money will assess your creditworthiness and share your details with credit reference agencies (CRAs) to help judge your suitability and determine what loan products and terms it can provide. This can leave a footprint on your credit file,  temporarily affecting your credit score, but if your loan application is accepted, timely repayments will help your credit score grow. 

Is the loan paid to businesses in a lump sum or instalments?

Funds will typically be paid in a lump sum upon approval, however, you may be able to negotiate a revolving credit agreement.

Does Virgin Money offer repayment holidays or flexibility in case of financial difficulties?

If you’re in an existing Government-backed loan scheme, such as a Bounce Back Loan or the Government Growth Scheme, you can leverage Pay As You Grow (PAYG) options, including repayment holidays, to give you more time to repay loans. However, repayment holidays are not included for Virgin Money’s main business loans. Instead, there is certain flexibility in interest payments, with some businesses opting for interest-only loans or paying interest quarterly, rather than monthly.

Virgin Money urges any business customers struggling to make repayments to get in touch with its support team, who may be able to negotiate terms to accommodate a significant change in financial health. 

Are there early repayment charges for fixed-rate business loans?

You may be charged a fee for early repayment for Virgin Money’s Fixed Rate and SONIA business loans, but not with the Base Rate Loan.

Alternatives to Virgin Money business loans

There are various business loans for UK companies offered by banks, financial institutions and digital lenders, whilst specialist funding solutions, such as invoice financing, asset and equipment finance or property development finance, can be good options for more dedicated finance requirements.

Many private lenders offer flexible business loans, with fewer restrictions for applicants and less strict eligibility, which are well-suited to start-ups and small businesses. iwoca’s loans are designed to meet the needs of UK SMEs, offering greater control over the amount borrowed and your repayments. We don’t charge early loan repayment fees and you only pay interest on the funds you use. 

With iwoca Flexi-Loans, you can borrow between £1,000 and £1,000,000 for a few days, weeks or up to 60 months, with manageable monthly repayments aligned with your cash flow. Our business loan application process is quick and easy, and you’ll receive an approval decision within 24 hours, with funds often transferred on the same day.

Find out how to get a business loan with iwoca or use our business loan calculator to see your likely repayment costs.

Sources:

• Virgin Money and Nationwide [Virgin Money]
• Virgin Money is Now Part of a Stronger Nationwide [Nationwide News]
• Nationwide Completes Takeover of Virgin Money [This is Money]
• Santander to Close Almost a Quarter of UK Branches [BBC News]
• Virgin Money Business Loans [Virgin Money]
• Virgin Money Business Lending FAQs [Virgin Money Help Centre]

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