HSBC Review

Despite HSBC’s wide appeal to UK customers, plenty of businesses find themselves unable to secure finance from this mainstream bank. If you’re considering applying, or you’ve been rejected in the past, learn more about the lender and its selection criteria with this overview by Rangewell. 

HSBC is a universal bank well known throughout the world and in the UK, where it operates over 400 branches from which it supports personal and business customers. As a business lender, HSBC is known for its ‘Kinetic’ small business loan, which is an SME loan for values between £1000 and £25,000. 

As a mainstream bank, HSBC’s lending criteria and expectations can be strict when compared to the more versatile independent sector. However, for borrowers who value safety and brand recognition, HSBC offers one of the most well-known names in the sector and adheres to a host of regulatory requirements designed to ensure your finances are protected. 

If you’re a small business, deciding whether you should apply for a loan with a mainstream bank like HSBC or an alternative provider is a question of understanding the full lender’s market and the impact each lender has on loan terms and conditions. 

Rather than go it alone, why not reach out to our team? We can help you make sense of the lender’s market, identify your own needs and then help select the right lender for you – whether that’s HSBC or an alternative. Get in touch now for free advice, or keep reading to learn more about HSBC as a lender. 

What is HSBC? 

HSBC was formally incorporated in 1866, meaning it has more than 150 years of experience and history in the financial sector. In the UK, HSBC is consistently ranked as the biggest bank in the country. 

As a lender, HSBC offers loans to SMEs and other private enterprises throughout the UK, with a number of options for personal and commercial lending and a wide suite of resources to help borrowers make sense of the offer.

What types of loans does HSBC offer?

HSBC offers a vast range of support for small businesses, though which option is right for you will depend on your specific needs and circumstances. HSBC offers lots of choice for commercial borrowers, mainly centred around debt financing such as business loans and commercial mortgages. 

Options include:

Working capital finance

If you’re struggling to meet short-term cash flow needs, HSBC offers a range of working capital solutions that can inject cash when you need it. 

Business overdrafts and credit cards, which provide a flexible means of managing cash flow. These are offered specifically to business banking customers, and all of the terms will be offered when you create an agreement. 

Other more focused options include invoice discounting and factoring, as well as supply chain financing. Deciding which is right for you is quite challenging, as there are many considerations to take into account – but feel free to call us today if you’d like impartial advice. 

Business loans

HSBC offers business loans and commercial mortgages to help borrowers fund their business’ growth. Small business loans offer financial support with repayments spread across a number of months or years, whilst commercial mortgages help your business purchase property and repay it in a similar fashion to a domestic mortgage. 

Standard business loans are available, offering to lend between £1,000 and £25,000 for up to 10 years. There’s also a flexible business loan which is more bespoke to your requirements, which has no capped maximum limit and can be for a term of 20 years. 

The HSBC Kinetic Small Business Loan is a branded product available through HSBC’s digital-only business banking app, HSBC Kinetic. This loan is positioned as a fast and flexible option for loans between £1000-£10,000 at a rate of 7.1% representative APR (fixed). 

Asset finance

If you’re looking to purchase items for your business, HSBC provides asset finance where you essentially lease the item from the bank and your repayments help you become the eventual owner of the asset. This is particularly useful for businesses that require equipment with expensive initial costs that can be justified over a long period, such as manufacturing machinery and robotics. 

Are you eligible for a loan from HSBC?

As a mainstream bank, HSBC has strict expectations for the businesses it will lend to. Whilst many of the working capital products it offers are limited to HSBC business customers, the more general business loan product is open to new and existing customers. 

To be eligible for a commercial loan, you’ll need to meet three conditions:

1. Be a UK resident for at least three years
2. Be aged over 18 years old
3. Hold a good credit rating with no CCJs or bankruptcy
4. Be a sole trader, run a limited company or be in a business partnership 

If you want to access the more bespoke flexible business loan product, which offers uncapped lending and terms of up to 20 years, you’ll need to be an existing customer with pre-existing lending from the bank above £100,000 in value. You can also be a new customer with a borrowing need for over £100,000, which you’ll need to demonstrate to the team when applying. 

Compared to other types of business lender that usually request that businesses are at least 2-3 years old, HSBC may seem more open to borrowers with no trading history looking to start a business. 

However, during your application you’ll need to demonstrate your plan for your business and each decision will be made based on the information you provide. In many cases once you discuss your application with the HSBC team, you may find that the bank has the same (or even higher) requirements when compared to alternative lenders. Ultimately, it will come down to the negotiations between you and the bank.

To help make these negotiations easier, why not work with Rangewell? We can help you take charge of your application and give the lender the right information to increase your chances of success – then negotiate on your behalf to secure the best possible loan outcome, all at no cost to you. 

What information do you need to provide? 

HSBC expects you to provide the following information when applying for a small business loan

• A full overview of your business
• How you have the skills and experience necessary to achieve your goals
• How you like to borrow the money, particularly with regards to the repayment period. 

All of the above can be included in your business plan, so prioritise completing a great plan before you apply for finance. The lender also expects certain documents to serve as evidence for your application. 

• Proof of any potential security and assets you’d offer for the loan
• Any other business interests you may have
• A cash flow forecast
• Financial accounts, demonstrating past evidence of your business’s financial history

Does HSBC offer secured or unsecured lending?

HSBC offers both secured and unsecured lending, though generally the bank will expect some form of security. For businesses that have less history or experience, you may find that secured loans allow you to borrow more money and improve your overall offer – but you must risk assets as a result.

HSBC doesn’t offer the choice between unsecured or secured lending, instead making an offer based on your application and circumstances. 

What are the rates and terms? 

The rates and terms offered by HSBC depend on your application and background, but there are some broad numbers you can use to help you decide if the lender is going to be right for you. 

Small business loans are offered with 7.1% APR representative, though the offered rate can be entirely different based on your actual application – so make sure you look at your offer letter closely. The rate is fixed for the whole term of the loan, which is useful for granting long-term vision over cashflow. 

Business overdrafts have different interest rates and are currently set to a representative EAR of 16.25% 

Want better rates or different terms? 

HSBC may be a household name for banking, but many businesses find that the rates or term lengths offered don’t suit their goals. We can help you find a lender more suited to your exact requirements – just get in touch below and we’ll talk you through the process. 

What are the fees and charges?

HSBC’s small business loan comes without any arrangement fees, a welcome bonus that many other lenders do not offer. You also won’t pay a fee for making overpayments, though depending on your agreement you may be charged if you repay in full early.  

How do I apply?

Before you apply for any loans from HSBC, it’s worth using their eligibility checker to see which type of lending you’ll be able to pursue. You can use this free tool to check your status within minutes and guide your decision, so we’d recommend using it early if you’re considering HSBC as your lender. 

Once checked, you can create an online account and apply using the digital platform, where you’ll need to log in to your customer account and follow the steps. Alternatively, you can call the bank on 03457 60 60 60. 

You can also visit a branch and request help from a Business Specialist, though it’s always best to pre-arrange this via the number above.

What if you’ve been rejected by HSBC?

HSBC has a fairly high approval rate for its small business loans, but not everyone will be successful. If you’ve been rejected or you’re unable to apply due to CCJs or bankruptcy, don’t worry – you can still find finance elsewhere from other lenders. 

Work with Rangewell and we’ll help you find the funding you need to bring your business vision to reality. We’re not affiliated with any lender but have extensive experience working with all of them, so we can help you make an informed decision and even strengthen your application to help overcome any issues you may encounter.

Want to refinance your HSBC loan? 

As your business loan approaches the end of its term, you may be offered a new loan product with HSBC. However, before accepting, consider the value of refinancing elsewhere. Refinancing gives you the opportunity to be more selective about your debt and repayment levels, provided you can find an alternative lender willing to offer you better terms. 

Even if you want to stay with high street banks, remember that even HSBC may have a more competitive offer if you can successfully negotiate a refinancing agreement with their team. To access these better offers, you can’t simply accept a new loan offer – you need to get an overview of the wider market and make your choice from there. 

Need more funding? 

Unless you can access HSBC’s flexible business loan product, your lending will be capped at the small business loan limit of £25,000. For many businesses, this isn’t enough capital to fund their requirements.

To raise higher amounts, you may need to source a different lending option entirely. Speak to our team today and we’ll discuss the ways in which Rangewell can help you improve your application and work with lenders who can provide loans at all levels.