Business loans for limited companies

Business loans for limited companies

With corporation tax rising to 25% for businesses with profits over £50,000 as of last year and a decrease in the total number of private sector businesses in the UK in 2024 when compared to figures from 2023, many businesses are turning to loans for limited companies to help support their growth and stability.

We’ve put together this easy to digest guide to help you get to grips with loans for limited companies.

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What it is and how it works

What is a loan for a limited company?

A loan for a limited company is a form of business finance available to UK-registered companies. The loan is issued to the company itself, not the individual directors, and can be used for a range of purposes - from paying staff to expanding operations.

Loans can be secured or unsecured, short or long term, and repayment terms vary depending on the type of finance and the credit profile of the business.

Key features

  • loan amount: from £1,000 up to £20 million or more

  • repayment term: from 3 months to 5+ years

  • interest: fixed or variable, depending on loan type

  • eligibility: based on turnover, credit score, trading history, and affordability

  • use of funds: working capital, expansion, investment, cash flow

How does Funding Options work?

1

Tell us how much you need

We’ll ask a few questions about your business and the reason for your loan.

2

Get quotes instantly

Our smart technology will compare quotes from up to 120+ lenders to help you find the ideal business loan.

3

Apply for a Business Loan 🎉

We'll be there to guide you through every step of the process.

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Common use cases

bridging cash flow gaps caused by late payments or reduced trading

purchasing new equipment, vehicles, or inventory

hiring new staff or increasing marketing spend

investing in premises, renovations, or business development

consolidating existing business debt into one manageable payment

Estimate your costs today

If you're ready to take your business to the next level, use our business loans calculator to get an idea of what you can afford.

Want to understand the cost of your loan?

Use our business loan calculator below to find out how much you can borrow to take your business to the next level.

Interest rates vary depending on the lender. Use 10% if you're unsure

Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.

Your estimate

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Financial product information

Representative example*

• 7.63% APR Representative based on a loan of £50,000 repayable over 24 months.

• Monthly repayment of £2,252.94. The total amount payable is £54,070.56

*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.

Annual Percentage Rates

Rates from 2.75% APR

Repayment period

1 month to 30 years terms

Types of loans for limited companies

Unsecured business loan

No collateral required - based on your creditworthiness and turnover. Typically available to businesses with 12+ months of trading.

Secured business loan

Backed by an asset (e.g. property, equipment, or invoice ledger). Often lower rates and longer terms.

Short-term loan

Used to cover urgent or short-lived costs. Terms usually range from 3 to 18 months.

Merchant cash advance

Repay the loan using a percentage of card sales. Ideal for retail and hospitality businesses.

Revolving credit facility

Draw down funds when needed, repay, and re-borrow. A flexible alternative to a fixed-term loan.

Asset finance

Buy or lease equipment or vehicles over time. Spread the cost instead of paying upfront.

Funding Options is a part of Tide. If you proceed, you’ll be redirected to Tide.

This quote won't affect your credit score

Expert help throughout the process

Get access to 120+ lenders

Endorsed by

The pros of business loans for limited companies

There are some great benefits to limited company loans, we’ve outlined a few of these below.

Access to larger amounts: limited companies may qualify for higher loan values than sole traders

Improved cash flow: borrow to cover seasonal slowdowns, gaps in income, or unexpected costs

Business-only responsibility: directors may not be personally liable unless a personal guarantee is required

Tax-deductible interest: in many cases, interest payments on business loans are tax-deductible

Build business credit: timely repayments can strengthen your company’s credit profile

What affects eligibility and how to apply

What affects eligibility?

Lenders consider several factors when assessing a limited company loan:

  • company age: most lenders prefer 6-12 months of trading history

  • turnover: annual revenue helps determine borrowing limits

  • credit score: both business and director credit histories may be reviewed

  • financial health: profit margins, debt obligations, and cash flow stability

  • loan purpose: how and why the funds will be used

How to apply for a limited company loan

  1. Check your company profile - ensure your accounts and credit history are in good shape

  2. Work out how much you need - and why

  3. Compare products - or use a broker like Funding Options to match you with lenders

  4. Submit an application - provide documents such as bank statements, filed accounts, and director ID

  5. Get approved - and receive funds, sometimes within 24-48 hours

Want to know more about limited company loans?

Limited company loans in action

Here are some examples of how limited company loans work.

Example A: Let’s say you’re the proud company director of a limited company. You’re putting together your end of year budgets, and you’ve spotted a short fall. Unless a client kindly pays their invoice early, you’re going to be stuck with negative working capital in the month of February.

To navigate this cash flow shortage, you could take out a working capital loan. You apply online, the lender considers your application and if you’re approved, they forward the funds. How you repay those funds varies from lender to lender, but if you took out a short term working capital business loan, you’ll likely repay in monthly instalments over the course of several months to a year.

Example B: Now imagine you own a chain of restaurants. You’d like to refresh your customer-facing premises, but the costs of a renovation would eat into your working capital, hindering your ability to purchase ingredients and pay staff.

In this instance, you might consider a bridging loan. A bridging loan is a secured short term loan. You could use one of the restaurants as security for the loan, use the loan to refurbish your chain of restaurants, and then pay off the bridging loan plus interest and fees in a few months once you make up the money in sales.

Some risks and drawbacks to watch out for

All financing options have drawbacks and risks to watch out for, here are some of the ones you should consider before taking out a limited company loan.

Debt spiral

A debt spiral is when a business becomes increasingly reliant on debt and the debt becomes unmanageable, growing larger in size with compounding interest rates.

Overexerting yourself financially

It’s important to be careful not to take out too much debt. Overexerting your business financially beyond its means can lead to loss of control and even insolvency.

Interest and fees can eat into your profits

Loans usually come with a mixture of fees and interest rates, which can eat into your profits, particularly if you lose sight of the overall cost of financing.

Possible loss of assets

If you miss payments or default on a loan, it’s possible you may lose your assets through possession or repossession. This can occur whether or not you take out a secured loan. 

Will I be personally liable for the loan?

Maybe, that depends a lot on your agreement with the lender. As a limited company, there is some degree to which you are protected by limited liability, but this does not cover you entirely. If you sign a personal guarantee, you are certainly liable for the loan. If you did not sign a personal guarantee, that does not necessarily mean you are not liable. If this is a concern for you, consider discussing this with the lender before entering into an agreement.

Can I get a commercial loan for a limited company?

Much like the businesses themselves, loans for limited companies come in all shapes and sizes and offer a range of financial relief for all types of companies. Designed to help limited companies grow, a loan for limited companies is an unsecured sum of money lenders offer for any company registered under Companies House. 

Whether or not you can get one will depend heavily on the unique circumstances of your business, however, in general, you will likely be able to find a loan if you are over the age of 18, if your company is based in the UK, and if you’ve been trading for at least 6 months. Whether or not that loan will have favourable terms is another question, one our expert team could help you get to grips with.

What are the requirements for a limited company loan?

The only way you can apply for a limited company loan is to be registered with Companies House as the lender will have to check beforehand. If you’re registered, you’ll be able to complete an online form and apply for the loan by sharing some basic information about your business. The lender you’ve chosen will then review and decide whether to grant your business loan.

Can a private limited company get a loan?

Yes, as limited companies can be either private or public, both types of companies are eligible to receive loans. The difference between private and public limited companies is that private companies don’t publicly share trade shares and are limited to a maximum number of shareholders whereas public limited companies trade publicly on the stock exchange. 

Private limited companies can also accept loans from their own shareholders or find a lender and apply.

Do I need good credit to apply for a limited company loan?

In short, no your business doesn’t need good credit to apply for a limited company loan but it might affect your ability to apply with traditional high street lenders and to get favourable terms. Businesses with bad credit may be restricted by how much they can borrow, will likely receive high interest rates, and lenders can apply their own terms to the loan once it’s granted. 

What is the minimum credit score for a business loan?

The minimum credit score for a loan like a limited company loan is generally between 640 to 700 which is an average score. Before granting a loan, lenders will review any outstanding debts and other loans your business has against its name as well as regular outgoings. They will then calculate the risk of lending your business the money before either rejecting or granting your loan request.

How can I get a first-time business loan?

If you’ve just started up a limited company and want to apply for funding, you'll need to have a great personal credit score, an impressive business plan, as well as ample collateral to qualify for a first-time business loan from a bank. Lenders will be looking for predicted evidence your business will thrive before committing to giving your company a loan.

How can I get a business loan with no money?

Lenders can offer your limited company an unsecured loan if your business doesn’t have any money or cash flow. We’ve previously written a guide to unsecured business loans and why they may be the most suitable option for your company. There are a wide range of lenders to choose from with unsecured loans so it may work out to be the best option for your limited company.

Can I get a business loan without a personal guarantee?

Some lenders offer no-PG options, but they may come with stricter requirements or higher rates.

How quickly can I receive the funds?

Some lenders release funds within 24 hours of approval, depending on the loan type.

Will a limited company loan affect my personal credit score?

Usually no - unless you sign a personal guarantee or miss repayments.

Can a new limited company apply for a loan?

It’s possible, but options may be limited. Some products require at least 6-12 months of trading history.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.

Disclaimer:

Funding Options helps UK firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. We are also able to make insurance introductions. Funding Options will receive a commission or finder’s fee for effecting such finance and insurance introductions.

*Eligibility criteria apply - see Tide website for full details.

Funding Options Ltd is incorporated and registered in England and Wales with company number 07739337 and registered office at 4th Floor The Featherstone Building, 66 City Road, London, EC1Y 2AL.

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