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Limited companies can access the widest range of funding — unsecured and secured loans, asset and invoice finance, revolving credit and the Growth Guarantee Scheme — typically £5,000–£500,000+ (more with security). Lenders assess company accounts, turnover, credit and usually a director's personal guarantee. Decisions often come within 24–48 hours; established, profitable companies get the best rates (around 6–15% APR).
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- A limited company borrows in its own name, but directors often back the loan with a personal guarantee.
- Lenders judge a Ltd on filed accounts, turnover, time trading and director credit history.
- Secured borrowing unlocks larger sums and lower rates; unsecured is faster but usually needs a guarantee.
- Director’s loans and business loans serve different purposes and should not be confused.
- Building a separate business credit profile widens your options over time.
Business loans for limited companies work differently from borrowing as an individual or a sole trader. The company is a separate legal entity, so the loan belongs to the business and not to you personally. That distinction shapes how lenders assess you, what security they ask for and how the debt appears in your accounts. This guide explains how limited company borrowing works in the UK, what lenders look at and how directors can strengthen an application. When you are ready to compare options, our business loans page brings whole-of-market lenders together in one place.
☰ On this page
- What makes business loans for limited companies different?
- How lenders assess a limited company
- Personal guarantees for limited company loans
- Secured vs unsecured loans for companies
- How much can a limited company borrow?
- Director's loans vs business loans
- Building business credit for your company
- Types of finance available to limited companies
- What can a limited company use a loan for?
- Comparing offers and the true cost of borrowing
- Documents a limited company needs to apply
- Common reasons company applications are declined
- How to strengthen your company's application
- Your next step
- Frequently Asked Questions
What makes business loans for limited companies different?
A limited company is a separate legal person from its owners. When it borrows, the company is the borrower, not the directors or shareholders. This is the core difference from borrowing as a sole trader, where you and the business are legally the same.
That separation has real consequences. The debt sits on the company balance sheet, repayments come from company funds, and the loan does not automatically appear on a director’s personal credit file. In practice, though, lenders often bridge that gap with a personal guarantee, which we cover below.
If you trade as an individual instead, the rules and risks change. Our guide to business loans for sole traders explains that route, where there is no legal divide between you and the business. Understanding which structure you are borrowing under is the first step to choosing the right product.
How lenders assess a limited company
Lenders build a picture of your company before they lend. The stronger and clearer that picture, the better your chances and your rate. Most assessments come down to a handful of factors.
The main things a lender reviews include:
- Filed accounts at Companies House, which show turnover, profit and net worth.
- Time trading, as many lenders want at least 12 to 24 months of history.
- Bank statements, often via open banking, to confirm real cash flow.
- Director credit profiles, since directors usually stand behind the loan.
- Existing debt and commitments, to judge affordability.
A company with two or three years of filed accounts and steady turnover has the widest choice of lenders. Younger companies are not shut out, but they lean more heavily on director credit and forecasts.
Why your filed accounts matter so much
Your Companies House filings are public, and lenders read them closely. Abbreviated accounts that hide turnover can actually count against you, because the lender cannot see your strength.
Where your accountant allows it, filing fuller accounts can help a lending decision. Up-to-date filings also signal that the business is well run, which reassures an underwriter weighing up risk.
Personal guarantees for limited company loans
A personal guarantee is a promise by a director to repay the loan personally if the company cannot. It is the most common way lenders bridge the gap created by limited liability.
For unsecured borrowing, a personal guarantee is close to standard. It gives the lender recourse beyond the company’s assets, which is why it makes lending to a younger or smaller company possible at all.
A guarantee is a serious commitment. If the company defaults, the lender can pursue your personal assets up to the guaranteed amount. Before signing, you should understand the cap, whether it is supported by a charge over property, and whether guarantee insurance is worth taking. Our guide to the personal guarantee under the Growth Guarantee Scheme explains how guarantees work even on government-backed lending.
Can you borrow without a personal guarantee?
Yes, but options narrow. Larger, well-established companies with strong balance sheets can sometimes borrow unsecured without a guarantee. Secured lending against company assets can also reduce or remove the need for one.
For most small and medium limited companies, expect a guarantee on unsecured facilities. Negotiating the cap, or splitting it between multiple directors, can limit individual exposure.
Secured vs unsecured loans for companies
Limited companies can borrow secured or unsecured, and the right choice depends on the amount, the purpose and the assets available. Each route has clear trade-offs.
The two broad options work like this:
- Unsecured loans need no specific asset as security, are quicker to arrange, but usually require a personal guarantee and carry slightly higher rates.
- Secured loans are backed by a company asset such as property or equipment, allowing larger sums and lower rates, but taking longer and putting the asset at risk.
Smaller, faster needs tend to suit unsecured borrowing. Larger investments, such as buying premises, often justify security. Our detailed comparison of secured vs unsecured business loans sets out the full picture so you apply for the right type.
How much can a limited company borrow?
There is no single figure, because borrowing scales with the strength of the business. As a rough guide, many lenders cap unsecured lending at around one to two months of turnover, while secured lending can go much higher.
The amount you can raise depends on several things:
- Annual turnover and profit, which set affordability.
- Trading history, as more years usually means more available.
- Security offered, since assets unlock larger facilities.
- The purpose, because a clear, productive use is easier to fund.
A profitable company turning over £500,000 might access £40,000 to £80,000 unsecured, and far more against property. Modelling repayments before you apply keeps your request realistic. Our business loan calculator shows what different amounts and terms cost each month.
Director’s loans vs business loans
These two are often confused, but they are completely different. A business loan brings outside money into the company from a lender. A director’s loan is money moved between a director and the company.
A director’s loan account records what the company owes you, or what you owe the company. It is an internal arrangement with its own tax rules, not a source of external funding.
The distinction matters for borrowing. If you have lent money to your own company through a director’s loan, a lender may view that as a sign of commitment. If the company owes you, repaying that should not be confused with servicing external debt. Keeping the two clearly separate in your accounts makes your position easier for a lender to read.
Building business credit for your company
A limited company can build its own credit profile, separate from the directors. Over time, a strong company credit score widens your borrowing options and can reduce reliance on personal guarantees.
Practical steps that help build company credit include:
- Filing accounts on time, as late filing damages your credit rating.
- Paying suppliers promptly, since trade credit data feeds your score.
- Registering for a business credit profile with the main agencies.
- Keeping a dedicated business bank account with clean, consistent activity.
- Using and repaying small facilities to build a track record.
Building business credit is a slow process, but it compounds. A company with a strong, established profile is treated very differently from one with thin history.
Types of finance available to limited companies
A term loan is only one option. Limited companies can choose from a range of products, and matching the product to the need is as important as the amount you borrow.
The main types of company finance include:
- Term loans, a lump sum repaid over a fixed period, ideal for one-off investments.
- Revolving credit facilities, a flexible limit you draw on and repay as needed.
- Asset finance, which spreads the cost of equipment or vehicles over their useful life.
- Invoice finance, releasing cash tied up in unpaid customer invoices.
- Merchant cash advances, repaid as a percentage of card takings.
Each suits a different purpose. A delivery van fits asset finance, while a seasonal stock gap may suit a revolving facility or invoice finance. Choosing the wrong product can make borrowing more expensive than it needs to be, so it pays to weigh the options before you apply.
Government-backed options for companies
Limited companies can also access government-supported lending, such as the Growth Guarantee Scheme. These schemes give the lender a partial guarantee, which can help a company that is viable but slightly outside normal criteria.
Importantly, a government guarantee protects the lender, not the borrower. You remain fully liable for the debt, and a personal guarantee can still apply. Treated correctly, though, these schemes widen access for companies that might otherwise struggle to borrow.
What can a limited company use a loan for?
Lenders prefer a clear, productive purpose, and a limited company has plenty of legitimate uses. A specific reason is always easier to fund than a vague request for cash.
Common uses for limited company borrowing include:
- Cash flow and working capital, to smooth out seasonal gaps.
- Buying equipment or vehicles, often through asset finance.
- Expansion, such as new premises, staff or a new site.
- Stock purchases, especially ahead of busy periods.
- Refinancing existing debt onto better terms.
Tying the loan to a clear outcome strengthens your application. A lender wants to see how the money helps the company generate the revenue that repays the debt.
It also helps to size the loan to the purpose rather than rounding up. Borrowing more than you need raises your costs and your risk, while borrowing too little can leave a project stranded halfway. A precise figure tied to a real quote or contract is far more convincing than a round number with no detail behind it.
Comparing offers and the true cost of borrowing
Once a limited company has offers on the table, the headline interest rate is only part of the story. The total cost of borrowing is what really matters when you compare lenders.
Look beyond the rate at the full picture:
- The APR or factor rate, which reflects the cost over the term.
- Arrangement and facility fees charged to set the loan up.
- Early repayment terms, which differ widely between lenders.
- The term length, since a longer term lowers monthly payments but raises total interest.
Two offers with the same monthly payment can cost very different amounts overall. Comparing the total repayable, not just the monthly figure, protects your company from paying more than it should. A broker can lay competing offers side by side so the real cost is clear.
Documents a limited company needs to apply
A complete application is decided faster and more favourably. Limited companies should have their paperwork ready before approaching a lender.
Typically you will need:
- Recent filed accounts, usually the last one or two years.
- Business bank statements, often the last three to six months.
- Management accounts if your filed figures are out of date.
- Director ID and proof of address for anti-money-laundering checks.
- A clear statement of purpose and amount.
Newer companies can lean on forecasts and a short business plan where filed accounts are thin. Accurate, consistent figures across every document avoid the follow-up questions that slow a decision down.
Common reasons company applications are declined
Most declines are avoidable once you know what triggers them. A limited company can usually fix these before applying.
- Late or overdue accounts at Companies House.
- Weak or inconsistent cash flow in the bank statements.
- Director adverse credit that the lender cannot get comfortable with.
- An unclear purpose or an amount that is hard to justify.
- Too much existing debt relative to turnover.
If your company is turned down, do not reapply everywhere at once, as multiple hard searches can harm your profile. Understanding the reason first is far more productive, and using a broker lets you match your company to lenders most likely to approve it.
How to strengthen your company’s application
A few deliberate steps before you apply can move a borderline application into clear approval territory. Most cost nothing but a little time.
Practical ways to present a stronger case include:
- Bring filings up to date, so the lender sees current accounts.
- Prepare management figures if your last filing is several months old.
- Tidy the business bank account, avoiding returned payments before you apply.
- Reduce or explain existing debt, so affordability looks healthy.
- Write a short, clear purpose statement linking the loan to revenue.
Underwriters reward clarity and consistency. When your accounts, statements and stated purpose all tell the same story, the decision becomes easy for the lender to make. That is usually the difference between a quick yes and a string of follow-up questions.
Your next step
Borrowing as a limited company comes down to presenting a strong, clear picture: tidy filed accounts, healthy cash flow, a defined purpose and directors prepared to stand behind the loan where needed. Get that groundwork right and you widen your choice of lenders and improve your rate. As an FCA-authorised commercial finance brokerage, we compare a whole-of-market panel and guide directors through every step. Start on our business loans page to see your company’s options and begin a soft-search application that will not affect your credit score.
Limited companies qualify for every product on the panel. Explore unsecured business loans, Growth Guarantee Scheme, merchant cash advance, or compare live options in 60 seconds — soft search only.
Frequently Asked Questions
Yes. A limited company borrows in its own name, with the debt sitting on the company balance sheet. Lenders assess the company’s filed accounts, turnover, trading history and director credit, and they often ask directors for a personal guarantee on unsecured facilities.
For most unsecured limited company loans, yes. A personal guarantee lets the lender pursue a director personally if the company cannot repay. Large, well-established companies with strong balance sheets, or those offering asset security, can sometimes borrow without one.
It depends on turnover, profit, trading history and any security offered. Many lenders cap unsecured lending at around one to two months of turnover, while secured borrowing against property or equipment can be much higher. Modelling repayments first keeps your request realistic.
No. A business loan brings external money into the company from a lender. A director’s loan is money moved between a director and the company, recorded in the director’s loan account, with its own tax rules. They serve different purposes and should be kept separate in your accounts.
Yes, though options are narrower with little trading history. Newer companies rely more on director credit, forecasts and a clear business plan, and a personal guarantee is usually expected. Startup loans and specialist lenders can help bridge the gap until filed accounts build up.
The loan itself usually sits with the company, not your personal credit file. However, lenders run a credit check on directors when assessing the application, and a personal guarantee can expose you personally if the company defaults. Soft-search eligibility checks do not affect your score.
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