Limited Company Loans

Business Loans For Limited Companies

Get a limited company loan with ABC Finance today. We can help you get funds in as little as 24 hours!

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Gary Hemming

Author: Gary Hemming CeMAP CeFA CeRGI CSP

20+ years experience in business loans

There are over five million limited companies in the United Kingdom and this type of company is a popular option for small businesses.

A limited company is owned by one or more directors and is a legal entity with special characteristics; this means that assets, liabilities and profits belong to the company rather than the directors of the company.

At ABC Finance, we have been arranging business loans to take limited companies to the next level since the year 2000. We help SMEs to thrive every day and can help you to find the best deal in minutes.

Get in touch to find out how we can help you.

Is my limited company eligible for a loan and what are the alternatives to a business loan?

Yes, limited companies can obtain a business loan as long as you are based in the United Kingdom and registered with Companies House.

If your limited company has a strong history of financial performance, there are a wide range of options available.

Directors of limited companies can opt for loans that are secured against property or assets or unsecured loans – often these are assessed against the strength of your business or future earning potential. These are known as secured business loans and unsecured business loans respectively.

Unsecured loans are helpful if you are looking to raise funds quickly and don’t want to offer a property or your business assets as security for the loan.

These are a popular type of loan. The benefit of an unsecured loan is that it can be arranged quickly and have a very simple application process compared to secured lending.

For this reason, they are often known as fast business loans.

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How do I apply for a limited company loan?

You can apply for a limited company loan directly with banks or lenders; however, given the vast range of loans available it is advisable to speak to an expert business loan broker to understand the options on offer to you.

Working with a broker you can evaluate options and they will guide you through the necessary paperwork.

How much can I borrow?

Limited company loans range from £5,000 to £750,000. The amount you can borrow will depend on the financial performance of your business, your company credit score and the amount you can afford to repay.

The loan term will vary from three months to 72 months depending on your needs.

The longer your loan term, the lower your monthly payments, but the more you pay in total. Shorter terms will lead to higher monthly costs, but lower total cost.

If you are applying for a limited company loan for the first time it is advisable to take advice from an experienced commercial finance broker with specialist experience in the limited company loans market.

There are a wide range of loans available, however, not all will be suitable for your circumstances and the difference in terms and costs between different lenders can be vast.

How long does it take to get the money?

It can take 1 day to around a week for a business loan to be approved and funding to be received.

The length of the process will depend on the type of loan you opt for. A secured loan will take longer than an unsecured loan as a secured loan requires your property to be valued and some legal work for the charge to be registered.

For an unsecured loan you could receive funds as quickly as 24 hours, or for a longer term secured loan the entire process will take around two weeks.

A credit check will also be required, however, these can often be undertaken online with a credit reference agency and usually comes back almost instantly.

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How can a business loan help my limited company?

A limited company business loan can provide much needed working capital finance, or growth finance if you are going through a period of expansion.

Taking a loan can cover short term cash flow allowing you to keep trading and not tie up capital in one transaction.

It also helps with future financial arrangements if you take a loan and pay it back within the agreed term as this demonstrates your creditworthiness to other lenders and can improve your credit rating over time.

Business loans can be used for a wide range of funding purposes and are designed to be flexible. Whether you need a short term business loan to cover a specific period, or a long term business loan for expansion, then this type of loan could be right for your company.

What can I use the funds for?

A limited company loan is a simple solution in many scenarios, giving you access to funding in the short term with the flexibility to make repayments over a period of 1-7 years.

The funds can be used for any purpose, including:

  • Finance for business growth and expansion
  • Recruiting new staff
  • Funding marketing and advertising expenses
  • Purchasing inventory or equipment
  • Expanding premises or taking on a second site
  • Help with cash flow – known as business cash flow loans
  • Renovation or refurbishment of your business premises
  • Payment of corporation tax or VAT – known as a corporation tax loan

What documents will I need to provide?

When you apply, you will be asked to provide the following:

  • 2 years accounts
  • 6 months business bank statements
  • Management accounts – in some, but not all cases

What other options do I have available to finance my business?

If you’re looking to raise finance for your limited company, but don’t want to take out a limited company business loan, there are other options available.

They can be broken down into a few different product types, invoice financing, asset finance, merchant cash advance and business revolving credit facilities.

Invoice finance allows you to release funds from the invoices that you have raised, but have not yet been paid. It is ideal for businesses that operate on delayed payment terms. As a financial product, it can be broken down into invoice factoring (also known as debt factoring) and invoice discounting.

The key differences come down to who is responsible for credit control. Confidential invoice discounting allows you to borrow without alerting your customers.

Asset finance allows you to raise funds to purchase an asset, or to lease a required asset. It is also known as equipment finance as it is often used to fund new equipment for a business.

A merchant cash advance, also known as a business cash advance allows you to borrow money against your future card receipts. They tend to work well for businesses that take a large proportion of their turnover through their card terminal, such as pubs, restaurants and retailers.

Frequently Asked Questions

Having a lower credit score isn’t necessarily a barrier to receiving a limited company business loan. Lenders are used to small business loans and start up businesses and understand that everyone has different circumstances, these are known as bad credit business loans.

Many loans and financial products are designed precisely for businesses with lower credit ratings.

Business loan interest rates start at 5.9 % and will vary according to your circumstances, lenders base their offer on an overall view of your company, and a credit rating is only one element of this. Having a solid business plan, and good financial performance, with strong profits will be viewed positively by lenders.

At ABC, we have over twenty years of experience and consult a wide panel of specialist lenders and we will work with you to find the right financial package for your business.

Yes, in most cases, you will be required to provide a personal guarantee. This is because when borrowing money as a limited company, you would otherwise face no personal liability for the debt.

This means that you could, in theory, borrow the funds, close the business and have no liability to repay.

As such, to protect themselves, lenders tend to insist on a PG. That said, for larger businesses with very strong credit ratings, and strong turnover, you may qualify for a loan without the need to provide a personal guarantee.

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