Limited Company Loans
A limited company loan provides fast and flexible funding for businesses registered with Companies House. If your business needs finance, a limited company loan could be the ideal solution.
- Compare a wide range of lenders and rates
- Check your eligibility in minutes
- Find out how much you could borrow
It's fast, free and won't affect your credit score
- How are private limited companies financed?
- How can I get a limited company loan?
- How do limited company loans work?
- How can a private limited company raise finance?
- Can I loan money to my limited company?
- What can a limited company business loan be used for?
- How can I apply for a limited company loan?
- Do limited company loans require personal guarantees?
- I have bad credit, can I still apply for a limited company loan?
- Are business loans available for new limited companies?
- Why choose Capalona to arrange limited company funding?
A limited company loan is a flexible and affordable way to grow your limited company. You can use your loan to comfortably cover overheads, effortlessly manage periods of financial difficulty or to plan for future growth.
Over 900,000 companies were incorporated in 2023. This data shows us that registered businesses continue to grow in the UK, and companies are increasingly turning to finance to help them compete in busy marketplaces.
Learn more about limited company loans, how to apply for them and how they can help you grow your business.
How are private limited companies financed?
There are many ways you can finance a private limited company. From traditional bank loans to working with venture capitalists or angel investors, business owners can also apply to alternative funding providers offering flexible business loans.
Many lenders prefer to lend money to limited companies over sole traderships or partnerships, this is because the business is a separate legal entity to the owners. Limited companies also have a certain level of credibility to them that other business statuses don’t have.
How can I get a limited company loan?
The basic criteria to apply for a limited company loan is that your company is registered with Companies House as a private limited company in England, Scotland or Wales.
You must also:
- Be over the age of 18
- Have been trading for the last three months
- Annual turnover of at least £10,000
- The director must be a UK resident
Lenders are looking to determine whether you’re a high-risk borrower, so alongside the above criteria, they’ll look at your business finances, taking your circumstances and how much you want to borrow into consideration.
If you’re a startup business with less than six months under your belt, don’t worry, you can still apply for a startup business loan. And if you’re self-employed or a sole trader looking for finance, you can apply for a self-employed loan or a sole trader loan instead.
How do limited company loans work?
A limited company loan works much like any other business loan. You apply for funding through a suitable lender, they approve your loan application, you’re given the loan amount as a lump sum and you repay the loan in monthly instalments, with interest, over a pre-agreed period.
How can a private limited company raise finance?
As a limited company, you have lots of financing options available to you. That’s because you’re eligible for most types of alternative finance, so let’s explore some of the options.
Secured business loans
A secured business loan is secured by collateral, i.e. commercial property, vehicles, etc. So, should you default on your loan repayments, the lender can seize your asset as collateral. Although a secured loan poses more risk to the borrower, you can access higher loan amounts and lower interest rates.
Unsecured business loans
With an unsecured business loan, although you don’t have to risk your limited company's assets, the lender might ask you to sign a personal guarantee. This makes you personally liable should your business fail to make timely repayments. Unsecured loans are quicker to access, but as it poses higher risk to the lender, interest rates are higher and loan amounts smaller.
Merchant cash advance
A merchant cash advance, or a business cash advance, is a loan against your limited company’s future credit or debit card sales. Unlike a traditional loan, a cash advance is automatically repaid as a percentage of your sales each month, which means there are no fixed monthly payments. Instead, this finance ebbs and flows with your business’s seasonality.
Invoice finance
Instead of waiting for 30, 60 or 90 days for your invoice payment, invoice finance helps you access up to 95% of your unpaid invoice value. When the customer pays the invoice, the lender will deduct fees from the outstanding amount, i.e. the 5% you didn't receive.
Crowdfunding
Crowdfunding is raising funds from multiple people through dedicated online platforms. If the person likes your business idea, they can choose to invest a small amount of money in your limited company. Users around the world can pay to back your product in return for gifts. The gift might be the finished product, or, if you're launching a restaurant, a meal for four people, and so on, the gift directly corresponds with the amount the person has invested.
Suggested reading: Should you crowdfund for your business?
Can I loan money to my limited company?
If you’re a director, you can loan money to your limited company; this is known as a director’s loan. Even though it might be tempting to transfer the money without an agreement in place, it’s recommended that you draw up terms and conditions, including interest rates (which is classed as personal income), repayment terms and the amount you’re lending.
What can a limited company business loan be used for?
You can use your ltd company business loan however you please as long as it’s for business-related purposes. Use it to:
- Pay wages, bills or rent
- Buy new stock
- Invest in new markets
- Keep cash flow steady
Ultimately, alternative business finance exists to help support your business as it grows, but sometimes you might just need to tread water for a little while, and that’s fine too. Use a limited company loan as you see fit.
How can I apply for a limited company loan?
To apply for a limited company loan, simply fill in our quote form with what you want to lend, for how long, and the reason and our tool will match you with eligible loans and lenders. Our comparison tool is self-serve, so you can instantly compare lenders free of charge on your own terms.
If you find a quote you like, simply click to continue with the application. There is no obligation to accept any quote on offer, and getting a quote won’t affect your credit score.
Do limited company loans require personal guarantees?
If you apply for an unsecured loan, the lender will generally require a personal guarantee. If you did not want to take personal liability for the business loan repayments (i.e. sign a personal guarantee), you can apply for a secured loan, where the lender will take your asset as collateral should you fail to make the agreed repayments.
While a personal guarantee can sound daunting, if you’re confident in your business’s ability to borrow responsibly, there’s little need to worry.
I have bad credit, can I still apply for a limited company loan?
You can still apply for a limited company loan with bad credit. Just know that your loan options might be limited. We work with a variety of UK lenders willing to make finance as accessible to all kinds of businesses as possible.
Are business loans available for new limited companies?
Yes, there are loan options for new limited companies. If you’re registered as a limited company but you’re not yet trading, you might be eligible for a start-up loan. If you are trading and have been for a few months, there are plenty of funding options available for limited companies.
Why choose Capalona to arrange limited company funding?
We worked alongside trusted UK lenders to help SMEs, like you, find and compare affordable and flexible funding options to help your business grow.
Our comparison tool is 100% free and easy to use.
Compare your LTD company loan options today.
About the author
Adrian T
5/5
Amazingly fast, efficient service, minimal paperwork. So much faster than my business bank of twelve years.
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