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Limited Company Business Loans

Best Limited Company Business Loans

Looking to grow your limited company or steady its cash flow? Business loans can provide quick access to the capital you need. Discover the types of limited company loans available, what lenders expect, and how to compare offers so you can secure the right finance for your business.

What is a limited company business loan?

Limited company loans are a type of business loan designed specifically for businesses registered as limited companies with Companies House. They may also sometimes be referred to as limited company business loans or limited business loans.

With a limited company loan, the borrowing is taken out by the business itself, which means the company, not the director, is usually responsible for repayment. This is because a limited company business is legally separate from its owners, so your personal assets are usually protected unless you provide a personal guarantee or secure the loan with personal property. This is different to the situation for a sole trader, where a business owner can directly enjoy the profits their business makes, but also has personal responsibility for its debts.

How do limited company loans work?

A limited company loan works similarly to other business loans: your company borrows a set amount and repays it over an agreed term with interest. The loan is normally in the name of the limited company business, keeping personal and business finances separate. However, lenders may still ask for a personal guarantee, especially if the business has limited trading history, low turnover or weaker credit.

How a limited company loan works in practice

Interest and any fees are added depending on the lender and loan type.
Your limited company business applies for funding with a lender.
The lender reviews your accounts, turnover, credit history and business plan.
If approved, loan funds are paid into your business bank account.
Your company repays the loan through fixed installments over the agreed term.

What types of business loans can limited companies get?

Most limited companies can choose between unsecured and secured limited company loans.

Unsecured limited company loans

Although an unsecured limited company loan does not require you to use an asset as collateral, lenders may ask for a personal guarantee, making you responsible for repaying the loan if your business can’t.

An unsecured loan is:

Quicker to apply for
Requires less paperwork
Does not put your assets at risk
Usually has higher Interest rates than secured loans
You may be offered a smaller loan amount.

» COMPARE: Unsecured business loans

Secured limited company loans

A secured limited company loan requires you to provide an asset, such as business premises, equipment or sometimes personal property, as security. If your business can’t meet the repayments, the secured asset could be repossessed.

Because secured borrowing reduces the lender’s risk, this type of loan often offers:

Lower interest rates
Higher borrowing limits
Longer repayment terms.

Comparison: Unsecured vs secured limited company loans

Feature	Unsecured	Secured
Requires collateral	No	Yes
Application speed	Faster	Slower
Typical loan amount	Lower	Higher
Interest rates	Higher	Lower
Personal guarantee required	Often	Sometimes
Risk to assets	No direct risk	Yes, secured asset is at risk

Pros and cons of limited company business loans

Advantages

A limited company business may find it easier to access finance.
Your business is liable for the loan, not you personally, which could protect your assets if repayments are not made.
Interest rates may be lower because lenders consider limited companies less risky.
Higher borrowing amounts may be available.
Funds can be used for many business needs, including expansion, equipment and cash flow – or to cover unexpected bills.
Successful repayment can help to build your business credit score.
Interest on the loan may be tax deductible, which could lower the cost of borrowing borrowing.

Disadvantages

Personal guarantees or secured borrowing can put your assets at risk.
Missed repayments could damage your business’s credit score.
Running a limited company business involves additional admin and reporting requirements.
New companies may face stricter lending criteria.

A limited company loan may suit your business if…

You want predictable monthly repayments.
Your limited company business needs capital to expand or stabilise cash flow.
You prefer to keep personal and business finances separate.

A limited company loan may not suit you if…

You prefer flexible finance such as an overdraft.
Your business has irregular income that makes fixed repayments difficult.
You can’t meet personal guarantee requirements.

Is my business eligible for a limited company loan?

To apply for a limited company loan, your business must:

be registered as a limited company.
be based in the UK.
have a UK business bank account.
have at least one director aged 18 or over.

Most lenders will also assess:

trading history.
business turnover and profit.
credit scores (personal and business).
recent bank statements.
financial accounts.
existing business debts.

Some lenders may request a business plan to understand the financial health and future prospects of your limited company business.

How to get a loan for a limited company through NerdWallet UK

In three short steps, we can help you find the best limited company loans – without affecting your credit score.

Tell us about your business: share a few details so we understand your needs.
See your matched lenders: view loans from our panel of lenders that your limited company is most likely to qualify for.
Compare and apply: choose a loan and apply directly with pre-filled details.

» COMPARE: Business loans for limited companies

Yes. New or recently incorporated companies can still access limited company loans, though options may be more limited. Startup business loans or secured loans may be easier to obtain.

A limited company loan may range from £1,000 up to £1 million or more, depending on company turnover, credit history and whether the loan is secured or unsecured.

Yes. Private limited companies, where ownership of the business is split into shares privately owned by shareholders, are eligible for limited company business loans, whether wholly founder-owned or held by multiple shareholders.

Yes, but borrowing options may be reduced. Lenders may ask for security or offer a smaller loan amount. Strong business performance or a detailed plan can help.

» COMPARE: Business loans for bad credit

Yes, limited company loans are often easier to get than sole trader loans. This is because the separation between owner and business and the requirement to register with Companies House means there is more information available about the business. As a result, lenders tend to consider limited companies less risky to lend to.

» MORE: Sole trader or limited company?

A limited company loan is usually recorded under the business, not the director. However, if you give a personal guarantee and the business defaults, this could affect your personal credit record.

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