Limited company loans to finance your business

What is a limited company loan?

A limited company loan is a type of business finance designed specifically for companies registered as limited companies with Companies House. In other words, it’s a funding option tailored to businesses that operate as separate legal entities, rather than sole traders or partnerships. When your business is a limited company, its finances are legally separate from your personal finances. This means the company can borrow money in its own name, and the debts belong to the business rather than to you as an individual director or owner.

How do limited company loans work?

Limited company loans work by allowing your company to borrow a set amount and repay it over time with interest, usually in regular instalments. The key difference from personal borrowing is that the company, not you as the owner, is generally responsible for the repayments. This structure helps protect your personal assets and credit if the business struggles to repay, since the liability stays with the company.

While many limited company loans are designed to separate personal and business liability, many lenders will require a director to sign a personal guarantee, a legal promise that you’ll personally repay the loan, or a specified portion of it, if the company cannot meet its obligation.

Providing a personal guarantee gives lenders extra security, which is particularly common for newer businesses or when borrowing larger sums.

If you do sign a personal guarantee, you become personally liable for the agreed amount in the event of default. Make sure you review the terms carefully. When working with a Capitalise Funding Specialist, they will take the time to run you through the terms of the loans, including discussing the terms of any personal guarantee in full.

Types of limited company loans

Limited company loans can be broadly categorised into two main loan types:

• Secured limited company loans: a secured loan requires an asset to be offered as security, for example, property, equipment, vehicles, or even your company’s invoices. By backing the loan with collateral, you give the lender reassurance, which often results in lower interest rates and the ability to borrow larger amounts. The trade-off is that if your company cannot repay the loan, the lender has the right to seize the asset used as security to recover the debt. 

• Unsecured limited company loans: an unsecured loan does not require you to pledge any business assets or collateral. This makes the application process faster and simpler since you don’t have to undergo asset valuations. Keep in mind: because there’s no collateral, lenders often ask for a personal guarantee as a condition for an unsecured loan. Unsecured loans are suitable for companies that don’t have significant assets to offer or prefer not to risk them, but they may come with slightly higher interest rates or lower borrowing limits due to the higher risk for the lender.

Within these categories, limited companies can access a wide range of finance options, from traditional term loans and commercial mortgages to business credit lines and invoice financing. The right option will depend on your company’s needs and circumstances, such as whether you require a large lump sum upfront or flexible access to funds over time. To find the right fit funding, start by exploring the loan types in the Insights section of our website. You can also discuss your funding needs with a specialist by signing up for free on our platform.

What are the benefits of limited company loans?

Taking out a loan through your limited company can bring several advantages:

• Lenders often offer larger amounts to limited companies than to sole traders, thanks to the transparency of filed accounts and company records. Depending on your turnover and credit profile, you could borrow from a few thousand pounds up to £1 million or more.

• Lower interest rates: With a solid financial history and public records, your company may be seen as lower risk, allowing you to secure more competitive rates. Offering collateral for a secured loan can reduce rates further.

• Limited liability: The loan sits with the company, not you personally, so your assets are generally protected. This protection can give you more confidence to borrow for growth.

• Flexibility: Funds can usually be used for a wide range of legitimate business needs, from expansion projects and equipment purchases to cash flow support or unexpected expenses.

• Successfully repaying a loan improves your credit score, helping you secure better terms on future borrowing, negotiate with suppliers, and build trust with partners. Keeping an eye on your business credit score regularly can help, with a free Capitalise account, you can check your business credit rating and spot issues early.

Before you borrow, there are key risks to consider

Being clear on the risks and responsibilities that come with a limited company loan will help you make a confident, informed decision:

• Understanding the risks of a limited company loan helps you make a confident, informed decision:

• Cost of borrowing: Loans come with interest and sometimes fees, which affect your monthly cash flow. Always look at the total cost of credit — a business loan calculator can help you estimate repayments and interest. If you’re using a funding specialist, ask them to explain all costs clearly.

• Personal guarantees & asset risk: If a loan is secured against assets or backed by a personal guarantee, those commitments can override limited liability. Default could put company assets — or even personal property — at risk. Make sure you’re comfortable with this exposure and consider safeguards like guarantee insurance.

• Impact on credit score: Limited company loans usually affect your company credit profile, not your personal one. However, if you’ve given a personal guarantee and can’t repay, the lender may pursue you personally, which could harm your own credit. Timely payments protect both your business and personal credit standing.

• Eligibility hurdles: Each lender has different criteria. Younger companies or those with poor credit may face fewer options, smaller loans, or higher interest rates. Being prepared improves your chances of approval.

Eligibility criteria for limited company loans

Most lenders have a few basic requirements your business must meet before they’ll consider your application. You'll need to be a UK-registered limited company and directors/owners must be 18+.

Trading history and turnover

Most lenders will look closely at how long your business has been trading and how much revenue it generates before approving a loan. In general, they prefer companies with at least 6–12 months of trading history, and a longer track record can significantly improve your chances of approval.

Your turnover also matters because many lenders base the loan amount on your revenue. Some won’t lend more than around 10% of your annual turnover to ensure repayments remain manageable and don’t put unnecessary strain on your cash flow.

If you’re a very new limited company, funding is still possible, but the options may be more limited and the terms less flexible.

Credit scores 

Lenders will evaluate your business credit score. A good credit history signals that you manage debts responsibly. Before applying, check your business’s credit report and address any issues. If your company’s credit file is thin or is low, expect that loan offers might come with higher interest or extra conditions (like providing a personal guarantee or security). Some alternative finance providers do cater to businesses with poor credit, but typically at reduced loan amounts or higher rates.

Financial documents

Be prepared to provide documentation to demonstrate your company’s financial health. Usually you'll need:

1. Recent bank statements

2. Filed accounts or management accounts

3. A business plan or forecasts sometimes, but not in all cases. You can use our cash flow forecast template, available for free and in Google Sheets format.

4. Directors’ details, including contact information and, in some cases, ID for verification and credit checks

Lenders want to be confident that your business can repay the loan comfortably. Meeting the basic criteria (UK limited company, minimum trading time, acceptable credit) gets you in the door. From there, the stronger your business’s financials and credit profile, the more options and better terms you’ll likely qualify for. If you’re unsure about your eligibility, you can speak with one of our funding specialists or to check what loans your company might be pre-qualified for without affecting your credit score.

How to apply for a limited company loan

Getting a loan for your limited company can be straightforward if you’re prepared. Here’s how to set yourself up for success:

1. Start by reviewing your company’s finances and business credit score. Make sure your balance sheet, income statement, and cash flow records are accurate and up to date as lenders will cross-check them with Companies House. You can also heck your business credit report, correct any errors, and resolve outstanding CCJs. A strong credit report and strong financials make for a faster, smoother approval.

2. Next, decide how much you need to borrow and whether your business can comfortably handle the repayments. Lenders care most about affordability, so have cash flow forecasts ready. You can use a business loan calculator to estimate your monthly payments and ensure they’re realistic.

3. Its a good idea to compare lenders to secure the best deal. Capitalise makes the process simple by giving you access to over 130 lenders and a funding specialist who will help you prepare your application and understand every offer.

4. Next, you need to gather your documents. Most lenders will ask for recent bank statements, filed or management accounts, and sometimes tax returns or forecasts.

5. Finally, its time to submit your application. you'll want to be ready to answer any follow-up questions. If approved, you’ll get an offer with the loan amount, interest rate, repayment terms, fees, and any conditions. Review it carefully and ask about anything you don’t understand before accepting. Once you agree, the funds are usually deposited within a few days, sometimes even faster.

6. If this process feels overwhelming, you don’t have to go it alone. When you apply with Capitalise, our platform lets you compare options, and our funding specialists can guide you through every step.