If you are currently a director for a limited company, you may require a loan to support the growth of your business or support the need for cash flow.
In our latest article, we guide you through the eligibility criteria when applying for a limited company loan and what to look out for when securing the most competitive deal for your business.
The Following Topics Are Covered
What Is The Eligibility Criteria For A Limited Company Loan?
Your business will be eligible to apply for a limited company loan if registered with companies house and trading in the UK. Other standard criteria you'll need to meet include the following:
Trading for at least 6 months
A monthly turnover of at least £5,000 (£60,000 per year)
Being a homeowner is advantageous but not a requirement
Directors are aged over 18 years old
How Can My Business Benefit From A Limited Company Loan?
Various business needs can be met with loans for limited companies. They are frequently best suited for circumstances like business expansion, marketing initiatives, buying new inventory or equipment, or hiring more staff where a financial injection will result in quick returns.
However, a loan can also be helpful when times are tough or there is not enough working capital available to cover costs. A loan could assist a company in paying for equipment and property repairs as well as an upcoming corporation tax bill.
A limited company loan can be a great option in many situations because it gives you short-term access to much-needed funding while allowing you to make repayments over a term of up to three years typically. Below are some use cases listed of uses for limited company business funding:
Funding for expansion and growth of businesses
Advertising and marketing
Hiring new employees
Acquiring supplies or tools
Renovation or refurbishment of the current location
Corporation tax payment
Improve business cash flow
How Much Can I Borrow With A Business Loan?
Depending on the size of your business and its annual turnover, you may be eligible to apply for a limited company loan that ranges in price from £5,000 to £500,000. To read more on the specifics, of the criteria, follow our dedicated business loans page
Depending on their risk assessment, lenders will evaluate each application separately and make an offer.
As a limited company, you will be seen as having fewer liabilities, which means you should be able to borrow more money. This is one of the main advantages of applying for business loans.
Are Directors Personally Liable For A Limited Company Loan?
Due to the lack of available business assets to secure the loan against, the majority of limited company directors choose unsecured loans. A director or shareholder must serve as a personal guarantor for unsecured loans. Being a homeowner will frequently make it much simpler to qualify for limited company loans.
The personal risk involved in securing an unsecured loan for a limited company must always be taken into account. But frequently, the advantages outweigh the disadvantages. When using a business loan to raise the required funds as opposed to selling shares, keeping ownership of your business is greatly advantageous.
How Important Is My Credit Score In Getting A Business Loan?
A private limited company's credit score and directors' personal credit histories will be looked at by lenders. Loan approval and financing requirements can be impacted by your personal and professional credit ratings.
However, do not worry if your credit score is below ideal. There are several specialized lenders we work with that are willing to offer business loans despite credit issues, even though many mainstream lenders may reject you if your credit rating is poor. They will, however, in most cases have higher interest rates when quoting.
How Can I Apply For A Limited Company Loan?
A business finance broker can walk you through the application process and assist you in selecting the type of loan you should apply for, depending on the circumstances and requirements of your business.
Accelerated Finance can walk you through your options and get things started as soon as we have the following information:
Verify the trading name and registration number for your business.
Give details on the company's operating history, monthly revenue, and the number of directors
Please specify the amount you want to borrow as well as the purpose of the loan.
This article is intended to provide a general understanding of the topic. The contents should not be treated as advice. Accelerated Finance Limited is not regulated by the financial conduct authority and only provides unregulated loans via our network of lenders.