Business Loans for Limited Companies: Rates and Options
Limited companies have more lending options than sole traders. Funding Circle and iwoca are our top picks — both use business performance data over hard score thresholds.
- Tide Funding Options compares business loans specifically for limited companies.
- Multiple lenders assessed in one application without affecting your credit score.
- Compare rates, terms, and eligibility from a panel suited to limited company finance.
How Limited Company Loans Differ from Sole Trader Lending
When your limited company applies for a loan, lenders assess two separate credit profiles: the business credit file (held at Experian Business, Creditsafe, or similar) and the personal credit file of the main director or shareholder. Both files are reviewed independently, and a weakness in either can affect the outcome.
The limited company structure provides legal protection against personal liability for business debts — in theory. In practice, most business loan lenders require a personal guarantee from the director, which bypasses the corporate structure.
If your company defaults, the lender can pursue you personally. We found this is widely misunderstood by new limited company directors.
Sole traders, by contrast, have no separation between personal and business liability — every business debt is automatically a personal debt. Your limited company offers more structural flexibility — but the personal guarantee requirement means the practical protection is often smaller than directors expect.
What Lenders Look for With Limited Companies
For limited companies, lenders verify your Companies House registration first. An active, correctly filed record with up-to-date director information and a valid registered address is a basic hygiene signal. Inactive or dormant company statuses typically trigger an automatic decline.
Your annual accounts are the primary financial document. Banks require at least 2 years of filed statutory accounts showing profitable or break-even trading.
Specialist lenders like iwoca and Capify work from 6 months of bank statements and Open Banking data — more accessible if your company has a short trading history.
Director credit checks are standard. Lenders check the personal credit files of directors holding 25%+ of the company.
A CCJ on your personal credit file — even if unrelated to the business — can trigger a decline or a rate increase. We recommend you check your personal credit file before your company applies.
Best Loan Options for Limited Companies
Funding Circle is our top pick for established limited companies — it uses business performance data, not a hard credit score threshold, and its underwriting is transparent. We found it works best for your company if you have at least 1 year of trading and clean recent financials.
iwoca is the best option if your company is under 2 years old or has imperfect credit. From 6 months of trading, Open Banking assessment replaces the document chase and decisions are often same-day.
High-street banks (Barclays, NatWest, Lloyds) offer the most competitive rates for limited companies with 2+ years of accounts, strong credit, and a track record of profitable trading. We found banks the right choice if your borrowing is larger and longer-term, where the rate difference justifies the longer application process.
Personal Guarantees for Limited Company Directors
Most business lenders require a personal guarantee (PG) from any director who holds 25%+ of the company’s shares. The PG means you personally guarantee the company’s loan repayments — bypassing the limited liability protection of the corporate structure.
If your company defaults, the lender can pursue you for the outstanding balance, including your personal assets such as savings, investments, and — in some cases — your home. We strongly recommend taking independent legal advice before signing a personal guarantee for any substantial loan.
Personal guarantee insurance (PGI) is available to limit your exposure. Policies typically cover 60–80% of the guaranteed amount and cost 1–3% of the insured sum annually. We found PGI worthwhile for loans above £100,000 where your personal financial position would be materially affected by a claim.
How to Apply as a Limited Company
The standard document set for your limited company loan application: Companies House registration number, last 2 years of filed statutory accounts (or 6 months of bank statements for specialist lenders), last 3–6 months of business bank statements, and photo ID for all directors holding 25%+.
iwoca and some other specialist lenders offer Open Banking as an alternative to full document submission. By linking your business bank account through a secure portal, the lender can assess your cash flow directly — removing the need to submit statements manually and significantly speeding up the decision.
We recommend applying to lenders that offer a soft eligibility check before the full application. iwoca, Capify, and Funding Circle all offer this — you can check your likely eligibility without a hard credit search that would be visible to other lenders.
Improving Your Limited Company Credit Profile
Six steps to strengthen your limited company’s credit profile before you apply for a loan:
1. Ensure Companies House is current — your registered address, active director details, and filed accounts are basic lender checks. 2. File accounts on time — late filings show as a red flag on your business credit file and are visible to all lenders.
3. Build trade credit history — open accounts with suppliers on credit terms and pay on time. This is reported to business credit agencies and improves your score.
4. Check your business credit file — errors are more common than most directors realise. Check via Creditsafe or Experian Business and dispute any incorrect entries.
5. Clean up your personal credit file — all directors with 25%+ shares should check and address any issues. 6. Avoid multiple loan applications in a short window — each hard search is visible and can affect both you and your company credit files.
Limited Company Loan FAQs
Can a newly incorporated limited company get a business loan?
Yes, but options are limited. High-street banks typically require 2+ years of filed accounts. Specialist lenders like iwoca work from 6 months of trading. For very new companies (under 6 months), the British Business Bank Start Up Loans scheme offers up to £25,000 at 6% fixed without a minimum trading history.
Do all directors need to sign the personal guarantee?
Most lenders require personal guarantees from any director holding 25% or more of the company’s shares. If the company has multiple shareholders, all those above the 25% threshold will typically need to sign. The lender will specify the exact requirements during the application process.
Can a dormant limited company get a business loan?
No. Dormant companies cannot demonstrate trading activity, revenue, or cash flow — the three primary lending criteria. You would need to reactivate the company and establish at least 6 months of active trading before most specialist lenders would consider an application.
Does my limited company’s credit score affect my personal credit score?
Generally no — the business credit file and personal credit file are separate. However, a personal guarantee creates a direct personal liability that could appear on your personal file if the company defaults. Applying for a loan also triggers a hard search on your personal file, which is visible to other lenders for 12 months.
This guide was researched using primary sources including FCA guidance, Bank of England publications, HMRC documentation, and lender and provider primary websites. The content covers limited company borrowing options. Verified in April 2026.
The information covers general principles applicable to UK businesses and is not financial advice. Rates, terms, and eligibility criteria vary by lender and business circumstances. Verify current terms directly with providers before making decisions.
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