How Limited Company Loans Differ from Sole Trader Lending
When your limited company applies, lenders read two separate credit files, the business file at Experian or Creditsafe and your own personal credit file as a director. A weakness in either one can sink the application.
Your limited liability is meant to shield your personal assets from business debts. In practice most lenders want a personal guarantee, which steps straight around that protection.
That’s the protection you think you have, and mostly don’t.
Sole traders get no split at all, so every business debt is automatically your debt. Your company gives you more structure, but the guarantee shrinks the practical gap to less than most directors expect.
What Lenders Look for With Limited Companies
Lenders check your Companies House record first, looking for an active status, a correct registered address and current director details. A dormant or overdue-filing status often triggers an automatic decline.
Your filed accounts are the main financial test. High-street banks want at least two years of statutory accounts showing profitable or break-even trading, while iwoca and Capify work from six months of bank statements and Open Banking instead.
Lenders also run a personal credit check on you and any director holding 25% or more of the shares. A CCJ on your personal credit file, even one unrelated to the business, can push up your APR or trigger a decline.
Picture your accountant chasing last year’s accounts at year-end while the application clock keeps running. Check your credit file before the company applies, not after.
Best Loan Options for Limited Companies
Your strongest option as an established limited company is Funding Circle. It now lends only to limited companies and LLPs, from 6.9% APR on £10,000 to £750,000, and it weighs your trading data over a hard credit score.
iwoca suits you when the company is younger or your credit is patchy. It sets no fixed trading-history minimum, decisions land inside 24 hours, and the representative APR on your borrowing is 49% across £1,000 to £1 million.
That’s the cost you carry for speed and a thin file.
High-street banks (Barclays, NatWest, Lloyds, HSBC) give you the sharpest rates and no arrangement fee on their small business loans, but they want two years of accounts and a clean look at your credit file. We’d use a bank when your borrowing is large and long-term.
You’ve also got two government-backed routes for when ordinary lenders say no. Start Up Loans lends £500 to £25,000 per founder at a fixed 7.5%, with no guarantee or guarantor required.
Your other safety net is the Growth Guarantee Scheme, which backs facilities up to £2 million and runs to March 2030. It hands the lender a 70% guarantee, yet you stay 100% liable and it can’t take your home as security.
That’s the catch: the guarantee protects the lender, not you.
Personal Guarantees for Limited Company Directors
You’ll almost always be asked for a personal guarantee if you hold 25% or more of the shares. Sign one and you personally promise the company’s repayments, which steps around your limited liability.
If the company defaults, the lender can come after your savings, your home, and your personal credit file. We’d take independent legal advice before you sign a guarantee on any substantial loan.
Personal guarantee insurance can cap your exposure. Policies cover 60 to 80% of the guaranteed sum and cost 1.5 to 5% of it a year, which we’d weigh up on guarantees above £100,000.
Picture your supplier chasing this week’s invoice while you wait on a guarantee decision at quarter-end.
That’s the catch you sign up for.
How to Apply as a Limited Company
You’ll need your Companies House number, your last two years of filed accounts (or six months of bank statements for specialist lenders), three to six months of business bank statements, and photo ID for every director above 25%.
iwoca and some specialists let you skip the document chase with Open Banking. You link your business account through a secure portal and they read your cash flow directly, which cuts the decision from days to hours.
You can check a soft eligibility quote before any full application. iwoca, Capify and Funding Circle all offer one, so you see your likely odds without a hard search that other lenders can see for 12 months.
Picture your accountant uploading six months of statements on a Friday while the lender waits on the decision.
Improving Your Limited Company Credit Profile
You can lift both credit files before you borrow, and it’s worth the effort. The cheapest win is filing your accounts at Companies House on time, because late filings flag on your business credit file for every lender to see.
Build trade credit by opening supplier accounts on terms and paying on time, since that history feeds your business score. Check your business credit file at Creditsafe or Experian and dispute any errors, which are more common than directors expect.
Keep your own personal credit file clean too, for every director above 25%. Avoid a cluster of applications in a short window, because each hard search shows on both files and chips at your score.
That’s the work that decides your rate before you even apply.
Limited Company Loan FAQs
Can a newly incorporated limited company get a business loan?
Yes, but the options narrow. High-street banks want two or more years of filed accounts, and Funding Circle looks for two years of trading. Specialist lenders like iwoca have no fixed trading-history minimum and will fund younger companies on cash flow. For a brand-new company, the British Business Bank Start Up Loans scheme lends up to £25,000 per founder at a fixed 7.5% with no minimum trading history.
Do all directors need to sign the personal guarantee?
Most lenders require a personal guarantee from any director holding 25% or more of the shares. If several shareholders sit above that threshold, each of them will usually need to sign. The lender confirms exactly who is required during the application, and the guarantee makes each signatory personally liable for the company’s repayments.
Is lending to a limited company regulated by the FCA?
No. Lending to limited companies and LLPs sits outside the FCA’s consumer-credit perimeter under Article 60C of the Regulated Activities Order, so you do not get the same protections a personal borrower would. Only sole traders and small partnerships borrowing £25,000 or less fall inside FCA regulation. Compare offers carefully, because the burden of due diligence sits with you.
Can a dormant limited company get a business loan?
No. A dormant company cannot show trading activity, revenue or cash flow, which are the three things lenders underwrite on. You would need to reactivate the company and build at least six months of active trading before most specialist lenders would look at an application.
How we reviewed limited company loans
What we covered. We looked at how UK limited companies borrow in 2026: the loan types open to them, the rates, the personal guarantee, and how lenders weigh the business and director credit files. We do not rely on comparison-site summaries or aggregator data.
Data sources. Rates, eligibility and scheme terms were checked against primary sources in June 2026, including Funding Circle, iwoca, the British Business Bank Start Up Loans and Growth Guarantee Scheme, the FCA, and the Bank of England base rate of 3.75%.
How we handle gaps. Where a figure dates quickly, such as a lender rate or a scheme rule, we verify it against the provider or the official scheme page rather than carry an older number forward.
Update cadence. We re-verify this page at least monthly, and whenever a lender or scheme changes pricing or terms. The verification date reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.
Regulatory note. This page is editorial content, not regulated financial advice. Lending to limited companies sits outside the FCA consumer-credit perimeter, and credit is subject to status and approval. Compare offers directly with providers before you apply.