Limited company loans
A limited company loan is business finance taken out in the company’s own name, as a separate legal entity registered at Companies House, with the company liable for the debt. Because limited liability normally protects directors, lenders usually ask for a personal guarantee, unless the facility is secured on an asset. A limited company can access the full range of products, from unsecured term loans to asset finance, invoice finance and commercial mortgages.
Founder & Managing Director, Muswell Rose, FundBiz
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind FundBiz. His background runs through commercial finance, mortgages and fintech, including as managing director of an invoice finance business. He oversees FundBiz's guides and lender reviews.
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At a glance
- Who borrows
- The company, a separate legal entity
- Registered at
- Companies House
- Usual security
- A director’s personal guarantee
- Products available
- The full range, secured and unsecured
- Key documents
- Company number, bank statements, accounts
- Scope
- Ltd companies, LLPs and partnerships of four or more partners
How borrowing in a company name works
A limited company is a separate legal entity from the people who own and run it. That means the company can borrow, hold assets and enter agreements in its own name, and it is the company, not the director personally, that is the borrower on the loan. The debt sits on the company’s books and is serviced from company cash flow.
This separation is one of the main reasons businesses incorporate, and it shapes how lenders approach a company facility, because they're lending to the entity rather than to an individual.
Why lenders still ask for a personal guarantee
Limited liability protects directors from the company’s debts, which is exactly why an unsecured lender wants something more before advancing funds. A personal guarantee is that something: a written promise by a director to repay the loan personally if the company can't, usually capped at an agreed figure rather than unlimited. It keeps the director aligned with repaying and gives the lender recourse beyond the company. Where a facility is secured on a real asset, the guarantee is often reduced or removed because the asset carries the risk. For the detail on avoiding one, see our page on the no personal guarantee options.
Finance types a limited company can use
Incorporation opens up the full product range. The right one follows the purpose of the money and what the company can offer as security.
| Finance type | Secured on | Typical use |
|---|---|---|
| Unsecured term loan | Nothing; usually a personal guarantee | Working capital, short-term needs |
| Asset finance | The asset being funded | Equipment, vehicles, machinery |
| Invoice finance | The debtor book | Freeing cash tied up in unpaid invoices |
| Merchant cash advance | Future card takings | Retail and hospitality with card flow |
| Commercial mortgage | Commercial property | Buying or refinancing premises |
Source: FundBiz product structure overview
View as plain-text Markdown
### The main finance types available to a UK limited company and where each one fits. Terms vary by lender and by the strength of the company. | Finance type | Secured on | Typical use | | --- | --- | --- | | Unsecured term loan | Nothing; usually a personal guarantee | Working capital, short-term needs | | Asset finance | The asset being funded | Equipment, vehicles, machinery | | Invoice finance | The debtor book | Freeing cash tied up in unpaid invoices | | Merchant cash advance | Future card takings | Retail and hospitality with card flow | | Commercial mortgage | Commercial property | Buying or refinancing premises | Source: FundBiz product structure overview
For an unsecured lump sum, see unsecured business loans. For a specific asset, asset finance is usually cheaper because the asset is the security. For premises, a commercial mortgage fits. For unpaid invoices, our sister site MarketInvoice compares invoice finance options. If credit is a concern, read bad credit business loans.
What a limited company needs to apply
Having the essentials ready shortens the process and avoids wasting a credit search on an application that stalls at the document stage. For most facilities a limited company should have:
- The Companies House registration number, with filings up to date.
- Confirmation the company is actively trading.
- Three to six months of business bank statements.
- Filed accounts, or management accounts where filed ones are dated.
- The names and details of any directors who will provide a personal guarantee.
Lenders check the Companies House record as a matter of routine, so overdue filings or penalties are worth clearing first. For the full rules on which structures qualify, see our guide on who FundBiz lends to.
New companies and short trading history
A young limited company has fewer options, mainly because it has no filed accounts yet, but it isn't shut out. Where there's evidence of trading, such as bank statements, card takings or VAT returns, some facilities remain open: a merchant cash advance for a card-led business, or asset finance secured on the equipment being purchased, where the asset itself provides the comfort.
Products that rely on a track record in filed accounts, such as some term loans and commercial mortgages, generally want at least one full year of trading. A directors’ loan can also sit alongside external finance in the early stages.
Frequently asked questions
What is a limited company loan?
A limited company loan is business finance taken out in the name of the company itself, a separate legal entity registered at Companies House, rather than by an individual. The company is the borrower and is liable for the debt. Because a limited company has its own legal identity, it can borrow, hold assets and enter contracts in its own name. In practice, lenders usually still ask the directors to stand behind the debt through a personal guarantee.
Do I need a personal guarantee to borrow through my limited company?
Usually, yes, especially for unsecured lending to smaller companies. Limited liability normally protects directors from the company’s debts, so a personal guarantee is how a lender bridges that gap and keeps a director aligned with repaying. The guarantee is a written promise to repay personally if the company can't, typically capped at an agreed amount.
Where the facility is secured on an asset, such as asset finance or a commercial mortgage, the guarantee is often reduced or waived because the asset does that job.
What do lenders need from a limited company?
At a minimum, the Companies House registration number, confirmation that the company is actively trading, recent business bank statements, and filed or management accounts. Lenders will check the Companies House record for the current director and shareholder structure and for any overdue filings or penalties.
For directors, a reasonable personal credit profile matters because personal guarantees are standard. A clear explanation of what the finance is for and how it will be repaid speeds the decision.
Can a new limited company get a loan?
Sometimes, but the options narrow with a short trading history. A company under a year old won't have filed accounts, so some products are harder to access. Where there's evidence of trading, such as bank statements, card takings or VAT returns, certain facilities remain possible, for example a merchant cash advance for a card-led business or asset finance secured on the equipment being bought.
Products that rely on filed accounts, such as some term loans and commercial mortgages, typically want at least a full year of trading.
Can a director lend money to their own limited company?
Yes. A director can lend personal money to their company, which is recorded through the director’s loan account and can be repaid later, sometimes with interest, subject to the usual tax and accounting treatment. This is different from external borrowing and doesn't remove the need for outside finance where larger sums are involved. Where a company needs more than the directors can inject, external facilities from lenders are the route, and a director’s loan can sit alongside them.
What types of finance can a limited company get?
A limited company can access the full range: unsecured and secured term loans, asset finance for equipment and vehicles, invoice finance against its debtor book, a merchant cash advance against card takings, revenue-based finance against online sales, commercial mortgages, bridging, and tax or VAT funding. The right one depends on the purpose, the trading profile and what the company can offer as security.
Is my personal credit checked when the company borrows?
Often, yes. Because most limited company facilities involve a director’s personal guarantee, lenders typically check the personal credit of the guaranteeing directors alongside the company’s own record. A weak personal file can affect the terms even where the company trades well. FundBiz does not run a credit check. If you send an enquiry, the broker or a lender may run their own checks, which can include a credit search, and they should tell you before they do.
Who can send an enquiry through FundBiz?
Our enquiry form is for UK limited companies, LLPs and partnerships with four or more partners. Sole traders are out of scope. For a limited company, lenders weigh trading history, turnover, cash flow, the company’s Companies House record and the directors’ credit profiles. FundBiz does not run a credit check. If you send an enquiry, the broker or a lender may run their own checks, which can include a credit search, and they should tell you before they do.
Related finance
For borrowing over 3 to 18 months see short term business loans, for draw-and-redraw working capital a revolving credit facility, for urgency fast business loans, and for what facilities cost right now, current business loan interest rates.
See what your limited company can borrow
Check your options →FundBiz does not run a credit check. Limited companies, LLPs and partnerships with four or more partners only.