What types of company loans are available for limited companies in the UK
Finding the right finance for your limited company doesn't have to be stressful. Whether you need to cover cash flow gaps, invest in equipment, or fuel growth, there are plenty of loan options designed specifically for UK limited companies. This guide walks you through the main types available, so you can make an informed choice about what suits your business best.
Term Loans
Term loans are one of the most straightforward types of business finance. You borrow a fixed amount upfront and repay it over an agreed period, usually between one and ten years, with regular monthly payments.
- Fixed or variable interest rates - most UK lenders offer fixed rates, which means your repayments stay the same throughout the term
- Amounts typically range from £5,000 to £500,000, though larger sums are possible
- Repayment flexibility - you know exactly what you'll pay each month, making budgeting simpler
- Quick funding - many lenders can arrange funds within 5 to 10 working days once approved
Term loans work well if you have a clear project or need in mind and can commit to regular repayments.
Business Bank Loans
Traditional bank loans from high street lenders like Barclays, Lloyds, and NatWest remain a common choice for established limited companies. Banks typically want to see a strong track record and good credit history.
- Competitive interest rates - banks often offer lower rates than alternative lenders, especially if you have good credit
- Larger loan amounts - banks are willing to lend £50,000 to £1 million or more
- Longer application process - expect 4 to 8 weeks from application to drawdown
- Stricter criteria - you'll need audited accounts, detailed business plans, and often personal guarantees
- Relationship manager support - many bank loans come with dedicated support for growing businesses
Bank loans suit mature companies with strong financials and patience for a thorough application process.
Invoice Finance and Trade Credit
If your limited company issues invoices to other businesses but has to wait weeks or months for payment, invoice finance can unlock cash tied up in those invoices.
- Quick access to funds - typically within 24 to 48 hours
- No fixed repayment term - you only pay when you've been paid by your customers
- Cash flow breathing room - ideal for businesses with long payment terms
- Cost varies - usually 1-3% of invoice value depending on your industry and customer creditworthiness
Invoice finance is perfect if you're profitable but struggling with cash flow due to payment delays from customers.
Invoice Factoring
A lender buys your unpaid invoices at a discount, usually releasing 80-90% of the invoice value immediately. They collect payment from your customer and keep the remainder as their fee.
Invoice Discounting
Your business retains control of the sales ledger. The lender advances cash against invoices but you manage customer relationships and collections yourself.
Asset-Based Lending and Secured Loans
These loans use your company's assets - such as property, equipment, or vehicles - as security, often allowing you to borrow larger amounts at better rates.
- Secured against business property - commercial mortgages or property-backed loans for premises
- Equipment finance - borrow to buy machinery, vehicles, or technology, with the asset itself as security
- Lower interest rates - because the lender has security, rates are typically 2-3% lower than unsecured loans
- Larger borrowing capacity - you can often borrow up to 70-80% of the asset's value
- Potential tax relief - interest payments may be deductible against corporation tax
Secured lending works well if you own substantial business assets and need significant funds for long-term investment.
Business Lines of Credit
A line of credit gives your company flexible access to funds up to a set limit. You draw money as needed and pay interest only on what you've used, making it ideal for managing variable cash flow.
- Flexible drawdown - borrow small or large amounts whenever you need them
- Interest on what you use - you're only charged for the amount outstanding, not the full credit limit
- Rolling facility - as you repay, funds become available again without reapplying
- Typically 1 to 3 years - most lines are reviewed annually and may be extended
Lines of credit suit businesses with uneven cash flow or those that need financial flexibility for seasonal peaks and troughs.
Government-Backed Schemes and Grants
The UK government and devolved administrations offer several schemes to help limited companies access affordable finance, often with lower interest rates or partial government guarantees.
- Bounce Back Loan Scheme - although closed to new applications, existing borrowers may refinance through other schemes
- Recovery Loan Scheme - available to businesses affected by economic challenges, with government backing on 80% of the loan
- Start Up Loans - for newer companies; government-backed loans up to £25,000 at a fixed rate
- Regional grants - depending on your location, you may access growth grants from local enterprise partnerships or combined authorities
- Sector-specific support - green energy loans, export finance, and innovation funding are available for eligible businesses
Government schemes often offer better rates and terms, so it's worth checking if your business qualifies before approaching commercial lenders.
How Spark Finance Can Help
At Spark Finance, we're an FCA-authorised broker (FRN 958123) that connects you with over 100 lenders across the UK, from high street banks to specialist finance providers. Rather than applying to lenders one by one, we handle the legwork for you.
- No-obligation eligibility check - we can give you an instant view of what you might qualify for without affecting your credit score
- Expert matching - we assess your situation and match you with lenders most likely to say yes
- Transparent pricing - we explain all costs upfront so there are no surprises
- Faster decisions - our relationships with lenders often mean quicker turnaround times
- Free support - our team of brokers guide you through the process from start to finish
Get in touch today for a free chat about your borrowing needs, and we'll show you what's available to your limited company.
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Frequently asked questions
How much can my limited company borrow?
It depends on the loan type and your circumstances. Unsecured term loans typically range from £5,000 to £250,000, while secured loans or bank loans can go much higher - sometimes £500,000 to £1 million or more. Lenders will assess your turnover, accounts, cash flow, and credit history to set your maximum borrowing.
What's the difference between a secured and unsecured loan?
An unsecured loan has no asset backing it, so interest rates are higher but you don't risk losing business property. A secured loan uses assets like property or equipment as collateral, which lowers the interest rate but means the lender can repossess the asset if you can't repay.
How long does it take to get a business loan?
This varies widely. Alternative lenders and specialist brokers can arrange funds in 5 to 10 working days, while high street banks often take 4 to 8 weeks due to stricter checks. Invoice finance is usually fastest, typically releasing funds within 24 to 48 hours.
Will I need a personal guarantee?
Many lenders will ask for a personal guarantee from directors of a limited company, especially for unsecured loans or smaller amounts. This means you're personally liable if the company can't repay. However, some lenders offer unsecured loans without personal guarantees, though interest rates will be higher.
Important information: Spark Finance Limited is authorised and regulated by the Financial Conduct Authority (FRN 958123). We are a credit broker, not a lender. This guide is for informational purposes only and does not constitute financial advice. Think carefully before securing debts against property or assets. Your business may be at risk if you do not keep up repayments on a debt or other commitment entered into in relation to it.