Business loans for limited companies: borrow £1K - £1M

Limited company loan eligibility factors and requirements

If registered with Companies House as a limited company, you can apply for a business loan with most lenders. However, different types of loans and lenders have varying eligibility criteria for qualifying, such as:

• A minimum trading history (often 6 months to 2 years).
• An annual turnover threshold.
• Loan purpose – some loans have strict rules about how the capital is used.
• Sector  – there are certain industries that some lenders will not support.

Most lenders will also require you to provide various supporting documentation to judge suitability and risk level, including:

• Proof of a steady revenue stream and financial stability.
• A clear business plan outlining the purpose of the loan.
• Solid credit history and information about existing loans or credit facilities.
• Details of assets to use as collateral (if applying for a secured loan).
• Bank statements, profit and loss statements and balance sheets.
• Personal guarantees from directors or owners (especially if you’re applying for an unsecured loan).

At iwoca, we support a wide range of companies, from start-ups and new businesses to SMEs and established organisations. We don’t require extensive documentation, meaning applications are faster and smoother than with traditional lenders.

Our limited company loans are unsecured, meaning you don’t need to use business assets as collateral. We also look beyond credit scores, focusing on your business plan, cash flow and revenue potential, meaning fewer barriers to accessing finance.

How much can you borrow with a limited company loan?

Every lender has a different target audience and approach to risk. The amount you’ll be able to borrow will depend on several key factors, outlined below:

• Your creditworthiness: This is how lenders judge your risk level and the likelihood of your business being able to repay the loan comfortably. 
• Security: If offering a secured business loan, the value of your asset plays a role in what level of capital lenders may offer.
• Loan purpose: If you’re seeking a loan for a high-value purchase or large-scale project, you may get access to bigger sums of capital.  
• Term length: Whether you need a short- or long-term loan affects the size of borrowing, with long-term lending usually unlocking larger borrowing amounts.
• Repayment model: While most business loans involve regular monthly repayments with interest, some loans have flexible repayment options, which can increase or decrease the amount you can borrow, depending on your needs.

With an iwoca Flexi-Loan, you can borrow between £1,000 and £1 million for a few days or weeks to as long as 60 months, with tailored repayments to suit your funding needs and cash flow.

If you have a clear business plan and strong profitability, you may be offered higher amounts as we judge your ability to repay within the required borrowing period. We’ll also take the purpose of the loan into account.

Loan interest rates and repayments

Interest rates for limited company loans can vary significantly, and are influenced by several factors, including creditworthiness, how much you want to borrow, term length and market conditions. Also, you can choose between a fixed or variable rate loan, depending on your preference and risk appetite. 

Repayment terms depend on each lender’s policy and the type of business loan offered. Some may include repayment holidays, options to repay early or roll up interest to pay at the end of the term. However, this may affect costs and incur additional fees.‍

With iwoca flexible business loans, we align repayment terms and rates with your unique position and cash flow to provide a manageable repayment schedule. You only pay interest on the funds you actually use, and you can repay early free of charge, helping you keep costs down.

Secured vs unsecured business loans

One important decision you'll face is choosing between a secured and an unsecured loan, since this will affect how much you can borrow and how much you’ll repay.

• Secured business loans: These require you to provide assets as collateral, such as property, equipment or inventory. This reduces lender risk, often resulting in lower interest rates and higher borrowing limits. However, if you default on the loan, the lender can seize the collateral to recover their losses. 
• Unsecured business loans: In this type of loan, you’re not required to use business assets as collateral, which means lenders focus more on your creditworthiness, financial history and business plan. These loans typically have higher interest rates and lower borrowing limits compared to secured loans, and may require a personal guarantee, but are often quicker and easier to access.

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Iwoca’s limited company loans are unsecured, meaning less paperwork, fewer application steps and a shorter time to funding. 

What details do limited companies need to apply for a business loan?

Most lenders ask for key information about you and your business, including company structure and trading history, and request various documents, like financial records and statements. With banks and traditional lenders, you may need to start your application over the phone and complete it via further communication and online submissions. 

With iwoca, our loan application process is super simple and can be done 100% online. We’ll only require some basic information before doing online verifications and checks. Our sophisticated leading system is powered by automation, enabling us to make funding decisions on the same day. 

Alternative funding solutions for limited companies

There are various alternative funding solutions available to limited companies beyond business loans, such as:

• Invoice finance: A specific funding solution for unlocking working capital tied up in unpaid client invoices, supporting businesses with lengthy payment schedules.
• Asset finance: Various agreements to lease or hire key business assets, from machinery and vehicles to office equipment. 
• Revenue-based funding: Lending solutions suitable for retailers where an advance is provided to businesses and repaid as a percentage of future sales.
• Government grants: A sought-after source of funds not requiring repayment, awarded by the government to eligible companies, usually in certain sectors or locations requiring growth.  ‍
• Equity finance: Another area of business finance where capital borrowed doesn’t need to be repaid, but investment is provided in exchange for a degree of control in the business and a share of future profits.