Business lines of credit for start-ups: what a new limited company can get

A new limited company can get a line of credit, but most providers want months of trading first, and you should expect a director to sign a personal guarantee. With little or no trading history, your options are a bank overdraft, a business credit card, or a business loan with flexible repayment options, such as the iwoca Flexi-Loan.

Key point: The key question is whether your company has started trading, not just when you registered it. Check each lender’s trading-history criteria before applying - being able to apply does not mean you’ll be approved.

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Most lines of credit need trading history first

Lenders price a line of credit on how a business has traded, so a company with no history has fewer options. Bizcap, for example, asks for at least nine months' trading and £20,000 a month in revenue before it offers one.

Banks are cautious too. NatWest offers its business overdraft to existing NatWest customers and says a personal, director, or member's guarantee may be required. In iwoca's SME Expert Index for Q2 2026, 75% of brokers agreed that high street banks are reducing their appetite for funding small businesses.

Here's what a new limited company can realistically apply for (checked on 12 October 2026):

If you're comparing cards, our guide to business credit cards for start-ups covers who accepts brand-new companies.

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How a business line of credit works

A line of credit gives your company a limit it can draw from when it needs to, and you pay interest only on what you've drawn. A loan suits one planned cost; a line of credit suits costs that come and go.

That makes it useful in a company's first year, when sales arrive unevenly but payroll, suppliers, and rent don't wait. You draw what you need, repay it, and the cost stops when the balance is cleared. Borrowing this way also keeps your equity: you don't give away a share of the company, as you would with an investor.

For the full mechanics, including secured and unsecured facilities, read how a business line of credit works.

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Expect to sign a personal guarantee

If your company is new, expect a lender to ask a director for a personal guarantee. GOV.UK defines it as 'a legally binding agreement that the director will personally repay a debt if the company fails to meet its financial obligations in relation to that debt'.

GOV.UK adds that guarantees are more likely when a company is newly formed or has a limited trading history. A guarantee can expose a director's personal assets, so it's worth knowing three things before you sign:

• 'Unsecured' only means the lender doesn't take an asset as security. It doesn't mean there's no guarantee.
• A guarantee is a legal commitment from you as an individual, separate from the company's own obligation.
• The terms vary between lenders, so read what you're agreeing to and ask an accountant or solicitor if anything is unclear.

At iwoca, every new Flexi-Loan needs a personal guarantee from at least one director. Not every director has to sign, and we don't take property as security at the start of the loan.

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What lenders check when your company is new

With no filed accounts, lenders lean on what they can see: the directors' credit history, the business bank account, the Companies House record, and what the money is for.

What that means in practice:

• Director credit history. With little company history, the directors' own record carries more weight.
• Business bank statements. For most loans, we ask for recent bank statements rather than a business plan or financial forecasts.
• Companies House record. Lenders look at the company's age, its directors, and any county court judgments (CCJs).
• What the money is for. A clear use, such as stock for a confirmed order, is easier to assess than a general buffer.

Banks may still ask for a business plan and a cash flow forecast. iwoca doesn't need either: we look at how your business is doing, not just your credit score.

Before you apply, you can see how lenders view your company with iwoca Credit Compass. It's free, and it shows your Equifax business credit score, four more scores, what's affecting them, and what to focus on to be ready for funding.

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How the iwoca Flexi-Loan compares with a line of credit

The iwoca Flexi-Loan is a business loan with flexible repayment options: you're offered a limit, draw what you need, and pay interest only on what you owe. We lend to UK limited companies, including new ones, with start-up loans capped at £10,000.

How a Flexi-Loan works for a new company:

• Limits from £1,000 to £1 million. Start-up loans are capped at £10,000, and your limit depends on how your business is doing.
• Draw what you need. You don't have to take the full amount at once, and once you're eligible you can apply for a top-up without starting from scratch.
• Apply in about five minutes. Checking your eligibility won't affect your credit score. We only run a hard check if you take the loan.
• A decision within 24 hours. It might be longer depending on the complexity of the request.
• Terms of one to five years. You can repay early at any time, with no fee.
• A personal guarantee from at least one director. It's needed on every new Flexi-Loan.

Rates start at 1.5% per 30 days, and we charge interest only for the days you use the money. There are no fees on 12-month loans. Longer terms may include a fee, typically 5% for 13–24 months and 6% for longer.

Because interest stops when you repay, clearing the balance early cuts the cost. Interest on £10,000 at our representative rate of 3.33% per 30 days, if you repay in full after:

The business loan calculator shows what your own amount and term could cost.

Customers use the limit in waves rather than all at once. 'We go through waves of borrowing a significant amount and paying back a significant amount. You need the conviction that a good period is only around the corner,' says Chris Billingham, founder of Muscle Squad, an ecommerce business that uses its Flexi-Loan to fund stock.

A Flexi-Loan isn't the right fit if you'd rather not give a personal guarantee, or if you need a large sum before your company has any trading to show. In those cases, the options below may suit you better.

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When a card, overdraft, or start-up loan fits better

If your company hasn't started trading, a business credit card or a government Start Up Loan may be easier to get, because both are open to brand-new businesses.

• A business credit card suits regular spending you clear each month. Capital on Tap, for example, has no minimum trading history.
• An overdraft suits short gaps on your current account, if your bank offers one to companies your age.
• A government Start Up Loan lends £500–£25,000 at a fixed 7.5% a year over one to five years, with no application or early repayment fee and up to 12 months of free mentoring. It's an unsecured personal loan, so you borrow as an individual and need to pass a credit check.

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Line of credit questions from new companies

Quick answers on bad credit, what you can use the money for, revolving credit, and whether a credit line is worth it.

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Can I get a line of credit with bad personal credit?

It's harder, because a new company's application leans on the directors' credit history. Some lenders still look beyond the score: at iwoca, we look at how your business is doing, not just your credit score, so it's worth checking your eligibility.

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Can I use a line of credit for payroll, suppliers, or VAT?

Yes. Once you draw funds into your business account, you can use them for business costs such as payroll, supplier bills, or a VAT bill. Check the lender's terms for any restricted uses.

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Is a revolving credit facility the same as a line of credit?

A revolving credit facility is a type of line of credit: you can draw, repay, and draw again up to the limit. They're usually aimed at established companies; one provider's guide, from Juice, says a minimum trading history of 12 to 24 months is standard. The iwoca Flexi-Loan is a business loan with flexible repayment options, with top-ups once you're eligible.

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Is a line of credit worth it for a start-up?

It's worth it when your costs come and go and you want a buffer you pay for only when you use it. If you need one fixed sum for a single purchase, a loan is usually simpler, and if you haven't traded yet, a card or a Start Up Loan is often easier to get.