Business loans for UK companies

Business loans give a limited company, LLP or partnership of four or more partners money now, which it repays to a lender over an agreed term with interest and sometimes fees. The main types differ in purpose, length of term and what the lender takes as security.

• Unsecured business loans: a fixed sum repaid in regular instalments, typically over one to six years, with no specific business assets pledged. Directors are usually asked for a personal guarantee instead.
• Secured business loans: larger sums or longer terms, backed by a debenture over the company or a charge over specific assets such as plant, machinery or vehicles.
• Working capital loans: shorter-term funding, often over 3 to 24 months, to cover wages, stock and supplier bills while the company waits to be paid.
• VAT loans: a short-term loan to pay a quarterly VAT bill to HMRC on time, then spread the cost over the following months.
• Corporation tax loans: the same idea for a corporation tax bill, usually repaid over three to twelve months.
• Growth finance: medium-term funding for expansion, such as a new site, more staff or entering new markets.
• Acquisition finance: funding to buy another company, including management buyouts and buy-ins, usually structured around the target business and arranged alongside due diligence.

Some funding needs sit better in other categories. Buying equipment or vehicles is often cheaper and simpler through asset finance, because the asset itself is the security. If cash is tied up in unpaid invoices, card takings or stock, cash flow finance may release it without a fixed loan repayment.

Start with what the money is for and how long it will take to pay for itself, then match the loan term to that. Short-term costs usually suit short-term borrowing, and long-life investments usually suit longer terms.

You have a VAT or corporation tax bill due

A short-term tax loan lets the company pay HMRC on the due date and repay the lender monthly, often finishing before the next bill arrives. It is worth comparing the total cost with an HMRC Time to Pay arrangement, which HMRC may agree for some companies, and with HMRC late payment interest, which is charged at the Bank of England base rate plus 4%.

You need to cover a temporary cash-flow gap

A working capital loan suits a gap with a clear end, such as a large order you must fund before the customer pays, or a quiet season before a busy one. If the gap repeats every month, a facility you can draw and repay, or invoice finance, may fit better than a fixed loan.

You are investing in growth

Hiring, opening a new site or launching a product takes time to produce a return. A longer term keeps monthly repayments manageable while the investment beds in.

You are buying another business

Acquisition finance is assessed on the combined business: the target's profits, its assets and how the deal is structured. Expect lenders to ask for heads of terms, due diligence findings and financial projections, and allow several weeks for the process.

You can offer security, or you would rather not

If the company has valuable business assets, a secured loan may allow a larger amount or a longer term. If it does not, or you want to keep those assets free, an unsecured loan avoids a charge over them, although a personal guarantee is common.

The main trade-offs are term, speed, security and total cost. No single type is right for every company, so it helps to see the differences side by side.

• Term: VAT and tax loans usually run for 3 to 12 months, working capital loans for 3 to 24 months, unsecured loans for one to six years, and secured or acquisition loans can run longer, depending on the lender.
• Speed: short-term unsecured lenders can often decide quickly once they have bank statements and accounts. Secured and acquisition loans take longer because of valuations, legal work and due diligence.
• Security: unsecured loans rely mainly on the company's trading and a director's guarantee. Secured loans add a charge over assets, and a personal guarantee may still be requested.
• Repayments: most loans have fixed monthly repayments. Some lenders may offer a capital repayment holiday at the start, or a larger final payment, particularly on growth and acquisition deals.

The cost of a business loan is everything you repay above the amount you borrow: interest plus any fees. Comparing that total, rather than a headline rate, is the most reliable way to compare offers.

• Interest: may be fixed or variable. Some short-term lenders quote a flat rate or a fixed charge instead of an annual rate.
• Arrangement fee: often deducted from the amount advanced, so the company receives less than the loan amount but repays the full amount.
• Legal and valuation fees: common on secured loans, where assets are valued and charges are registered.
• Due diligence and professional fees: usual on acquisition finance.
• Early repayment charges: some lenders charge a fee, or a minimum amount of interest, if you repay early.

A flat rate is charged on the original loan amount for the whole term, even as the balance falls, so the true annual cost is higher than the flat rate figure suggests. Pricing usually reflects the company's trading history, turnover, profitability, existing debt, the credit records of the company and its directors, the term and the security offered.

Illustrative example only: actual costs depend on the lender and your circumstances. A company borrows £60,000 over 36 months. The lender charges an arrangement fee of £1,200, deducted from the advance, and interest totalling £12,600. The company receives £58,800 and repays £72,600 in total, which is £2,016.67 a month. The total cost of credit is £13,800: the £12,600 of interest plus the £1,200 fee.

We arrange business loans for UK limited companies, LLPs and partnerships of four or more partners. Each lender sets its own minimum trading period, from a few months to two or three years, and its own turnover requirements.

Lenders usually assess:

• recent business bank statements, to see income, outgoings and existing repayments
• filed accounts and, for larger or longer loans, up-to-date management accounts
• the credit records of the company and its directors
• existing borrowing, including asset finance, cash advances and overdrafts
• the company's position with HMRC, including any arrears or Time to Pay arrangements
• what the money is for and how the repayments will be afforded

A company with adverse credit, a short trading history or low profits may still be considered by some lenders, but the choice is usually narrower. Lenders may offer a smaller amount, a shorter term, a higher cost or ask for security. Being open about any issues at the start helps avoid wasted applications.

Before signing, check exactly what the company and its directors are agreeing to, not just the monthly repayment. The points below are where business loan agreements most often differ.

• Personal guarantees: a guarantee makes a director personally liable if the company cannot pay. Check whether it is capped or unlimited, and take independent legal advice before signing.
• Debentures and charges: a debenture gives the lender a fixed and floating charge over company assets, which may limit what other lenders can take as security later.
• Early repayment: check whether you can settle early and what it will cost.
• Covenants and conditions: some loans require the company to meet financial tests or provide regular accounts. Breaching them can count as a default.
• Default terms: read what happens if a payment is missed, including fees, extra interest and when the lender can demand the full balance.

Lending to limited companies, LLPs and partnerships of four or more partners is generally not regulated by the FCA, and Consumer Credit Act protections generally do not apply. Welcome Finance is not authorised or regulated by the FCA and arranges unregulated business finance only. Read every agreement carefully and take independent legal or financial advice if anything is unclear.

Yes. Many lenders offer small business loans to established smaller limited companies and LLPs, and there is no legal minimum size for a business loan to a company. Each lender sets its own minimum loan amount, trading period and turnover requirements, and you can send an enquiry with us from £5,000.

For a smaller company, the amount a lender offers usually depends less on the size of the business and more on what it can comfortably repay. Lenders typically look at turnover, recent bank statements, existing borrowing and the credit history of the company and its directors.

Products smaller companies often consider include:

• unsecured business loans, usually with a personal guarantee from the directors
• short-term business loans for a gap of a few months
• a merchant cash advance if the company takes regular card payments
• a revolving credit facility for ongoing cash-flow needs
• VAT loans to spread a VAT bill

Smaller loans can still carry fees, so compare offers on the total amount repayable, not just the monthly payment. Our business loan calculator shows how the term changes the total cost, and our guide on how to get a business loan explains what to prepare.

Welcome Finance is a commercial finance broker, not a lender. A dedicated relationship manager, a real person you can reach by phone, email and chat, works with you from your first enquiry until the lender pays out.

1. Check eligibility in about 60 seconds. It does not affect your credit score.
2. Your relationship manager talks through the purpose, amount, timing and any security.
3. We identify suitable lenders on our panel and explain the options in plain English.
4. You decide whether to apply. Lenders then run their own credit checks and may ask for documents.
5. If offers are made, we help you compare the total cost, security, guarantees and early repayment terms.
6. You accept the offer that suits you, sign the agreement and the lender releases the funds.

We do not charge you a fee. We are paid a commission by the lender when the finance completes. You can ask us how much we will receive, and the amount can differ between lenders. Lenders make their own decisions, so approval is never certain.

Can a company have more than one business loan at a time?

Yes, it is possible. A new lender will look at existing repayments when assessing affordability, and some existing loan or debenture terms may restrict further borrowing, so check your current agreements first.

Can we repay a business loan early?

Often, yes. Some lenders charge an early repayment fee or a minimum amount of interest, so ask for a settlement figure and check the agreement before you commit.

Does checking eligibility affect our credit score?

No. Our eligibility check takes about 60 seconds and does not affect your credit score. Lenders run their own credit checks later, only after you decide to apply.

Will directors need to give a personal guarantee?

It is common, especially for unsecured loans, but it depends on the lender, the amount and the security available. Some guarantees are capped at a fixed amount. Always take independent advice before signing one.

How long does it take to get a business loan?

Short-term unsecured loans can move quickly once the lender has your documents. Secured and acquisition loans usually take several weeks because of valuations, legal work and due diligence.

Can an LLP or a larger partnership apply?

Yes. We work with LLPs and partnerships of four or more partners. Lenders may ask members or partners for guarantees, as they do with company directors.