Business finance for limited companies: the complete UK guide

• Unsecured business loans: a lump sum repaid over a fixed term, approved mainly on trading performance and credit. Usually quicker to arrange, but amounts and terms tend to be smaller.
• Secured business loans: backed by company assets, often through a debenture or a charge over equipment or vehicles. Can allow larger amounts and longer terms.
• Revolving credit facilities and working capital: flexible limits you draw on and repay as needed, useful for uneven cash flow.
• Asset finance: hire purchase and leasing for vehicles, machinery and equipment, secured on the asset itself. Asset refinance releases cash from equipment the company already owns.
• Invoice finance: advances against unpaid B2B invoices through factoring or invoice discounting, so funding grows with sales.
• Trade and stock finance: pays suppliers or funds stock so you can fulfil orders before your customers pay.
• Specific-purpose finance: VAT and tax loans, merchant cash advances for card-taking businesses, and acquisition finance for buying another business.

A useful rule is to match the length of the finance to the life of what it pays for. Short-term needs, such as a VAT bill or a seasonal stock build, suit short-term or revolving finance. Long-lived assets suit asset finance over a term close to their working life. Ongoing cash flow gaps caused by slow-paying customers are often better solved with invoice finance than with a one-off loan. Borrowing long for a short need, or short for a long one, is a common source of strain.

The British Business Bank's Growth Guarantee Scheme supports term loans, overdrafts, asset finance, invoice finance and asset-based lending from accredited lenders for smaller UK businesses. The government guarantee is given to the lender, not the borrower: the company remains 100% liable for the debt, lenders carry out their standard credit and fraud checks, and lenders can still ask for personal guarantees, although a principal private residence cannot be taken as security. Whether a facility is offered under the scheme is the lender's decision.

Finance works best when it bridges a timing gap or pays for something that earns its keep. If the company is loss-making with no clear route back to profit, already missing payments, or would need new debt to repay old debt, more borrowing usually makes things worse. Speak to your accountant, or to a licensed insolvency practitioner if the company may be unable to pay its debts, before applying.

• Trading history: how long the company has traded and whether filed accounts show a consistent record. Lenders set their own minimum trading period: some consider businesses trading for a few months, while others want two years or more of filed accounts.
• Affordability: whether profits and cash flow comfortably cover the new repayments alongside existing commitments.
• Bank statements: how cash actually moves through the business, including overdraft use and any returned payments.
• Credit history: the company credit file and the personal credit files of directors and major shareholders.
• Security: what assets the company can offer, and whether directors will guarantee the debt.
• Purpose: a clear, credible reason for borrowing and a plan for repayment.

Limited liability normally protects directors from the company's debts, but a personal guarantee changes that for the debt it covers. If the company cannot repay, the lender can pursue the guarantor personally, up to the limit of the guarantee. Most unsecured lenders ask for one, and many secured lenders, asset finance and invoice finance providers do too.

Before signing, check whether the guarantee is capped, whether it is joint and several, whether it covers one facility or all debts with that lender, and how you can be released. Consider independent legal advice. Our guide to personal guarantees covers this in more detail.

1. Bring Companies House filings up to date, including accounts and the confirmation statement.
2. Prepare management accounts if your last year-end was more than a few months ago.
3. Gather three to six months of business bank statements for every account.
4. List existing borrowing: lender, balance, monthly payment and end date.
5. Check the company and director credit files and correct any errors.
6. Write a short summary of how much you need, what it is for and how it will be repaid.

Good preparation shortens the process and reduces the chance of a decline, which can leave a footprint on credit files without moving you forward.

A broker compares options across a range of lenders and matches your company to those whose criteria it is likely to meet. That can save time, avoid unnecessary credit searches and surface products you might not have considered. Ask any broker how it is paid, which lenders it works with and whether it charges you a fee.

Welcome Finance is a commercial finance broker. We arrange unregulated business finance only, for UK limited companies, LLPs and partnerships of four or more partners. We are not authorised or regulated by the Financial Conduct Authority, and we do not arrange mortgages, property finance or any finance secured on a home. We do not charge you a fee: we are paid a commission by the lender when your finance completes.

• Comparing monthly payments rather than the total amount repayable, including fees.
• Using short-term finance to cover a long-term funding gap.
• Signing guarantees without understanding their scope.
• Applying to several lenders at once and collecting multiple hard searches.
• Leaving funding until the last minute, which limits choice.

Start with our 60-second eligibility check. It will not affect your credit score, and it tells us enough to suggest which types of finance and which lenders are realistic before anyone runs a credit search.