Best Limited Company Loans

Read on as we find the best limited company loan for you.

Updated: May 18, 2024
Matt Crabtree

Written By

Matt Crabtree

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Loans for limited companies can often be a lifeline, providing much needed business financing for survival or the ability to attain business growth.

Perhaps you want to clear business debts with an unsecured loan or achieve investing in your limited company with secured loans.

But, which limited company loans offer the best deals and features for you? In this article, we will explore the top business loans for your limited company.

ProviderScoreDetails
1. Capify★★★★★Click Here
2. Iwoca★★★★★Click Here
3. Century Business Finance★★★★★Click Here
4. Starling Bank★★★★Click Here
5. Lloyds Bank★★★★Click Here
6. V4B Business Finance★★★★Click Here

What Is a Limited Company?

A limited company, or a private limited company, is a legally separate entity from the business owners and will possess separate finances.

The business name will usually contain ‘limited’ or ‘ltd’, and you must register the business with Companies House when you set up a limited company.

A limited company will have shareholders who own the business by purchasing shares. The shareholders will then receive a proportionate amount of profits after all deductions have been made and in line with the number of shares they own.

What Are the Advantages of Being a Limited Company?

Here are the advantages of being a limited company:

1. Limited Liability

The main advantage of being a limited company is that you can enjoy limited liability as the business is legally a separate entity. This means that you will never be personally liable for the debts incurred by the business, even if the business succumbs to severe debt.

This level of protection is not enjoyed by sole trader or partnership businesses as these businesses provide unlimited liability. This means that the owners of a sole trader or partnership business are liable for business debts and their personal finances can be impacted as a result.

2. Reputation

Limited companies enjoy a greater reputation than sole trader and partnership businesses, being able to secure finance and cement stronger relationships in the industry.

3. Lower Taxes

As a limited company, you will pay corporation tax. Limited companies in the UK will pay corporation tax of 25% from 1 April 2023, with businesses earning less than £50,000 per year paying a rate of 19%.

A sole trader business will pay tax of above 45% when your income surpasses £125,140 per year. Therefore, a limited company will pay less tax due to lower corporation tax rates.

4. Earnings

When owning a limited company, you can split whether you want to receive your share of the profits as a salary, dividends, or both. You can choose the combination that works for you.

5. Lending Opportunities

As a limited company, there are more lending opportunities available to you. This includes limited company loans with excellent rates and lending terms, with both secured loans and unsecured loans becoming available to you.

What Are the Disadvantages of Being a Limited Company?

There are some disadvantages for you to be aware of. Here they are:

1. Setup Costs

The costs to set up a limited company are typically higher than the start-up costs for sole trader and partnership businesses. 

2. Paperwork

A greater level of admin is required for limited companies, with more requirements and restrictions to be aware of.

3. Accounting fees

Due to more complexities, you could pay higher accounting fees when owning a limited company, or face complicated tasks when using web-based accounting software.

4. Lack of Privacy

The company accounts of limited companies will be shown on Companies House records. These records can be viewed by others and reduce your privacy.

5. Shared Ownership

Limited companies may have several shareholders and will therefore share ownership and shared decision making.

Can I Get a Loan for a Limited Company?

You can secure business loans for your limited company if you have a good business credit score and meet the lender’s eligibility criteria. A limited company business loan can be a secured loan or an unsecured loan.

Secured Loan

Secured Ltd company loans are secured on business assets. For example, the loan may be secured on a property or another form of collateral. If you fail to pay the secured loan repayments, the property or other collateral may be seized by the lender.

Unsecured loan

An unsecured loan is not secured on any business asset. Therefore, it can be difficult to obtain an unsecured business loan as a result. 

Personal Guarantee

A limited company loan that requires a personal guarantee will secure the loan on the promise from the Company Director. The individual who provides the personal guarantee will be liable for the debt if left unpaid.

At a Glance, Pros and Cons

To gain a clear overview of the pros and cons of limited company loans, look no further than this section:

Pros

✔️ Limited liability — You are not personally liable for the debts of the business.

✔️ Lower taxes — A limited company pays corporation tax at 25%, or less if you earn under £50,000 per year.

✔️ Lending opportunities — A Ltd company loan may be available to your limited company.

✔️ Earnings — Limited company owners can choose to receive a salary or dividends, or a combination of both.

Cons

❌️ Setup costs — A limited company usually costs more money to set up.

❌️ Paperwork — Limited companies usually require more admin tasks as more requirements must be met.

❌️ Accounting fees — Your accounting fees could be higher when your business is a limited company.

❌️ Companies House — Your company accounts will be published on Companies House records.

Best Limited Company Loans — Reviews

Which limited company loans could you apply for?

Here is our expert review of the best limited company loans current available for UK businesses:

1. Capify — Best for Fixed Repayments

Features:

  • Loan amounts from £5,000 to £500,000.
  • Pay back regular, small amounts.
  • Check eligibility within minutes.
  • Receive funds within 24 hours.

Eligibility:

  • Turnover more than £10,000.
  • Evidence of 12 months trading records.

Limited company loans from Capify promise to make business funding simple, offering finance for a variety of purposes.

You can apply for a Capify limited company loan with amounts from £5,000 up to a significant £500,000. Eligibility can be determined within minutes, with funds to be paid into your bank account within 24 hours.

When paying back your loan, you will pay back small amounts regularly. Fixed repayments are not required so you can pay back more when your sales are high and lower amounts when your sales are low.

To be eligible for a Capify limited company loan, you must achieve a turnover of more than £10,000 per year and you must be able to evidence 12 months of trading records.

2. Iwoca — Best for a Line of Credit

Features:

  • Loan amounts from £1,000 to £500,000.
  • No early repayment fees.
  • Apply in minutes.
  • Line of credit feature.
  • Interest rates calculated every 30 days.

Eligibility:

  • Personal guarantee from a Company Director.

A Flexi-Loan from Iwoca can help you to obtain finance from £1,000 up to a maximum £500,000. You can apply in minutes with a personal guarantee required from your limited company’s Company Director.

This loan offers a line of credit and will calculate interest every 30 days. So, how will an Iwoca Flexi-Loan work?

If your application is successful, you will be granted a credit limit from Iwoca. You can then withdraw all or some of the credit limit when you need it. You can revisit your line of credit as many times as you need to and will only be charged interest on the amount of money you have withdrawn.

You can repay the money borrowed as soon as you like with no early repayment charges and then withdraw money again if you need to.

3. Century Business Finance — Best for Fast Loans

Features:

  • Loan amounts from £10,000 to £500,000.
  • Low rates.
  • Apply in minutes.
  • Receive your cash fast.

Eligibility:

  • Evidence of business trading for over 6 months.
  • Turnover more than £72,000 per year.

Century Business Finance offers fast loans for limited companies. You can borrow an amount between £10,000 to £500,000 with low rates charged.

The application process takes minutes to complete and you will receive an instant decision that day. Your funds will then be transferred to your business bank account immediately.

To apply for this loan, you must show evidence of trading for over 6 months. You must also have evidence of earning an annual turnover of over £72,000.

4. Starling Bank — Best for Simplicity

Features:

  • Loan amounts from £25,000 to £250,000.
  • Fixed monthly repayments.
  • 4% arrangement fee.
  • Repayment terms between 12 to 72 months.

Eligibility:

  • Personal guarantee required.
  • 6 months bank statements.
  • Companies House registration.

Starling Bank offers loan amounts from £25,000 to £250,000 and promises a simple process and a clear lending procedure.

Repayment terms are offered between 12 to 72 months, allowing you the flexibility to choose the length of your loan. You will pay fixed monthly repayments so you know how much to pay out each month.

Once you have received your cash, you will need to pay a 4% arrangement fee, calculated as 4% of the amount borrowed.

To apply for this loan, you will need to be registered with Companies House and show 6 months of bank statements. Furthermore, a personal guarantee is required.

5. Lloyds Bank — Best for Lower Interest Rates

Features:

  • Loan amounts from £1,000 to £25,000.
  • Fixed monthly repayments.
  • 11.8% APR representative.
  • Flexible repayment terms.

Eligibility:

  • Business profile required.
  • Evidence of assets.
  • Details of existing finance.

Lloyds Bank offers loan amounts from £1,000 to £25,000, repayable with fixed monthly repayments. You can choose flexible repayment terms to meet the needs of your business.

You could receive an interest rate of 11.8% APR representative, one of the lower rates available for limited company loans.

To be eligible for a Lloyds Bank loan, you will need to show evidence of your business profile as well as evidence of assets. In addition, you must show details of any existing business finance.

6. V4B Business Finance — Best for Higher Lending Amounts

Features:

  • Loan amounts from £10,000 to £1 million.
  • Receive cash in 24 hours.

Eligibility:

  • Evidence of turnover over £250,000.
  • Show at least a 2-year trading history.

V4B Business Finance is the perfect choice if you are looking to borrow a higher amount of money. 

You can borrow from £10,000 to £1 million, with cash deposited into your bank within 24 hours.

To be eligible for this loan, you must show evidence of a 2 year trading history as well as an annual turnover of at least £250,000.

Leading Limited Company Loans: The Verdict

If you need a modest limited company loan from a reputable company, Lloyds Bank offers some good rates. You can achieve flexible repayment terms and flexible monthly repayments.

However, if you need a flexible line of credit to use and repay back multiple times, Iwoca’s Flexi-Loan could be your best choice. There are no early repayment fees and you can apply for the loan in a few minutes.

Related Guides:

FAQs

What is the recovery loan scheme?

Is a Ltd company different to a limited company?

Is being a limited company worth it?

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