Much like the businesses themselves, loans for limited companies come in all shapes and sizes and offer a range of financial relief for all types of companies. Designed to help limited companies grow, a loan for limited companies is an unsecured sum of money lenders offer for any company registered under Companies House.
The only way you can apply for a limited company loan is to be registered with Companies House as the lender will have to check beforehand. If you’re registered, you’ll be able to complete an online form and apply for the loan by sharing some basic information about your business. The lender you’ve chosen will then review and decide whether to grant your business loan.
Lenders won’t approve a limited company loan for any other kind of business.
Yes, as limited companies can be either private or public, both types of companies are eligible to receive loans. The difference between private and public limited companies is that private companies don’t publicly share trade shares and are limited to a maximum number of shareholders whereas public limited companies trade publicly on the stock exchange.
Private limited companies can also accept loans from their own shareholders or find a lender and apply.
In short, no your business doesn’t need good credit to apply for a limited company loan but it might affect your ability to apply with traditional high street lenders. Businesses with bad credit may also be restricted by how much they can borrow and lenders can apply their own terms to the loan once it’s granted.
Yes, you’ll need a personal credit score at the very least when applying for a business loan, even if your company hasn’t got a credit score attributed to it. A credit score is a number between 300 and 850 that's worked out based on credit history which is- the number of active bank accounts, total levels of debt, any repayment history as well as other factors such as the number of direct debits etc.
A credit score is given to every person- both personal and business account owners- and you’ll start developing a score the moment you open a bank account or set up a direct debit. Lenders will take into consideration a business’s credit score before granting a loan.
The minimum credit score for a loan like a limited company loan is generally between 640 to 700 which is an average score but not the best. Before granting a loan, lenders will review any outstanding debts and other loans your business has against its name as well as regular outgoings. They will then calculate the risk of lending your business the money before either rejecting or granting your loan request.
If you’ve just started up a limited company and want to apply for funding, you'll need to have a great personal credit score, an impressive business plan, as well as ample collateral to qualify for a first-time business loan from a bank. Lenders will be looking for predicted evidence your business will thrive before committing to giving your company a loan.
Lenders can offer your limited company an unsecured loan if your business doesn’t have any money or cash flow. We’ve previously written a guide to unsecured loans and why they may be the best option for your company. There is a wide range of lenders to choose from with unsecured loans so it may work out to be the best option for your limited company.
If your a limited company owner or want to understand what types of funding options are available to you, there are several options available that will suit your funding needs;
Secured loans are supported by assets that lenders use as security to ensure they will get back the same value from the loan if the business can’t make repayments. Some examples of assets are property, vehicles and other items that have value and they can guarantee a lender money back should anything go wrong.
Unlike secured loans, an unsecured loan is given out by lenders without a backup of assets or other valuable items. Whilst they tend to be for smaller value, an unsecured loan is quicker to process and suits smaller businesses like limited companies.
Limited company loans are loans exclusively for businesses registered as limited companies at Companies House. They’re suitable for all types of businesses that are either publicly or privately trading and have been introduced to help limited companies grow.
Short term loans as the name suggests, are loans granted to businesses with a shorter repayment term in place. If you apply for a short term business loan, the lender will have their own repayment terms which can be anywhere between 3 months and 2 years.