Being a director and running a limited company comes with its ups and downs and trying to obtain business loan can be rather challenging.
Should you be sourcing working capital to pay everyday day expenses or trying to secure a larger amount to fund expansion? It was becoming increasingly difficult to find the right answers.
However, over the past decade or so, many more methods of funding have revealed themselves, thanks to the power of the online world we’re all now operating within on a daily basis.
Directors will have concerns and worries about the idea of applying for limited company loans. They may believe that it is a tiring, time-consuming and frustrating process that involves a lot of credit checks and paperwork, this clearly is not the case with a small business loan!
What is a Limited Company Loan?
A limited company loan is an unsecured small business finance product that is offered to that private limited companies that are registered with Companies House in the UK. Limited Companies can apply for unsecured finance of between £5,000 – £200,000 within 48 hours, without risk to directors as the liability is placed on the company.
We intend to break the cycle and offer a fresh view compared to the traditional idea of an Ltd company loan from the banks. As new, alternative and refreshing methods of finance are now benefiting more and more businesses across the UK enabling directors to run a limited company in 2021.
What is a limited company?
In the United Kingdom there are about 4.2 million limited companies registered with Companies House in Cardiff. A Limited Company refers to the legal structure of business in the UK. The directors are distant from the shareholders. This legal definition is formed under the companies act 2016. Registration must be made with Companies House in order to be recognised as a Limited Company.
Limited Company have its own company number and a SIC code is used to classify its trade. Articles of association set the rules directors and officers need to follow while running the business.
A Limited Company refers to the legal structure of business in the UK. The directors are distant from the shareholders. This legal definition is formed under the companies act 2016. Registration must be made with Companies House in order to be recognised as a Limited Company.
We understand that there can be no one-size-fits all approach to business finance for Limited Companies. Business finance should be tailor-made that is why we understand the need to be flexible. Loans are available to be used for any purpose, our range of short-term arrangements offered by direct lenders with a term time up-to 18 months. This type of lending is perfect for companies that need that a quick lending decision.
What types of business loans are there for ltd companies?
If your private limited company is incorporated with Companies House, a business loan can be provided that is competitive against high street banks. The availability and types of loans are dependant on factors, such as how much you need to borrow. What is the purpose of the loan, how quick you need the business loan and your financial standing. A limited liability company maybe required to offer a debenture or personal guarantees required from shareholders or company directors. If the business loan falls into arrears your own personal assets maybe recovered to repay the outstanding amount and your personal credit rating will be effected.
Short-term unsecured forms of finance can also be offered, these come in the type of credit cards, bank overdrafts, invoice finance, fixed term loans and asset finance. If businesses are looking towards a long-term loan, the most popular options are secured business loans which lend unto £1,000,000 and commercial mortgages.
As there are a number of short term sources of business finance available to ltd companies, it may we worth taking an in depth view of the different types of products that will work for your business.
As the alternative finance space in the UK is growing and the number of ltd company loans products are also starting to expand in this space.
Loans for new Limited Companies
Apply for a government-backed loan for new limited companies of £500 to £25,000 to start or grow your business. Unlike a limited company loan, this is an unsecured personal loan for business needs. You’ll get free support and guidance to help write your best business plan, and successful applicants get up to 12 months of free mentoring.
All owners or directors in a new limited company can apply for loans up to £25,000 each, with a maximum of £100,000 per business. The loan is unsecured, so there’s no need to put forward any assets or guarantors to support an application.
Start Up Loans for new Ltd Companies are personal loans that are used to start a new business or grow an existing business that has been trading for less than 24 months. Your loan can be spent on a wide range of things related to your business, like equipment and stock, a premises, marketing and promotional expenses to name just a few. It’s important to note however that you must be able to describe your intentions for your loan within your business plan and cash flow forecast and explain how this will help you start and/or grow your business.
Can I get a limited company loan?
A limited company loan is a quick and easy funding option you can receive as long as your business is registered with Companies House. Here at PDQ Funding, we can help you obtain a limited company loan up to £500,000. Once you’ve received your money, you’ll then begin to make fixed monthly repayments at an interest rate which will have been previously agreed upon. This will continue until the loan is eventually completely paid off.
Entrepreneurs running limited companies sometimes undergo a challenging time when attempting to secure funding from traditional high street banks and the like. Thankfully, there are now many alternative sources of finance for your consideration:
- Unsecured Business Loans
- Merchant Cash Advance
- Funding from investors
How can a limited company loan help my business?
Limited company loans are the perfect way to help out any small business that needs a financial push in the right direction. These types of loans are classed as unsecured, meaning there is no danger of losing precious assets if you are unable to make repayments. Unsecured loans offer business owners uncompromised flexibility, and borrowing is kept simple with tailored payment plans which feature competitive interest rates.
Extra cash flow can help in many different ways, such as tiding your business over when in a low sales period, or boosting business growth through the purchase of new equipment or machinery. The options you have in regards to how you’ll use the money are pretty much endless:
- Help make corporation tax payments more manageable
- This type of loan could help with business growth
- Stay in control of decisions that affect your business
- Receive finance in just 24 hours
- Ongoing support from a company that wants to see you succeed
What is a personal guarantee?
Many lenders will not ask for you to provide assets as security against your company loan. You will be asked to sign a personal guarantee. This legal document between the directors and the lender confirms that if the limited company defaults on the loan repayments, the director or directors will be personally liable to pay back the balance. Meaning that you or a third party will personally have to make payments until the loan is repaid. Your credit score could suffer should you fail to make repayments.
Is my private limited company eligible?
Any limited company in the UK can apply for an unsecured business loan if it meets the following criteria:
- Your business is already registered with Companies House
- Your business has been trading for at least 6 months with a turnover of £5,000 or more per month
- Your business does not have any adverse credit against it
- We do not offer start up loans
Can a limited liability partnership get a business loan?
Limited Liability Partnerships (LLP) in the UK came about due to the Limited Liability Partnerships Act (2000). It benefits from having limited liability status for members. We have arranged business loans for LLP’s since 2010, this type of partnership is perfect for accountants and solicitors.
Using a Business Loan Advance to Finance your Company
A business loan advance is not a limited company loan; it is an advance on the revenue your business. For this said a Card payment terminal is required as this is needed to generate future debit card and credit card sales. This type of funding has been around for about tens years. Businesses can receive a cash injection of £5,000 to a maximum of £200,000 with this type of finance. The great advantage for this product is you do not need to be a limited company as sole traders can also apply.
This type of finance is easier for any Ltd company to qualify for compared to a business loan from the bank. The is no need to provide a business plan to qualify. We offer 90% approval as this is subject to your business’ performance.
Companies can gain access to working capital that is needed within 48 hours. Lenders can gain a clear vision of your business revenue that you generate in an average month via your card terminal. This makes an easy process to make unconditional funding offer, and agree repayment terms all within a few days.
No interest is charged on the amount borrowed, as there is no interest rate with this type of loan. You receive a clear repayment schedule that any business can work too.
Totally Unsecured & Low Risk
Unsecured and low risk is how finance professionals would describe a merchant cash advance. The funding solution is an idea fit for any business that generates card transactions but has little valuable assets and does not wish to offer security.
How are repayments made on a Company Business Loan?
Repayments on this type of loan is also a straightforward process. The schedule of repayments is calculated on a daily basis. This has a meaning of you only make a repayment when you make a sale. This has the advantage of you will not need to worry about lump sum monthly repayments or any late fees.
Should you at anytime require more money and as long as conditions are met, you are eligible to extend the limited company loan even further if a percentage of the original amount has been repaid.
Intercompany loans are loans made from one business to another, both businesses have the same shareholders or directors. Not all intercompany debt is covered by the loan relationship rules. This type of inter company borrowing is different from a traditional loan and does has tax implications.
Government Loans for Limited Companies
In April 2020 the UK Government offered unsecured loans to limited companies via their bounce back scheme and CBILS loan. Rishi Sunak said the new Bounce Back Loans scheme, which will provide loans of up to £50,000, would help bolster the existing package of support to the smallest businesses affected by the coronavirus pandemic.
10th November 2020 it was announced that participating lenders in the Bounce Back Loan Scheme (BBLS) are able to offer smaller businesses across the UK a ‘top-up’ to their existing Bounce Back Loan if they originally borrowed less than the maximum amount available to them.
The top-ups are only available from a borrower’s existing BBLS lender. A borrower can apply for a top-up that is for the lesser of £50k or 25% of the annual turnover the borrower certified in their original successful BBLS application form, minus the value of their original loan. This type of borrowing may also be accessible from your business bank in England and Wales.
Under the Bounce Back Loan Scheme top-up, if a borrower had certified an annual turnover of £100,000 in their original application and taken a Bounce Back Loan of £20,000 (20% of that certified annual turnover), they can ask to borrow an additional £5,000 (5% of that certified annual turnover), taking their Bounce Back Loan to the maximum 25% of their originally certified annual turnover.
This type of business loan is not authorised and regulated by the financial conduct authority.
What are Limited Company Loans?
Limited Company Loans are funding designed to work with Limited Companies, with the responsibility for repayment based with the company and not the director.
Do directors need to offer security with a loan for a Limited Company
Directors do not need to offer security, a debenture maybe needed from the company.
How much can the Limited Company borrow?
A company can borrow between £5,000 and £200,000 without the need for security.
Limited Company Business Loan Application
We’re here to help in your search in the competitive markets of limited company loans in the UK and give our advice as a trusted lender. Limited company loans are packed with many advantages which can act as a complete financial saviour to small businesses, or help to take a venture which is registered in England to the next level.
The loan application for your limited company business is so easy to get started, follow these simple steps:
Applications can be processed online by clicking on “Get a Quick Quote”. The following information will be required:
- The registered name of your Limited Company or trading name
- Company registration number
- Registered office address
- Your businesses monthly turnover
- Loan amount, how much is required
The next step will be a request for some personal details, including:
- Full name
- Your contact number
- Email address so we can send you out terms and conditions
You will need to agree to the terms and conditions.
We will review the application and assign an account manager to your application. If it is approved, we will let you know within 24 hours.
Both parties need to sign the agreement before the loan can be paid out. Our turnaround of completion usually takes between 2 – 5 days from recipe of application form.
Limited company loans can be used in many different scenarios, whether you’re considering taking your business elsewhere, wanting to purchase a larger premise, on the lookout for new members of staff, or looking to purchase that much needed equipment that’d help with growth, it’s all possible. The short-term funding you receive will give you the financial boost to accomplish your business’ long-term goals, so don’t waste time and get in touch with us today if you need more information.