If you run a small UK limited company and need funding, the honest question is not what the market advertises. It is what a company your size actually gets approved for, at what price, and how quickly. This guide answers that for the 2026/27 tax year. It is written for limited-company directors, calibrated to the amounts, lenders, and eligibility that apply to small companies rather than to large corporates or to personal borrowing.
Company borrowers only. The finance introductions on this page are for UK limited companies and limited liability partnerships borrowing for business purposes. We introduce your company to a panel of commercial-finance brokers. We are not a lender and do not give regulated credit advice. If you are a sole trader, an individual, or borrowing for personal or household purposes, this service is not for you and you should speak to an FCA-authorised consumer-credit firm.
What Counts as a Small-Business Loan
A small-business loan is simply a term loan sized for a smaller company. There is no legal definition, but in practice lenders and brokers use it to mean company borrowing from around £10,000 up to roughly £500,000, repaid over one to five years (occasionally longer for larger secured facilities). It is the workhorse product for SMEs: a fixed lump sum, a fixed repayment schedule, and a clear end date.
The Companies Act 2006 defines a small company by size (broadly, meeting two of three tests: turnover not more than £15m, balance-sheet total not more than £7.5m, and not more than 50 employees, following the April 2025 threshold uplift). Most lenders are looking further down that range: micro and small companies turning over anywhere from £50,000 to a few million. That is the band this page speaks to.
Our introductions are for company facilities, typically £25,000 and above. Sub-£25,000 borrowing, personal loans, and personal-liability schemes sit outside what we introduce. If your company needs less than that, or you are borrowing in your own name, this is not the right service.
How Much a Small Company Can Actually Borrow
The single most useful benchmark: unsecured lenders commonly cap a small-business loan at around one to two months of turnover, or up to roughly a quarter of annual turnover, subject to affordability and profit. A company turning over £250,000 a year will often see unsecured offers in the £25,000 to £75,000 range. Push beyond that and lenders start asking for security.
Term length usually tracks the amount and purpose. Working-capital and cash-flow loans run one to three years. Larger investment or growth loans stretch to five years, and secured facilities backed by property can run longer. Shorter terms mean higher monthly payments but far less total interest, so match the term to the life of what you are funding rather than simply stretching it to reduce the monthly figure.
If your need is not a one-off lump sum but a fluctuating gap that comes and goes, a term loan is often the wrong shape. A working-capital facility or revolving line can be cheaper because you only pay for what you draw. The business loans guide maps the full product set so you can check the term loan is genuinely the right structure before you apply.
Secured or Unsecured for a Small Company
This is the first real decision. An unsecured business loan pledges no company asset. It is faster, keeps your property and plant unencumbered, and suits smaller sums, typically up to £250,000. The trade-offs are a higher rate and, in almost every case, a personal guarantee from the directors, which makes them personally liable if the company cannot repay. For most small companies borrowing under £100,000 for working capital, unsecured is the practical default.
A secured loan is backed by company property, plant, debtors, or an all-assets debenture. Because the lender can recover against the security, rates are lower and amounts higher, so secured tends to win for larger or longer borrowing. The cost is time (valuation and legal work add weeks) and risk (the security is on the line if the company defaults). A small company with commercial premises or valuable equipment can use that to unlock a better price.
Bank, Alternative Lender, or Broker Panel
Where you borrow shapes both the price and the odds of approval.
- High-street banks offer the lowest rates but the strictest criteria and the slowest decisions. They tend to favour existing business-account holders with two or more years of clean accounts. A strong small company banks well here, a marginal one often gets declined without a clear reason.
- Alternative and fintech lenders (challenger banks, marketplace lenders, specialist funders) decide in days rather than weeks and accept companies with shorter histories or thinner files. The rate is higher to price the extra risk, but for many small companies they are the difference between funded and declined.
- A commercial-finance broker panel submits one application to several lenders at once. For a small company that would otherwise apply to each lender in turn (leaving a trail of separate credit searches), this widens the choice and surfaces the all-in cost quickly. This is the route our introductions use.
There is no universally best lender, because the right one depends on your sector, your accounts, and the amount. That is exactly why comparing several through a panel usually beats guessing at a single name.
Eligibility: What a Small Company Actually Needs
Lenders assess a small-business loan on a short list of things, and knowing them lets you self-check before you apply:
- Trading history. Two or more years of filed accounts open the most doors. Twelve months plus steady bank statements still works with many alternative lenders. Under six months is difficult for a standard term loan.
- Turnover and profitability. Lenders size the loan against turnover and want to see the company can service repayments from trading profit, not just revenue.
- Filed accounts and management figures. Up-to-date accounts at Companies House plus recent management accounts signal a well-run company and speed the decision.
- Director creditworthiness. Because most small-company loans carry a personal guarantee, the directors' personal credit is assessed alongside the company's.
- Existing debt. Current facilities, overdrafts, and any HMRC arrears all feed the affordability calculation.
You do not need to be perfect on every line. A thin credit file offset by strong, consistent cash flow can still get funded, just at a specialist lender and a higher rate.
Government-Backed Options
Small companies that struggle to borrow on standard commercial terms have a state-supported route. The British Business Bank Growth Guarantee Scheme gives the lender a partial government guarantee, which can help a viable small company access a facility it might not get otherwise. The important nuance, and a common misconception, is that the guarantee protects the lender, not the borrower: your company still repays in full and the directors may still give a personal guarantee.
Note the boundary carefully. The British Business Bank Start Up Loan is a personal loan to the individual (up to £25,000, personal liability), not a company facility, so it is not something we introduce. A new limited company should look at company routes such as asset finance or an unsecured company loan instead.
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What a Small-Business Loan Costs: A Worked Example
Take a realistic small company: two years of filed accounts, £250,000 turnover, borrowing £30,000 over three years for working capital and a hire. Small-company unsecured rates in 2026/27 typically land somewhere in a 9% to 14% band depending on strength of accounts and whether a personal guarantee is given. Work the middle of that at around 11%.
| Element | Figure |
|---|---|
| Amount borrowed | £30,000 |
| Term | 3 years (36 months) |
| Indicative rate | ~11% per year |
| Monthly repayment | ~£982 |
| Total interest over the term | ~£5,350 |
| Total repaid (before fees) | ~£35,350 |
| Typical arrangement fee (1% to 5%) | £300 to £1,500 |
Two things move that number. First, the rate: dropping from 11% to 9% saves roughly £560 in interest over the term, and a stronger set of accounts is what earns the lower rate. Second, the fee: always compare the total cost of borrowing (interest plus every fee) rather than the headline rate, because a low rate with a high arrangement fee can cost more than a higher rate with none. You can model different amounts, rates, and terms with the business loan calculator before you commit.
What strengthens the application and pulls the rate toward the bottom of the band: filed accounts on time, recent management figures, low existing debt, a clean director credit profile, and a clear, specific use of funds that supports repayment.
Is the Interest Tax-Deductible?
For a limited company, interest and most arrangement fees on a loan taken out wholly for business purposes are generally deductible against corporation-tax profits under the loan-relationships rules, which lowers the effective cost of borrowing. The capital you repay is not deductible, only the finance cost. That interaction with your corporation-tax position (and with marginal relief in the 26.5% effective band between £50,000 and £250,000 of profit) is a tax question, not a finance one. We keep this page to the finance mechanics. For the tax treatment, see the corporation-tax and marginal-relief guide, and speak to your accountant about how the deduction applies to your accounts.
How to Apply and Improve Your Odds
The application itself is quick once your paperwork is ready. Lenders and brokers will want the last two years of filed accounts (or twelve months plus bank statements), recent management figures, three to six months of business bank statements, and details of any existing borrowing. Have the amount, term, and purpose clear before you start.
To improve the decision and the price: file your accounts and confirmation statement on time, keep the business bank account well managed and free of returned payments, clear any HMRC arrears or agree a Time to Pay arrangement first, reduce reliance on an existing overdraft, and be able to state exactly what the money is for and how the company repays it. A single application through a broker panel then compares several lenders without leaving a trail of separate credit searches.
For the full menu of company debt products (term, revolving, secured, unsecured, asset-backed, and cash advance) and how they compare, start with the business loans guide, then use the calculator to test the numbers before you approach the market.
Authority and Sources
This guide draws on the following primary and regulatory sources:
- British Business Bank, Small Business Finance Markets report and business finance guidance.
- gov.uk, Finance and support for your business.
- legislation.gov.uk, Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (Article 60C business-purpose exemption and Article 36A credit broking, the company-borrower framing).
- HMRC, Business Income Manual (BIM45301 onward, interest and finance-cost deductibility).
- Bank of England, lending-conditions and Bankstats data.