What is a business loan for private limited company ?
A business loan for a private limited company is a type of financing provided to companies that are legally incorporated as “private limited” entities. In such companies, ownership is held privately by shareholders, and liability is limited to the amount of capital they have invested.
The purpose of a business loan for a private limited company can vary widely. These loans may be used for working capital (to cover everyday expenses like salaries, rent, or inventory), capital expenditure (such as machinery, vehicles, or technology), expansion projects (opening new branches, entering new markets), or even debt restructuring (consolidating existing company liabilities).
Why is it difficult for a limited company to obtain a business loan ?
Why a limited company often finds it more difficult to obtain a business loan compared to an individual trader or larger corporation:
1. Limited Liability Restricts Lenders’ Security
A limited company (Ltd) is a separate legal entity. This means the company’s finances are separate from its owners or directors. If the company defaults on the loan, lenders can only pursue company assets—not the personal assets of shareholders (unless a personal guarantee is signed).
👉 From the lender’s perspective, this limited liability increases risk, because they may have less recourse to recover funds.
2. Lack of Credit History or Trading Record
Many limited companies—especially small or newly incorporated ones—do not have a long credit history or proven financial track record. Banks and lenders prefer to see:
- At least 2–3 years of filed accounts
- Consistent revenue and profitability
- Established business credit history
Without these, lenders may view the company as high risk.
3. Dependence on Directors’ Guarantees
Because of the above risks, most lenders ask for a director’s personal guarantee. This undermines the benefit of “limited liability” for the owner and makes borrowing harder if directors have weak personal credit or insufficient assets. Some directors are unwilling or unable to provide such guarantees.
4. Cash Flow & Collateral Issues
- Cash flow volatility: Small limited companies often face irregular cash flow, making it harder to demonstrate repayment ability.
- Lack of collateral: Many limited companies, especially service-based ones, don’t own significant assets (like property or machinery) that can be pledged as security. Without collateral, lenders are reluctant to approve larger loans.
Which lenders provide with business loans to limited companies in UK and Ireland ?
Here are reputable lenders offering business loans to limited companies in the UK and Ireland, covering a range of traditional banks, challenger banks, alternative finance firms, and government-backed institutions:
United Kingdom — Lenders for Limited Companies
1. Funding Circle
A pioneering online business lending platform (initially P2P, now institutional-backed) offering business loans and credit lines up to £250,000 through its FlexiPay product.
2. Capify
An alternative finance provider offering merchant cash advances and business loans to SMEs, with a quick and flexible application process.
3. Kriya (formerly MarketFinance)
Specializes in invoice finance and business loans for UK SMEs. It has delivered over £3 billion in credit and forms partnerships with major banks.
4. Fiduciam
Offers short-term, asset-backed finance to SMEs, including bridging and development funding, operating across the UK and Ireland.
5. High Street Banks (Barclays, HSBC, Lloyds, NatWest, Santander, etc.)
Provide comprehensive business loan solutions for limited companies with established records, often participating in government-backed initiatives such as the Growth Guarantee Scheme.
6. Community Development Financial Institutions (CDFIs)
Not-for-profit lenders like BCRS and ART Business Loans offer local SME lending—often more flexible for businesses unable to secure mainstream loans. Supported by government and partnerships with major banks.
Ireland — Lenders for Limited Companies
1. Microfinance Ireland (MFI)
Provides government-supported unsecured business loans ranging from €2,000 to €50,000 for SMEs with fewer than 10 employees and turnover under €2M.
Microfinance Irelandlocalenterprise.ie
2. AIB (Allied Irish Banks)
Offers business loans up to €60,000 with flexible repayment terms and fixed rates. e-signing options and quick processing are available for convenience.
AIB
3. Permanent TSB (PTSB)
Provides Business Term Loans starting from €5,000, with competitive variable interest rates and terms up to 10 years. A small facility fee may apply.
ptsb.ie
4. Linked Finance
An alternative lending platform offering fast and flexible business loans to Irish SMEs, with funding approval often within 24 hours.
Linked Finance
5. Braemar Finance
Offers business loans specifically to incorporated entities (limited companies) in Ireland, helping with growth and capital requirements.
braemarfinance.ie