Business loans for limited companies
A business loan can help your company pay for something now and spread the repayments over time. Before choosing one, it helps to know what the money will achieve, what you’ll pay back and whether those payments fit your business.
This guide explains what to compare and which questions to ask a funding provider.
Start with what you need the money for
Write down what you need to pay for, how much it will cost and when you need the money. A supplier quote or a simple breakdown of costs can make this easier.
Then consider when the business expects to receive the money that will cover the repayments. For example, if a project takes several months to bring in sales, how would you make payments before then?
Look beyond the monthly payment
A smaller payment can look more manageable, but check how many payments you’ll make and what you’ll pay overall.
Ask the provider:
- How much money will the company actually receive?
- How much will we repay, how often and for how long?
- Can the payments change?
- What fees are included, and are any payable separately?
- What would it cost to repay early?
Interest is the charge for borrowing money. Fees are other charges, such as a fee for setting up the loan. Ask for the total cost in pounds as well as any quoted percentage.
A simple comparison
Imagine your company receives £20,000 under either of these fictional arrangements:
| Option A | Option B | |
|---|---|---|
| Money received | £20,000 | £20,000 |
| Monthly payment | £950 | £680 |
| Number of payments | 24 | 36 |
| Total repayments | £22,800 | £24,480 |
| Cost above the £20,000 borrowed | £2,800 | £4,480 |
Option B costs £270 less each month, but lasts a year longer and costs £1,680 more overall.
These figures illustrate the comparison, not available loan offers. They assume equal monthly payments, no separate fees and no final extra payment.
Neither option is automatically better. The useful question is how the payment amount, total cost and length of the commitment fit your business.
Check what you and the company are agreeing to
A secured loan involves assets offered as security. That means the provider may be able to take those assets if the loan is not repaid.
An unsecured loan does not require business assets as security, but it can still require a personal guarantee: a promise that you will repay the company’s debt personally if it cannot.
Read Personal guarantees and security for the questions to ask before agreeing.
Have the right information ready
Be ready to explain your company’s trading history, what it earns, its existing borrowing and what the new loan will pay for. A provider may ask for accounts, bank statements or forecasts showing expected income and spending.
You don’t need to gather every possible document before using CapSage. Our Eligibility and preparation guide explains what the assessment asks and what a provider may request afterwards.
If you need the money soon
Tell the provider your deadline and ask what must happen before money can reach your account. Check what information is missing, which checks remain and when you can expect a decision.
Ask whether any advertised timeframe refers to an initial response, approval or receiving the money. Those are different stages.
Could another option suit the purpose?
If you’re buying a vehicle or equipment, read Asset Finance alongside this guide.
If the need comes from waiting for business customers to pay invoices, Invoice Finance may also be worth exploring.
Find a funding provider
Tell CapSage about your company and what you need the money for. We’ll compare your answers with what the funding providers in our network look for in a business.
If we identify a suitable provider, we’ll introduce you. The provider decides whether to offer funding.
You don’t pay a fee to use CapSage’s assessment and matching service.