Everything You Need To Know:
Running A Limited Company Ltd Companies In The UK
Entrepreneurs running limited companies can find it difficult to obtain financing for their startup or growing business. High Street banks have a notoriously low approval rate, and with a less than perfect credit score, even professional business plans and projections won’t impress the local bank. For this reason, many limited company owners just like you are looking for alternative sources of finance.
According to the Office for National Statistics, 45.8% of all corporate businesses in the UK in 2018 consisted of limited companies. As you can imagine, these figures are changing regularly. This statistic alone is enough to indicate just how prominent limited companies are becoming and just how much scope there is for the development and expansion of such businesses in the UK.
Running A Limited Company
There are two types of limited companies that commonly operate in the UK; private limited companies and public limited companies. While public limited companies trade shares on a stock exchange, private limited companies are registered with Companies House and rely on traditional trading. Fortunately, there are business loans for limited companies available for both private and public concerns.
In the UK, most limited companies are private and are typically businesses like restaurants, local stores, and other small to medium size enterprises. As a small startup, you already probably know how tough it can be to get the funding you need, when you need it. Limited companies need to fork out large sums of capital for equipment, business premises, advertising, stock, staff, training and more. Of course, limited companies also must pay 19% Corporate Tax when they start turning a profit, which can be crippling for a new and expanding business.
Whether your business trades nationally on the stock exchange (public limited company) or locally (private limited company), you can rely on getting the financing you need from SME Loans.
How to Register Your Limited Company
Business loans for limited companies can only be provided to businesses that are registered with Companies House. In order to register, you will need to select an appropriate business name, find the right business premises (this can be your home premise), select a director, and be able to name a shareholder (this can be yourself).
You will also need to ensure that you have a suitable SIC code assigned to your business. This code designates the official nature of your business. Once all these details are registered fully registered, you will receive a certificate stating the existence of your business. You will then need to apply for Corporation Tax within 3 months, or serious face penalties for your business. If the idea of Corporation Tax is overwhelming, you can use our Corporation Tax Guide to assist you.
Ltd Company Loans Finance For Limited Companies
With more and more limited companies starting up in the UK, now is the time to get your business off the ground and ensure that you get your piece of the proverbial pie. Whether you are a new startup or simply want to expand your current business, SME Loans can assist...
Limited companies have a variety of funding options typically available to them. A couple of these options include:
- High Street Bank Loans for Limited Companies
Local High Street banks don’t make it particularly easy for limited companies to get funding. For starters, the applicant needs to have an impeccable credit score and will need to have some form of collateral to guarantee the loan. If the business plan and concept isn’t considered fail-proof by the bank, the loan may be rejected anyway. While this is a viable long-term financial solution for larger, more established limited companies, it’s typically just too difficult for others to pursue.
- Crowdfunding for Limited Companies
15% of start-ups in the UK in 2016 were financed with crowd funding. This statistic provides insight into how useful this type of funding can be to some businesses. And more people are turning to it. While this is a viable funding option, there are situations where some projects simply aren’t supported. Crowdfunding is never guaranteed. Whilst it’s true that many projects do go ahead, sadly several don’t get enough funding to take off at all.
Which business loans for limited companies are best for your business? Some limited companies find the above mentioned Ltd company loans sufficient for their needs, but the majority of startups in the UK are realising the value of alternative funding options. At SME Loans, we provide finance for limited companies in the following forms:
Limited Company Loans
When most entrepreneurs think about business loans, they think of the bank. Unsecured business loans from SME Loans are non-bank funded, which makes all the difference. Unlike traditional bank loans, this type of limited company loan requires no collateral. The network of lenders that we work with can provide you with an unsecured, flexible loan ranging from £1,000 to £500,000, that can be paid back over 1 to 5 years.
You can even get approved for this loan type if you have a less than perfect credit score. That’s because our lenders analyse both the broader overview and finer details of your situation, not just taking your current credit score into account when making decisions. Our unsecured limited company loans are typically paid out within 24 hours.
After receiving the funds, you will be required to make fixed monthly repayments at a pre-agreed interest rate. Because our loans are unsecured and you don’t need to offer collateral, you may instead be asked to provide a personal guarantee.
Is My Limited Company Eligible for an Unsecured Business Loan?
You can apply for a limited company loan if you meet the following criteria:
- Your business is already registered and trading in the United Kingdom
- You (the business owner) are over 18 years of age
- Your business has been active for at least 6 months with a standard monthly turnover of £5,000 or more
Merchant Cash Advance To Finance Limited Companies
A merchant cash advance is not a standard loan. In fact, it is a cash injection that aims to boost the growth and profits of an already-operating business. A merchant cash advance is provided in accordance to your current card transactions. If your business currently receives payment by card, it is these figures that will be used to either approve or deny the merchant cash advance application.
As long as your business is processing card payments in excess of £ 5,000 per month, you can get a merchant cash advance of between £5,000 and £500,000. This is not paid back in fixed monthly amounts. Limited companies pay back a percentage of their credit and debit card earnings each month. This means that these Ltd company loans repayments will never cripple the business. In a bad month with fewer sales, your repayments will be less than they would be in a good month.
Is My Limited Company Eligible For A Merchant Cash Advance?
You can apply for a merchant cash advance if you meet the following criteria:
- Your business is already registered and trading in the United Kingdom
- Your monthly card sales average no less than £5,000 per month
- Your business has been active for at least 6 months
- You (the business owner) is 18 years of age or older
Corporation Tax is something that all limited companies must apply for within 3 months of being registered. You should consider this when thinking about limited company finance options. The tax amount, which is 19%, only needs to be paid when the company is turning a profit. For some new businesses, this can delay growth or even stunt it. SME Loans can provide Corporation Tax Loans which are paid out within 24 hours of approval. The loan amount is repaid in scheduled monthly payments over 1 to 5 years.
Providing A Personal Guarantee
Limited companies can use our quick and easy online application form to apply for limited company finance. Please be aware that this funding product doesn’t come without strings attached – there are still a few requirements in place. As a limited company, you may be asked by the lender to provide a personal guarantee when the loan is approved. This is a form of security that is used by lenders providing finance to individuals who aren’t providing collateral, or who are considered “high risk”.
What is a personal guarantee? While you won’t have to provide assets and possessions as security against your loan, you will have to sign a legally binding personal guarantee document. This document confirms that if the limited company defaults on its loan repayments, you as the director or main shareholder will be personally liable for the balance thereof. This means that you will personally endeavour to repay the loan.
Apply for Limited Company Finance | SME Loans Application
To apply for limited company finance, simply follow these steps:
Limited company owners can use our quick and easy online application form to apply for a small, unsecured business loan. When you click on “apply”, be prepared to provide the following details:
- The registered and trading name of your limited company.
- Total number of years that your business has been in operation.
- Evidence of your currently monthly income/turnover.
- The amount of money the limited company requires.
The next step is to tell us more about you. Provide us with:
- Your full name and title.
- Your designated position within the business.
- Contact details.
Before the application for your limited company finance can proceed, you will need to read through the terms and conditions and agree to them. Once you are happy to go ahead, simply click on “get my quote”. Your application will then be reviewed, and an account manager will be in touch when required.
Wait to hear the outcome of your application. If your limited company loan application is approved, you can expect a payment within 24 hours.
The last step is to sign the limited company finance agreement and send it back on to the lender. Once both parties have signed the document, the cash will be transferred into your bank account in as little as just 24 hours.