2 min read
How lenders size a facility
Lenders begin with your company's net profit or EBITDA and calculate whether projected repayments leave a comfortable surplus — commonly referred to as debt-service cover. A ratio of at least 1.25 times the annual repayment is a widely used floor, meaning the business generates £1.25 for every £1 of debt service due. These are illustrative benchmarks, not a quote or offer.
For asset-backed or property-secured facilities, lenders also apply a loan-to-value limit on the collateral, which may allow larger amounts than cash-flow analysis alone would support.
Key variables that affect the maximum
- Turnover and profitability — higher and more consistent revenue supports a larger loan.
- Existing debt — other borrowings reduce headroom; lenders add all servicing costs together.
- Trading history — a longer track record, ideally two or more years of filed accounts, typically unlocks higher multiples.
- Security offered — a personal guarantee, business asset or property can increase the facility available.
- Sector and seasonality — some sectors are viewed as higher risk and attract tighter limits.
Unsecured versus secured borrowing
Unsecured business loans rely entirely on cash-flow analysis. Lenders typically advance between 10% and 30% of annual turnover on an unsecured basis for SMEs with clean credit profiles — this is an illustrative range, not an offer. Secured deals, backed by property or other assets, can go materially higher because the lender holds a tangible recovery route.
Directors considering a personal guarantee should understand that this makes them individually liable for the debt if the company cannot repay. See what a personal guarantee means in practice.
Can you borrow more than one facility at once?
A business can hold multiple facilities simultaneously provided total debt remains serviceable. Lenders will ask about all existing borrowings when assessing a new application. For more detail, see whether you can hold more than one business loan.
Frequently asked questions
Is there a fixed maximum a limited company can borrow?
No fixed cap exists in UK business lending. The limit is set by what the lender judges your company can service. Very large amounts may require syndication across multiple lenders.
Does my personal credit score affect how much the company can borrow?
On secured facilities or where a personal guarantee is taken, the director's personal credit history is typically reviewed alongside the company's. On purely company-credit facilities it is less determinative, though lenders may still check it.
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.