How much can my limited company borrow?

2 min read

AffordabilityRepayment capacity sets the ceiling

Turnover-linkedOften sized against monthly revenue

Net of debtExisting commitments reduce headroom

How lenders size it

The lender looks at what the business brings in, what it keeps after costs, and how steady that is. From there they work out how large a repayment the company can meet each month with room to spare, and size the borrowing to fit. A profitable, consistent company will support more than one with thin or erratic margins on the same turnover.

Working it out yourself

You can get close before you apply. Look at your average monthly profit, decide what repayment you could meet even in a slower month, and work back to a loan size from there. An affordability view keeps you from borrowing to a number that looks fine on a good month but bites on a bad one. Borrowing to genuine, repayable need — rather than to the maximum offered — is what keeps the company comfortable.

What lifts or limits the figure

Longer trading history, steady growth and low existing debt lift what a company can borrow. Heavy existing commitments, volatile income or a short record pull it down. If the amount you need is above what affordability supports, staging it — or pairing a term loan with a revolving facility — can be a healthier route than stretching a single loan.

Frequently asked questions

Is there a simple multiple of turnover?

It is often talked about as a few months of revenue, but that is only a starting point. The real limit is the repayment your cash flow can comfortably carry, net of what you already owe.

Does more turnover always mean I can borrow more?

Not on its own. Two companies with the same turnover can support very different borrowing depending on profit, stability and existing debt.

Can I borrow more later if I need it?

Often yes, as trading and track record grow. Many companies increase their facilities over time as the business — and its affordability — expands.