Is it cheaper to borrow in the company or my

2 min read

Company = deductibleAnd limited liability

Personal = your riskOn your own record

Tax differsRelief usually company-side

Guarantee blurs itPG exposes you anyway

The company route

Borrowing in the company's name keeps the debt on the company's books, preserves limited liability (absent a guarantee), and means the interest is generally deductible against company profits — a real cost advantage. For genuine business borrowing, this is usually the right and cheaper route once tax relief is counted. See recording it in the accounts.

The personal route

Borrowing personally and lending the money into the business can occasionally be simpler or quicker, especially for a very new company that struggles to borrow in its own name. But the debt sits on your personal credit record, exposes you directly, and the interest rarely attracts business tax relief in the same way. It also complicates the director's loan account. It is a fallback, not a default.

The guarantee caveat

The line blurs when a company loan requires a personal guarantee — then you are personally exposed even on company borrowing, though the debt and its tax treatment still sit with the company. Weigh the cost, the tax relief, the exposure and the effect on your personal credit together. For most genuine business needs, company borrowing wins; take advice where the position is finely balanced. See guarantee-free options.

Compare company borrowing on the true cost calculator, and to apply in the company's name, start here.

Frequently asked questions

Should I borrow personally to fund my business?

Usually only as a fallback — for genuine business borrowing, a company loan is generally cheaper once tax relief on the interest is counted, and it keeps the debt off your personal record. Personal borrowing exposes you directly, rarely gives business tax relief, and complicates the director's loan account. It can help a very new company that can't yet borrow in its own name, but it's not the default choice.

Does company borrowing protect my personal assets?

It can, through limited liability — but only if there is no personal guarantee. A company loan without a guarantee keeps the debt with the company, so your personal assets aren't directly at stake. A personal guarantee cuts through that protection, exposing your own assets to the company's debt. So 'company borrowing' protects you only to the extent no guarantee is given; check the terms.