Settling a Business Loan in Full: Step-by-Step for UK Limited Companies

Step 1 – Request a formal redemption figure

Contact your lender's servicing team in writing, specifying your proposed settlement date. The lender will provide a redemption statement showing: outstanding principal, accrued daily interest to the settlement date, any early repayment charge, and any outstanding fees or administration costs. The statement will be valid for a defined window — typically 14 to 28 days. If you miss that window, request a fresh figure.

Step 2 – Arrange cleared funds transfer

Use CHAPS for same-day guaranteed settlement, particularly if the redemption window is tight. Faster Payments is generally reliable for amounts below bank-set limits but confirm your bank's cut-off time. Include your loan account reference in the payment reference field. Telephone the lender on the day to confirm receipt — do not assume the Direct Debit or standing order will cover the redemption amount, as these are typically suspended or superseded by the manual payment.

Step 3 – Obtain written confirmation of settlement

Once funds clear, request a settlement completion letter. This should state the date of settlement, the amount received, that the balance is zero, and that all obligations under the facility are discharged. File this document with your company's financial records permanently.

Step 4 – Confirm security discharge

If a debenture or fixed and floating charge was registered at Companies House, monitor the register for the satisfaction filing. The lender has a statutory 21-day window to file. Once filed and processed, download the updated charge certificate from Companies House for your records. If a personal guarantee was in place, ensure you receive a separate written release letter from the lender.