What can a business loan be used for?

Common permitted uses

• Working capital — bridging gaps between invoices, paying suppliers, covering payroll during slow periods.
• Stock and inventory — purchasing goods ahead of a seasonal peak or large order.
• Equipment and machinery — though asset finance is often more efficient for physical assets.
• Business premises — fit-out costs, deposit on a lease, or refurbishment.
• Hiring and recruitment — covering salary costs while new staff become productive.
• Refinancing existing debt — consolidating higher-cost borrowings into a single facility.
• Acquisitions — funding the purchase of another business or its assets.

What lenders will not fund

Lenders will not advance business funds for personal expenditure, deposits on residential property for personal use, or activities that breach anti-money-laundering regulations. Speculative financial instruments — spread betting, crypto trading — are also routinely declined.

Some lenders restrict use to specific sectors or purposes stated in their credit policy. If your intended use is unusual, disclose it early; misrepresenting purpose is a serious matter and can result in immediate repayment demand.

Why purpose matters to the lender

The stated purpose affects how the lender assesses repayment risk. Working-capital loans are assessed against trading cash flow; acquisition loans require a view of the target business. Declaring a clear, credible purpose strengthens your application and allows the lender to structure terms appropriately.

Some lenders include a condition that funds are used for the declared purpose and may request evidence of how drawdowns were applied, particularly on larger facilities.