Published and reviewed 17 October 2026. General information, not advice. Figures are illustrations, not lender quotes.
The short version
- There is no fixed multiple. A lender runs two or three tests and offers the lowest answer: what the business can afford to repay, a cap linked to turnover or to the value of any security, and the most its product allows.
- Affordability usually decides it. Lenders divide your yearly earnings by a cover ratio, commonly 1.25 to 1.5, take off what you already repay on other finance and see what loan the rest would service.
- For unsecured loans many lenders also cap the amount at a share of annual turnover, often around 20% to 25%. iwoca, for example, says it typically lends up to about 20% of turnover, and caps businesses trading for under a year at £10,000.
- Security moves the ceiling, not the affordability test. Property lenders commonly lend 60% to 75% of the value, less any mortgage already on it. Asset and invoice finance lend against the equipment or the invoices instead.
- The right amount is the one the business can repay in a quiet month, not the maximum on offer. In our example, borrowing £150,000 rather than the £100,000 needed adds about £1,290 a month and £12,000 of interest over four years.
How much can a business borrow? The short answer
Most UK business loans fall somewhere between a few thousand pounds and a few hundred thousand, and secured property lending runs into the millions. Where your business sits in that range depends far less on what you ask for than on three things a lender can measure: how much cash the business generates, how big it is, and what, if anything, sits behind the loan as security.
Every lender turns those into limits, and the smallest one wins:
- The affordability limit. The largest loan whose repayments the business can cover from its earnings, with room to spare, after its existing finance. This is the test that most often sets the figure.
- The size limit. For unsecured lending, usually a share of annual turnover or a multiple of monthly takings. For secured lending, a share of the asset’s value, called loan to value. For invoice finance, a share of eligible invoices.
- The product limit. Each lender has a minimum and a maximum for each product, and often lower maximums for younger businesses.
Our guide on how to get a business loan introduces these tests in brief. This guide goes further: how each one is worked out, what moves it, how it changes with the type of finance and how to estimate your own figure before you speak to anyone. All the worked examples are illustrations with their assumptions stated, not lender offers.
How much you can borrow with each type of finance
The type of finance changes which limit matters most. A machine, a property or a sales ledger lets a lender lend against something it can recover, so the ceiling is set by that asset. An unsecured loan has nothing behind it, so the ceiling is set by the business itself.
| Type of finance | What sets the limit | Typical range | Watch for |
|---|---|---|---|
| Unsecured business loan | Affordability, plus a cap linked to turnover or monthly takings | About £1,000 to £500,000. Larger sums need strong accounts | A personal guarantee is usual. Young businesses face low first-year caps |
| Secured business loan | Loan to value of the property or assets, less existing debt, and affordability | Tens of thousands to several million pounds | The asset can be repossessed. Second-charge loans usually allow less |
| Commercial mortgage | Loan to value, commonly 60% to 75%, and debt service or rent cover | Usually from about £50,000 | You need a deposit of 25% to 40% plus costs |
| Asset finance | The price and resale value of the asset, less any deposit | From a few thousand pounds, up to the cost of the asset | Deposits of 10% to 20% and VAT upfront on hire purchase |
| Invoice finance | An advance of 70% to 90% of eligible unpaid invoices | Grows with your sales ledger | Old, disputed and concentrated debts do not count |
| Merchant cash advance | Average monthly card takings | Often around one to one and a half times monthly card sales | Factor rates can mean a high equivalent APR |
| Overdraft or revolving credit facility | Cash flow, the bank relationship and any debenture | Usually a modest share of turnover | Can be reduced or withdrawn, often reviewed yearly |
| Start Up Loan | Your personal affordability and business plan | £500 to £25,000 per person | A personal loan, at 7.5% fixed. Not a company loan |
| Growth Guarantee Scheme | The accredited lender’s own tests | Up to £2 million per business group | Guarantee protects the lender, not you |
Ranges are indicative and drawn from published lender criteria and the other guides on this site. Individual lenders set their own limits. Our guides to asset finance, invoice finance and commercial mortgages explain how each limit works in more depth.
Mixing products often raises the total a business can raise, because each lender is looking at a different source of repayment or security. A company might fund a new van on hire purchase, its working capital through invoice finance and a fit-out with a term loan. The catch is that every repayment counts in the next lender’s affordability test, so the order in which you arrange them matters.
The affordability test: what your cash flow can support
Almost every business lender, secured or not, asks the same question first: does the business make enough to repay this loan, plus everything else it already owes, with a margin for a bad year? The usual measure is the debt service cover ratio (DSCR).
DSCR is the money available to pay debt each year divided by the debt repayments due in that year, capital and interest together. A DSCR of 1.4 means £1.40 of earnings for every £1 of repayments. Lenders set a minimum, and figures of about 1.25 to 1.5 are common reference points. A lender that wants more cover, or a riskier sector, lends less on the same earnings.
What counts as earnings
Most lenders start from EBITDA: profit before interest, tax, depreciation and amortisation, taken from your latest filed accounts and, where they help, more recent management accounts. Then they adjust it.
- Add-backs. One-off costs that will not repeat, such as a legal dispute or a relocation, may be added back if you can evidence them. Rent you will stop paying when you buy your premises is a common one for commercial mortgages.
- Directors’ pay. In a small company where directors draw a low salary and take dividends, a lender may deduct a realistic amount for their living costs, because that money has to come from somewhere.
- Tax. Some lenders deduct Corporation Tax due, since it is paid before any lender.
- Trend. Falling profits are discounted. A lender may use the lower of the last two years, or an average.
What counts as debt repayments
Every regular finance payment the business makes: existing loans, hire purchase and leases, a commercial mortgage, and in some cases a share of an overdraft limit. Business credit cards and director’s loans that must be repaid may be included too. This is why clearing a small, expensive loan before applying can lift the amount you can borrow by more than the loan itself.
Worked example: turning earnings into a loan amount
A limited company has EBITDA of £90,000 a year. It already pays £550 a month on a van on hire purchase, which is £6,600 a year. The lender wants a DSCR of 1.35 and quotes 11% a year on an unsecured loan. These are assumptions for the illustration, not an offer.
- Money available for all repayments: £90,000 ÷ 1.35 = about £66,670 a year.
- Less the van: £66,670 less £6,600 = £60,070 a year, or about £5,005 a month for the new loan.
- What that repays at 11%: about £152,900 over three years, £193,700 over four years or £230,200 over five years.
On affordability alone, this company could support a loan of roughly £150,000 to £230,000 depending on the term. Whether it would be offered that depends on the other limits, which the next sections apply to the same company.
Stress tests
For a variable rate loan, many lenders test affordability at a rate higher than the one you will pay, often two or three percentage points above it, so the loan stays affordable if rates rise. Bank Rate is 3.75% as of October 2026. On £150,000 over four years, a rise from 11% to 14% adds about £220 a month. A stressed test lowers the maximum loan in the same way that a higher actual rate would.
Turnover caps and bank statement checks
Unsecured lenders add a second limit tied to the size of the business, because a loan that is large relative to sales leaves little room if trading dips. The two common forms are:
- A share of annual turnover. Often somewhere around 20% to 25% for an established business, sometimes lower for a new or volatile one. As an example of published criteria, iwoca says it typically lends up to about 20% of annual turnover, from £1,000 to £1 million, and caps businesses trading for under a year at £10,000.
- A multiple of monthly revenue. Some online lenders work from average monthly takings in your business bank account, offering perhaps one to two months’ worth.
Lenders using open banking will also read your bank statements for the last three to twelve months. They look at the average balance, how often you are overdrawn, regular payments to other lenders, returned payments and whether income arrives steadily or in lumps. Two businesses with the same turnover can be offered very different amounts because their statements tell different stories.
Worked example: the turnover cap bites
The same company turns over £750,000 a year, about £62,500 a month. Its affordability limit, from the last section, is about £193,700 over four years.
- Lender A caps unsecured loans at 20% of turnover: £150,000.
- Lender B lends up to one and a half times average monthly revenue: about £93,750.
- Lender C has a product maximum of £100,000 for companies under three years old, and this company is two: £100,000.
Affordability says £193,700, but the most any of these lenders would offer unsecured is £150,000. To borrow more, the company would need a lender with a higher cap, security, or a mix of products.
How much might a business of your size borrow?
The table puts the two limits side by side for businesses of different sizes. It assumes an unsecured loan at 11% over four years, a lender wanting 1.35 times cover and a 20% turnover cap, with no other borrowing. The EBITDA margin is your earnings as a share of turnover.
| Annual turnover | 20% turnover cap | Affordable at a 6% margin | Affordable at a 12% margin | Likely ceiling |
|---|---|---|---|---|
| £150,000 | £30,000 | £21,500 | £43,000 | £21,500 to £30,000 |
| £300,000 | £60,000 | £43,000 | £86,000 | £43,000 to £60,000 |
| £500,000 | £100,000 | £71,700 | £143,300 | £71,700 to £100,000 |
| £1 million | £200,000 | £143,300 | £286,600 | £143,300 to £200,000 |
| £2 million | £400,000 | £286,600 | £573,200 | £286,600 to £400,000 |
The pattern is the useful part. A business with thin margins hits the affordability limit first, so better profits or a longer term would raise its figure. A business with healthy margins hits the turnover cap first, so it needs a lender with a higher cap, security or a different product to go further. These figures are illustrations, not offers.
Secured borrowing: loan to value and equity
Security changes the ceiling. Instead of a share of turnover, a secured lender caps the loan at a share of what the asset is worth, using its own valuation. This is the loan to value (LTV). For commercial property, mainstream lenders commonly allow 60% to 75%, with less for specialist or hard-to-sell buildings. Some lenders will also take a charge over a director’s home, which puts the family home at risk, so take independent legal advice before agreeing to it.
If the property already has a mortgage, the new lender looks at the combined borrowing. It either refinances the existing loan or takes a second charge behind it, and second-charge lenders usually allow a lower combined LTV. A debenture over the company’s other assets, such as stock and equipment, may also be taken, but rarely adds much to the amount on its own. Our secured vs unsecured guide covers charges and debentures in more detail.
Worked example: equity is not the whole answer
The same company owns its warehouse, valued at £600,000, with a mortgage of £250,000 costing £2,000 a month. A second-charge lender allows combined borrowing of up to 70% and quotes 7.5%.
- The value test: 70% of £600,000 is £420,000. Take off the £250,000 already owed and the most it would lend is £170,000. At a 65% cap it would be £140,000.
- The affordability test: £90,000 ÷ 1.35 is £66,670 a year for all repayments. Take off the van (£6,600) and the mortgage (£24,000) and £36,070 is left, about £3,005 a month.
- What that repays at 7.5%: about £150,000 over five years, or about £196,000 over seven.
- The answer: over five years, affordability limits the loan to about £150,000. Over seven years, the value test limits it to £170,000.
Security lowered the rate and removed the turnover cap, but it did not remove the need to afford the repayments. Notice too that the existing mortgage counted twice: once against the property value and once against the cash flow.
Asset finance and invoice finance work in a similar way. An asset finance provider will often fund most or all of the price of a standard piece of equipment, less a deposit, because it can take the asset back. An invoice finance provider advances a share of your eligible invoices, so the amount grows with sales. Both still check that the business can carry the cost.
Work out your own borrowing limit in five steps
You can estimate your own range in about ten minutes with your latest accounts and three months of bank statements. Doing it before you apply tells you which lenders and products are worth approaching, and stops you asking for a figure that triggers an automatic decline.
- Find your earnings. Take operating profit from your latest accounts and add back depreciation and amortisation to get EBITDA. If this year is clearly different, use recent management accounts as well.
- Divide by a cover ratio. Use 1.35 as a middle estimate, or 1.5 to be cautious. The answer is the most you could spend on all debt repayments in a year.
- Take off what you already repay. Add up a year of payments on existing loans, hire purchase, leases and any mortgage, and subtract them. Divide by 12 for the monthly amount available.
- Turn the monthly amount into a loan. Use the ready reckoner below, or put trial amounts into the business loan calculator until the monthly repayment matches.
- Apply the size limit. For unsecured borrowing, compare the answer with 20% of turnover. For secured borrowing, compare it with 60% to 75% of the property value, less existing debt. The lower figure is your realistic ceiling.
Ready reckoner: the loan each £1,000 a month repays
Find the rate and term closest to what you expect, then multiply by the number of thousands you can afford each month. Figures assume equal monthly repayments at a fixed rate with no fees.
| Annual rate | 2 years | 3 years | 4 years | 5 years | 7 years | 10 years |
|---|---|---|---|---|---|---|
| 7.5% | £22,200 | £32,100 | £41,400 | £49,900 | £65,200 | £84,200 |
| 11% | £21,500 | £30,500 | £38,700 | £46,000 | £58,400 | £72,600 |
| 15% | £20,600 | £28,800 | £35,900 | £42,000 | £51,800 | £62,000 |
| 20% | £19,600 | £26,900 | £32,900 | £37,700 | £45,000 | £51,700 |
So £2,500 a month at 11% over five years supports about 2.5 × £46,000, or £115,000. Two things stand out. Term matters more than rate for the size of the loan: moving from three to five years at 11% raises the amount by half. And a longer term costs more interest in total, so a bigger ceiling is not free. Our guide to business loan interest rates explains what rate to expect and how to compare quotes expressed in different ways.
If fees are deducted from the advance, borrow enough to land the net amount you need. To receive £100,000 after a 3% arrangement fee taken from the loan, you would need to borrow about £103,100, and the repayments are worked out on that larger figure.
How much can a new business borrow?
Less, and through different routes. Without filed accounts there are no earnings for an affordability test, so lenders lean on other evidence or keep amounts small. Typical patterns:
- Before trading or in the first months: the government-backed Start Up Loan lends £500 to £25,000 to each founder personally, at 7.5% fixed over one to five years. It is assessed on your personal finances and business plan, and you remain personally liable.
- Under a year: online unsecured lenders that accept young businesses often cap the first loan, such as iwoca’s £10,000 limit for businesses trading under a year, and usually require a personal guarantee.
- From the first invoices or the first asset: invoice finance and asset finance can start early, because they lend against invoices or equipment rather than a trading record. Expect a larger deposit, a smaller limit and a guarantee.
- After one and then two sets of accounts: bank lending and larger unsecured loans open up. Many young companies become eligible for more once a second set of accounts is filed, so timing an application just after filing can change the figure.
Our startup business loans guide compares every route for new businesses in detail, including grants and equity.
What reduces the amount you can borrow
When an offer comes in below what you asked for, it is usually one of these. Most are visible in your own records before a lender sees them.
| Factor | Why it lowers the amount | What you can do |
|---|---|---|
| Existing borrowing | Every repayment comes out of the affordability test first. | Clear small, expensive debts first, or refinance them into the new loan. |
| Falling or uneven profits | Lenders discount a downward trend or use the weaker year. | Provide management accounts showing recovery and explain one-off costs. |
| Thin bank balances or heavy overdraft use | Suggests the business already runs close to its limit. | Build a buffer for three to six months before applying. |
| Tax arrears or a Time to Pay arrangement | HMRC is paid before other creditors and arrears signal strain. | Disclose it with a clear plan. Hiding it ends most applications. |
| Adverse credit | Late payments, defaults or County Court Judgments against the company or directors. | Check credit files, correct errors and settle what you can. |
| Short trading history | Less evidence, so lenders cap first loans. | Use products that lend against assets or invoices, or wait until accounts are filed. |
| One large customer | Losing that customer could stop repayments. | Show contract length and the customer’s track record. |
| Late or missing filings | Overdue accounts at Companies House undermine trust in the figures. | File on time. Late filing also brings automatic penalties. |
| Higher-risk sector | Some lenders apply tighter ratios to sectors they see as volatile. | Approach lenders that specialise in your sector. |
A decline or a low offer is information. Under the Bank Referral Scheme, if one of nine designated banks turns down a business with turnover under £25 million, it must offer, with your consent, to pass your details to finance platforms that may find another lender.
How to borrow more, safely
If the figure you need is above your estimated limit, there are legitimate ways to close the gap. Each has a cost or a risk, so weigh it rather than reaching for the biggest number.
- Extend the term. The ready reckoner shows that moving from three to five years raises the loan by about half for the same monthly payment. You pay more interest in total, and turnover caps still apply.
- Offer security. A charge over property lifts the turnover cap and usually lowers the rate. It also puts the property at risk if the loan is not repaid.
- Use the right product for each need. Funding equipment with asset finance and working capital with invoice finance leaves more room in the affordability test for a term loan, because the asset or the invoices carry part of the risk.
- Clear or consolidate existing debt. A £500 a month loan near its end takes £6,000 a year out of the affordability test. Settling it can add tens of thousands to the amount available.
- Show your best current figures. If trading has improved since your last accounts, up-to-date management accounts and a cash flow forecast give the lender a reason to use the stronger numbers.
- Ask about government-backed lending. Under the Growth Guarantee Scheme, the government guarantees 70% of an accredited lender’s loss on eligible facilities of up to £2 million per business group. The guarantee can help a lender agree where security is thin, but it protects the lender, not you, and the business must still pass the affordability test. GOV.UK lists the eligibility rules, and changes announced in July 2026 are being phased in by accredited lenders.
- Raise part of it as equity. Investment or a director putting money in reduces what has to be borrowed, and lenders like to see owners with something at stake.
A personal guarantee from the directors is often a condition of an unsecured or lightly secured loan. It can make a lender more comfortable, but it does not usually raise the affordability limit, and it puts your own assets behind the company’s debt. Read our personal guarantees guide before you sign one.
How much should you borrow?
The maximum a lender will offer and the amount that is right for the business are different numbers. A lender’s cover ratio leaves some headroom, but it is set to protect the lender, not your cash flow in a slow quarter. Three checks help.
- Borrow for a job, not a limit. Price what the money will actually be spent on, add a contingency of perhaps 10% to 15%, and stop there.
- Run the quiet-month test. Take your weakest recent month, or cut average income by 20%, and check the business could still make every repayment and pay its other bills.
- Count the total cost in pounds. Compare offers on the total repayable and the APR, not only the monthly figure. Our guide to comparing business loans sets out how.
Worked example: borrowing what you need, not what you can
The company from our earlier examples needs £100,000 for a new production line, and Lender A will offer up to £150,000. Both options are at 11% over four years.
- Borrowing £100,000: about £2,585 a month, with total interest of about £24,060.
- Borrowing £150,000: about £3,877 a month, with total interest of about £36,090.
The extra £50,000 costs about £1,290 a month and roughly £12,000 in interest, and it uses up most of the headroom the company would need if it later wanted to finance equipment or a vehicle. Unless the extra money has a clear job that earns more than it costs, the smaller loan is the stronger choice.
Sole traders, partnerships and regulation
Most lending to limited companies is not regulated by the Financial Conduct Authority, so the size of the loan is a commercial decision between the company and the lender. The position is different for some smaller borrowers.
- Sole traders and small partnerships borrowing £25,000 or less can be covered by consumer credit rules even when the money is for the business, which brings regulated affordability checks and complaint rights. Our service does not cover them, but the protection is worth knowing about.
- Personal borrowing for business use, such as a Start Up Loan or a loan secured on your home, is assessed on your personal finances and stays your debt if the business fails.
- Complaints. The Financial Ombudsman Service can consider complaints from micro-enterprises and many small businesses, including about some lending that is not otherwise regulated.
Where Business Loan Advice fits
We are not a lender and we do not give personal advice. We are preparing a service that will introduce UK limited companies directly to lenders. No lenders are confirmed yet, so we cannot currently obtain quotes, check eligibility or make introductions. You will not pay us a fee. If a lender pays us commission after the service launches, we will tell you before asking your permission to refer you.
In the meantime, the business loan calculator and these guides are free to use with no sign-up. If your limited company has worked out the figure it needs, you can register its interest and we will contact you about the service launch. Read how we are paid for the details.
Common questions
How much can I borrow for a business loan?
It depends on three limits, and the lowest wins: what your earnings can repay after existing debts, a size cap such as a share of turnover or of a property’s value, and the lender’s product maximum. Most UK business loans range from a few thousand pounds to a few hundred thousand.
How much will a bank lend my business?
Banks usually lend the amount your earnings can repay with a cover ratio of about 1.25 to 1.5 times, after existing borrowing. They generally want one to two years of filed accounts, and for larger or longer loans they often ask for security or a personal guarantee.
How much can I borrow with an unsecured business loan?
Often up to around 20% to 25% of annual turnover, if your cash flow can support the repayments. Online lenders commonly offer from about £1,000 to several hundred thousand pounds. Businesses trading for under a year usually face much lower caps, such as £10,000.
What turnover do I need for a £100,000 business loan?
For an unsecured loan, lenders capping at 20% to 25% of turnover would look for roughly £400,000 to £500,000 a year, plus earnings that cover the repayments. At 11% over four years, £100,000 costs about £2,585 a month, so EBITDA of around £42,000 a year would be needed at 1.35 times cover.
Can I borrow more than my annual turnover?
Rarely on an unsecured basis. It is possible with secured lending, such as a commercial mortgage or a loan against property, where the size is set by the asset’s value and the business’s earnings rather than its sales.
How much can a new business borrow?
Usually small sums at first. A government Start Up Loan offers £500 to £25,000 per founder as a personal loan. Online lenders often cap first-year business loans at around £10,000. Asset and invoice finance can provide more because they lend against equipment or invoices.
What is a debt service cover ratio?
It is the money a business has available to pay debt each year, often EBITDA, divided by its yearly loan repayments. A ratio of 1.35 means £1.35 of earnings for every £1 of repayments. Lenders commonly look for about 1.25 to 1.5.
How much can I borrow against my commercial property?
Mainstream lenders commonly lend 60% to 75% of the property’s value, less any mortgage already secured on it. The repayments must also pass an affordability test, so the final figure is the lower of the two.
Does a longer term mean I can borrow more?
Usually, yes, because the same monthly payment repays a larger loan. At 11%, £1,000 a month repays about £30,500 over three years and £46,000 over five. You pay more interest in total, and turnover caps and product maximums still apply.
Will checking how much I can borrow affect my credit score?
An eligibility check that uses a soft search does not affect your credit score and is not visible to other lenders. A full application usually involves a hard search, which is recorded. Ask which type of search a lender uses before you apply.
Does a personal guarantee increase how much I can borrow?
Not usually by itself. It may make a lender willing to lend to a younger company, but the amount is still set by affordability and the lender’s caps. It does make you personally liable if the company cannot repay.
Can the Growth Guarantee Scheme help me borrow more?
It can help a lender agree to a loan where security is limited, because the government guarantees 70% of the lender’s loss on eligible facilities of up to £2 million. The business must still show it can afford the repayments, and it remains liable for the whole debt.
Why was I offered less than I asked for?
Usually because one of the lender’s tests set a lower limit: existing repayments, a profit dip, thin bank balances, a turnover cap or a short trading record. Ask the lender which test applied. It tells you what to change before you apply again.
iwoca: business loans, published borrowing limits
Bank of England: Bank Rate, 3.75% after the 17 September 2026 decision
British Business Bank: Growth Guarantee Scheme
GOV.UK: Growth Guarantee Scheme eligibility
GOV.UK: apply for a Start Up Loan
The Small and Medium Sized Business (Finance Platforms) Regulations 2015 (SI 2015/1946)
Financial Conduct Authority: consumer credit
Financial Ombudsman Service: who can complain
Rates, tax bands and lender criteria change. Confirm the current details with the lender, your solicitor or your accountant before relying on them.