The Client
The client is a payroll services business seeking £250,000 to £350,000 of working capital to support ongoing growth. The client wanted a facility that would allow the business to grow over a three-year period, investing in marketing, new staff and an upgraded office to accommodate increasing demand. The business had no assets of its own to speak of, but the director held assets in the background that could be used as security to strengthen the case.
The Solution
As the client was looking for a large loan, it was important to establish what assets were available as security and to understand the business’s turnover. The business had shown positive growth over the previous three years, with a strong level of turnover and sufficient net profit to appeal to lenders.
The client held enough equity in two properties in the background to place an equitable charge over both. We secured two finance offers: an unsecured business loan of £150,000, or £217,000 if using the two properties as security. Although the business could have supported a higher loan amount, the preferred lender caps loan sizes where there is only one director providing a personal guarantee.
While the initial loan was not as high as first hoped, the lender offered flexibility – provided the client maintained regular repayments over a three to six month period, further top-up loans would be available to let the facility grow alongside the business. This gave the client both the initial funds needed and a realistic route to the fuller three-year facility originally planned.
From initial submission to funds being released, the process took just nine working days.
Summary
As a general guide, where the client has assets or is a homeowner, lenders can often lend between 15% and 25% of business turnover. These are broad guidelines rather than fixed rules – each case is assessed individually and on its own merits.
Frequently Asked Questions
How much can a business borrow relative to its turnover?
As a general guide, lenders can often lend between 15% and 25% of business turnover where the applicant has assets or is a homeowner.
This is only a broad guideline – actual lending depends on the specific case, including profitability, trading history and available security.
Can a business loan be secured against personal property?
Yes, using an equitable charge over personal property can significantly increase the amount a lender is willing to offer.
This is common where the business itself holds few assets but the director has equity available elsewhere.
Why do lenders cap loan size when there is only one director?
Some lenders limit loan size where only one personal guarantee is available, since it concentrates their risk on a single individual.
This does not necessarily prevent a larger facility being reached over time through structured top-up lending.
What is a top-up loan?
A top-up loan lets a facility grow in stages once the client has demonstrated a track record of regular repayments.
This allows a business to start with a smaller facility and build toward the fuller amount originally needed as trust is established with the lender.
Commercial Finance Network is a whole-of-market FCA authorised commercial finance broker working with property investors, developers, and businesses across the UK and internationally. We work across the full specialist business loan panel and will tell you which lenders will engage with your deal, what security and terms to expect, and how to structure the application before anything is submitted.
Commercial Finance Network is directly authorised and regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it. Business loans secured against property are not regulated by the Financial Conduct Authority.
Call us on +44 1494 622 111 or email info@cfnuk.com to speak to a specialist directly.
Related Pages
- Business Loans – flexible unsecured and secured lending for UK businesses
- Commercial Loan Calculator – estimate monthly costs and repayments on your commercial loan
- Commercial Finance – whole-of-market funding for businesses and property investors
- Bridging Loans – fast, flexible funding secured against property