What is a Limited Company Loan?

What Distinguishes a Limited Company?

A limited company is a business entity in the United Kingdom. It is a company that cannot offer shares to the public and has limited liability. This business entity protects its shareholders as they are only liable for the amount they invested in the company. If the company goes bankrupt, shareholders only lose the amount of money they invested in the company. It is a requirement that LTD companies have at least one director and one shareholder. The shareholders elect the directors, who then manage the company; but the company is legally separate. Having at least one director and shareholder is required by law in order to operate as a limited company in the UK. A limited company must also register and file accounts with Companies House.

A limited company is a legal entity with its own rights and responsibilities. Through the eyes of the law, a limited company is a person. All profits belong to the company; the director can only withdraw funds for salary or loan payments. However, the company is also responsible for paying debts and liabilities. The director's money and the company's money must be kept separate.

A limited company is a legal entity with at least one director & one shareholder who are separate from the business.

Types of Limited Companies

There are two common types of limited companies: private limited companies and public limited companies. Private limited companies are typically small businesses, while public limited companies are larger businesses listed on a stock exchange.

One advantage that a private limited company has over a public limited company is that a private company can be more flexible in its structure and operations. A private company is not subject to the same level of scrutiny and regulation as a public company, so it can tailor its business model to suit its specific needs and goals. Additionally, a private company can change its internal workings more easily than a public company.

Public limited companies have some advantages over private limited companies. They are required to disclose their financial information to the public, which can help them raise capital. They also have greater credibility with customers and suppliers, as they are subject to stricter regulation.

Limited companies can be public or private.

Limited Company Responsibilities

A limited company must file annual accounts through Companies House. These accounts must include a balance sheet, which shows the company's assets and liabilities, and an income statement, which shows the company's revenue and expenses. Limited companies must also submit a report on any financial compensation received by the director (i.e. base salary, bonuses, commission etc.)

Limited companies also have to pay corporation tax on their profits, which can be a significant expense.

Limited companies offer shareholders protection from personal liability, greater flexibility in raising capital, and increased credibility with customers and suppliers. If you are contemplating opening a business, you should consider incorporating it as a limited company.

Difference Between Limited Companies & Sole Traders

There are several key differences between limited companies and sole traders:

- Limited companies have limited liability, which means that the shareholders' personal assets are protected if the company cannot pay its debts.

- Limited companies must file annual accounts with Companies House, whereas sole traders do not have to.

- Limited companies can issue shares to investors, giving them greater flexibility in raising capital.

- Public limited companies are subject to stricter regulation than sole traders.

- Sole traders are managed by one person, whereas limited company ownership is split between several parties.

- A limited company is legally separated from its owners, whereas a sole trader is not. Limited company shareholders are not reliable for covering the company's debts, whereas a sole trader is.

With a limited company, shareholder assets are protected.

What is a Limited Company Loan?

A limited company loan is available to any business registered as a limited company with Companies House. LTD company loans are available to both private and public limited companies.

The main advantage of taking out a limited company loan is that it can help you build your business without having to give up equity or acquire lots of debt. Being a limited company proves how established your business is, which shows the lender your trustworthiness. For this reason, limited company loans tend to have lower interest rates than other business loans, making them more accessible in the long term.

Love Finance limited company loans are always unsecured, meaning they do not require any collateral to be provided by the borrower. This makes them an appropriate option for small businesses that may not have the necessary assets to secure a traditional bank loan.

Repayment terms are also flexible and can be tailored to suit the individual needs of each business.

Limited company loans tend to have better rates as limited companies are trusted and established.

How Can My Business Get a Limited Company Loan?

There are several ways to get a limited company loan. One way is to go through a bank or another financial institution. This option may be more challenging to obtain if your business is small as banks are often hesitant to give loans to businesses that are not well established. Additionally, banks tend to have high-interest rates and often have more drawn-out processes than online lenders.

Going through an online lender like Love Finance can allow you to get the funding you need for your limited company in a matter of hours. 

Once you have found a lender you are happy with, you should fill out an application form. The application form will ask for information about your company, such as its registered address, business activity, and financial information. Once you have submitted the form, the lender will carry out a credit check on your company.

If the credit check is successful, the lender will offer you a loan. The loan agreement will set out the loan's interest rate, repayment terms, and fees - make sure this suits your needs.

Online lenders tend to be easier to get approved by than banks.

Am I Eligible for a Love Finance Limited Company Loan?

To qualify for a limited company loan with Love Finance, you should:

- Be 18 years of age or over
- Be registered with Companies House
- Be trading for at least 3 months

Even if these criteria do not apply to you, you can still enquire with Love Finance, and we'll do our best to fund you with our other options. 

How Can a Limited Company Loan Help My Business?

There are many ways that a limited company loan can help your business. A loan can help you to finance the purchase of new equipment, expand your premises, hire new staff, or to cover unexpected costs such as repairs. 

A limited company loan can also help you to improve your cash flow. You will not have to repay until the loan term ends, freeing up cash you can use to invest in other areas of your business.

Limited company loans can be used for almost any purpose in your business.

What Are the Benefits of a Limited Company Loan?

LTD company loans can help you:

- Finance your business growth
- Improve your cash flow
- Protect shareholder assets if your company is unable to pay its debts

Can I Get a Loan If I Do Not Have a Limited Company?

If you do not have a limited company, you can't get a limited company loan. However, this does not mean you cannot get a loan full stop - there are other options for you. Some lenders view sole traders as higher-risk borrowers than limited companies, meaning you may get less favourable terms. If you are thinking about making the move from sole trader to limited company, visit the Government website to find out how.

You cannot get a limited company loan as a sole trader, but there are other options for you.

Summary

A limited company loan can help you finance your business's growth. Incorporating your small business as a LTD company gives you more control and credibility, which can benefit you when it comes to applying for finance.

You can use a limited company loan for anything in your business, from protecting cash flow to paying staff's wages.

If you're thinking of enquiring about a limited company loan, you should ensure you have good credit and a strong business plan to ensure you can get the best rates possible. Ensure you are aware of the terms of the loan and that they suit your business needs. 

Apply for a LTD company loan with Love Finance today to access rates as low as 2.9%, and funds accessible in as little as 4 hours!