How Much Can I Borrow for a Business Loan? A Realistic Guide

"How much can I borrow?" is the first question on every business owner's mind when they think about a loan. And the honest answer is — it depends. On how big your business is, how profitable, how long you've been trading, what the loan is for, and which lender you ask.

Here's a realistic breakdown of how UK business lenders work out the maximum, what affects it, and how to give yourself the best shot at a larger offer.

There's no simple answer — here's why

Different lenders use different formulas. Some cap at a multiple of turnover. Some focus on debt-service coverage from net profit. Some look at the asset being financed. Some weigh personal credit and director income heavily. The result is that the same business can be offered very different amounts by different lenders.

That's actually good news. If your first quote feels low, a different lender may offer significantly more. Our guide to getting a business loan covers the wider landscape.

What's common across most lenders: they're trying to lend an amount your business can comfortably repay, with room to spare for unexpected hiccups.

How lenders calculate maximum borrowing

Most UK business lenders use some combination of these factors:

• Turnover multiple. Common cap of 20-30% of annual turnover for unsecured loans.
• Debt-service coverage ratio. Net profit ÷ total monthly debt repayments. Most lenders want this above 1.25x.
• Loan-to-value (for secured). Typically up to 60-75% of the secured asset's value.
• Personal credit and director income (especially for small companies and sole traders).
• Bank statement health. Healthy average balances and consistent receipts support larger amounts.
• Trading history. Longer history allows larger amounts.

The maximum offered is usually whichever calculation produces the smallest number. So you can be capped by turnover even if affordability allows more, or capped by affordability even if turnover allows more.

The role of your annual turnover

Turnover is the most common headline cap. Typical multiples:

• Unsecured business loan: 20-30% of annual turnover
• Secured business loan: 50-100%+ of annual turnover (more constrained by asset value than turnover)
• Asset finance: based on asset value, not turnover
• Revolving credit facility: typically 10-20% of turnover

So a business with £400,000 annual turnover might typically be offered £80,000-£120,000 unsecured. Same business with property to secure could potentially borrow £200,000-£400,000+.

What's also important: the shape of turnover. Stable, recurring, diversified revenue allows higher multiples than lumpy, seasonal or concentrated revenue.

Your profitability and debt service coverage

The affordability calculation gets technical, but the principle is straightforward: can the business comfortably afford the new repayment alongside everything else it already pays?

Debt-service coverage ratio (DSCR) is the common metric. Roughly:

DSCR = Net monthly profit ÷ Total monthly debt repayments

Most lenders want DSCR above 1.25x. Some want 1.5x or higher for larger loans. So:

• If your business has £8,000/month in existing debt repayments and wants to add a £2,000/month new loan, total is £10,000.
• At 1.25x DSCR, you'd need net monthly profit of at least £12,500.
• At 1.5x DSCR (more conservative), you'd need £15,000.

Use our business profit calculator to work out your actual margins and net profit. If your DSCR is borderline, paying down existing debt or extending the loan term can both shift the maths in your favour.

What type of loan affects the amount

The maximum varies dramatically by product:

• Unsecured term loan: typically £1,000-£250,000
• Secured term loan: typically £25,000 to several million
• Asset finance: matches the asset value, usually £5,000-£500,000+
• Invoice financing: typically up to 80-90% of qualifying invoice value
• Revolving credit facility: typically £5,000-£500,000
• Start Up Loan (BBB): £500-£25,000 per director
• Commercial mortgage: typically £100,000 to several million

If unsecured doesn't reach the amount you need, the answer is often a different product type rather than a different lender for the same product.

Secured loans — borrowing more with security

If you have substantial assets — particularly property — secured borrowing opens up much larger amounts. The headline maths is:

Max secured loan = (Asset value × LTV %) - Existing charges

So if you own a commercial property worth £500,000 with an existing mortgage of £200,000, at 70% LTV:

• 70% × £500,000 = £350,000
• Less existing £200,000 mortgage = £150,000 available headroom

That £150,000 could potentially be borrowed as a secured second-charge loan. Different lenders allow different LTV ratios. Our guide to secured vs unsecured loans covers the trade-offs in detail.

Typical loan amounts by business size

Indicative ranges for established profitable UK businesses:

• Sole trader, turnover under £100k: typically £5,000-£25,000 unsecured
• Small company, turnover £100k-£500k: typically £20,000-£100,000 unsecured
• Established SME, turnover £500k-£2m: typically £50,000-£250,000 unsecured
• Larger SME, turnover £2m-£10m: typically £100,000-£500,000+ unsecured
• Established company with property: potentially £500,000-£5m+ secured

These are rough ranges, not promises. Within each tier, the amount depends on your specific profitability, credit history and the lender you choose.

How loan term affects what you can borrow

Longer terms mean lower monthly payments, which means better affordability, which can mean larger borrowing. But the trade-off is total cost.

Example:

• £100,000 over 3 years at 9% APR — monthly payment ~£3,180, total interest ~£14,500
• £100,000 over 5 years at 9% APR — monthly payment ~£2,080, total interest ~£24,500
• £100,000 over 7 years at 9% APR — monthly payment ~£1,610, total interest ~£35,000

Extending from 3 to 7 years cuts the monthly payment in half but more than doubles the total interest. Use a longer term to make borrowing affordable when you genuinely need it; don't stretch it just to make payments smaller.

Use our business loan calculator to model different scenarios side by side.

How to maximise your borrowing potential

Without changing the underlying business, the practical levers are:

• Pay down existing debt. Lowering monthly debt service raises DSCR, which raises max borrowing.
• Improve personal credit for directors. See our credit improvement guide.
• Tighten cashflow management. Healthier average bank balances support larger amounts.
• Apply at the right time — not after a slow quarter, but after a strong run of trading.
• Provide security if possible. Unlocks larger amounts at better rates.
• Use a broker if your situation is borderline or complex.
• Be realistic with the amount. Asking for too much triggers decline; asking for what's clearly affordable often gets approved instantly.

The combination of these can shift the maximum offered by 30-50% in many cases.

Using a calculator to work out repayments

Before you apply, run the numbers on what specific loan amounts would actually cost your business each month. Use our business loan calculator to model:

• Different amounts at the same rate and term
• Same amount at different rates
• Same amount at different terms (shows total interest impact)
• The CTA on the calculator can take you straight to our application page with your figures pre-filled

The exercise is genuinely useful before applying. It tells you what's actually affordable, what's pushing the edges, and what's clearly out of reach. Most over-borrowing comes from not running the numbers in advance.

Frequently asked questions