Tag: Business loans
Can a sole trader get a business loan, and how is it different from a limited company borrowing?
Yes. Sole traders borrow from the same lenders, for the same purposes. The difference is legal, not commercial: as a sole trader there is no company between you and the debt, so you are personally liable for every penny from day one. Loans to sole traders up to £25,000 are regulated like consumer credit, with extra protection. Limited company loans are not regulated that way, but lenders routinely ask directors for a personal guarantee, which puts your own assets back on the table. Cited to GOV.UK, checked 20 October 2026.
What government-backed loan schemes can my small business still use in 2026?
Two main ones. The Start Up Loan scheme lends £500 to £25,000 at a fixed 7.5% a year over 1 to 5 years, for businesses trading less than 5 years. The Growth Guarantee Scheme backs facilities up to £2 million for UK businesses with turnover under £45 million, through accredited lenders. Neither is free money: you are assessed, you sign a loan, and you repay it. Cited to GOV.UK, checked 20 October 2026.
Is business loan interest tax deductible?
Yes, if the loan is for the business. A sole trader claims interest on bank and business loans as an allowable expense, and a company deducts interest before working out its Corporation Tax. What you can never claim is the repayment of the loan itself: only the interest. A £10,000 loan at 8% costs £800 of interest in a year, and that £800 is what reduces your taxable profit. Cited to GOV.UK, checked 20 October 2026.
What do lenders look at when a small business applies for a loan?
Five things, in roughly this order: can the cash flow cover the repayments, does the trading history show a real business, what do the credit files say, what is the money for, and what can the lender take if it goes wrong. The British Business Bank names cash flow as one of the key indicators any lender examines. A clean application answers all five before the lender asks. Cited to GOV.UK, checked 20 October 2026.