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Sole Trader Business Loans
Access loans for the self-employed or unlock a wider range of business funding by registering as a limited company
Is it time to become a Limited company?
Transition from a sole trader to a limited company to protect your personal assets and maximise your borrowing potential. Move beyond personal credit limits and unlock the professional borrowing power of a limited company. See our FAQ’s to learn more.
Tide can register your business as a UK Limited Company for you.
For only £14.99 instead of £100 via Companies House.
- Tide will register your business with Companies House for you…You just need to provide the name.
- Receive your certificate of incorporation and Tide will give you a free business account all within one business day.
- Tide is a Companies House Authorised Corporate Service Provider (ACSP). They can verify your identity for your registration and account in one step.
- Unlock more Tide services* like, Virtual Office Address, Website Building, Savings, Loans, Card Readers, Accounting and much more
*charges may apply
Sole Trader Lenders
Sole traders can access business funding with speed and simplicity against their personal credit borrowing power. See our FAQ’s to learn more.
Tide Start Up Loan-
Minimum Turnover:No minimum
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Available Amounts:£500 – £25,000
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Available Terms:1 – 5 Years
Barclays Business Loans-
Minimum Turnover:No minimum
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Available Amounts:£1,000 – £5,000,000
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Available Terms:12 – 300 Months
YouLend Merchant Cash Advance-
Minimum Turnover:£36,000
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Available Amounts:£3k – £1m
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Available Terms:1 – 18 months
Important: Information provided in our comparison is a guide. Always check terms and eligibility directly with providers before proceeding with any loan product.
Sole Trader & Limited Company Loan FAQs
1. What is the fundamental difference between a sole trader and a limited company?
A sole trader and their business are legally the same entity, you are personally responsible for all profits and losses. A limited company is a separate legal entity, meaning the business stands on its own, providing “limited liability” to protect your personal assets.
2. How do lending options differ between the two structures?
Sole trader lending is often based on your personal credit score and self-assessment tax returns. Limited company lending focuses on the company’s balance sheet, trading history and incorporation age, which often unlocks higher credit limits and specialised commercial products.
3. Will I have access to more loan types as a limited company?
Yes. While sole traders are usually restricted to personal or small business loans, limited companies can access asset finance, invoice factoring and corporate lines of credit that are specifically designed for incorporated entities.
4. Is it easier to be eligible for a loan as a limited company?
Not necessarily easier, but the criteria changes. As a sole trader, your personal debt-to-income ratio matters most. As a limited company, lenders look at operating profit and retained earnings. Some lenders actually prefer limited companies because the financial reporting (via Companies House) is more transparent.
5. What should I consider before making the switch from sole trader?
Think about administrative responsibility. Limited companies require annual accounts, a confirmation statement to Companies House and Corporation Tax filings. You should also weigh the cost of accountancy fees against the potential tax savings and increased borrowing power.
6. Do I really need a business bank account as a sole trader?
While not a legal requirement in some regions, it is highly recommended. It keeps your personal and business expenses separate, making tax season easier and proving to lenders that you are running a professional operation.
7. Is a business bank account mandatory for a limited company?
Yes. Because a limited company is a separate legal entity, it must have its own bank account. You cannot legally process company income through a personal bank account.
8. Do I need a business account as a sole trader to apply for a business loan?
Technically no, but practically yes. While there is no legal law requiring a sole trader to have a business account, the vast majority of business lenders will not approve a loan without one. They need to see a clear audit trail of your business income and expenses. If your business transactions are mixed with your personal grocery shopping and rent payments, lenders often find it too difficult to verify your true affordability and may decline the application.
9. Can I use my sole trader trading history to get a loan for my new limited company?
Many lenders will consider your continuity of trade. If you’ve been a sole trader for five years and then incorporate, specialist lenders may count those five years toward your eligibility, rather than treating you like a brand new startup.
10. Does being a limited company affect my personal liability on a loan?
Generally yes, the company is liable. However, be aware that for many small limited company loans, lenders may still ask for a Personal Guarantee (PG), which means you would be personally responsible if the company cannot pay.
11. What benefits are there to borrowing as a sole trader?
The primary benefits are simplicity and speed, as you can often secure funding quickly using your personal credit history with minimal paperwork. Sole trader loans (up to a certain threshold) are frequently regulated, giving the borrower more rights if things go wrong. Regulated loans have mandatory cooling off periods
Important Note: Understanding Your Borrowing Risks and Rights
- Personal Guarantees for Limited Companies: While a limited company structure protects your personal assets from general business debts, many lenders still require a Personal Guarantee from directors for business loans. This means that if the company fails to repay the debt, you become personally liable, putting your personal assets at risk.
- Regulatory Protection for Sole Traders: Loans of up to £25,000 for sole traders and small partnerships (fewer than four partners) are typically regulated under the Consumer Credit Act. This provides you with FCA backed protections, including cooling off periods, stricter rules on how lenders must treat you if you face financial difficulty and the right to take disputes to the Financial Ombudsman Service.