How much can my business borrow? A director's guide

Turnover sets a loose ceiling

Many lenders start with a rough rule of thumb — a facility of perhaps one to three months' turnover — as a sanity check, not a promise. A company turning over £600,000 a year might see £50,000–£150,000 quoted as "in range". But that is only the opening bracket; the real limit comes from cash, not sales.

Cash flow is the binding constraint

What truly caps the loan is how much repayment your monthly free cash can absorb while keeping the cover ratio healthy. Work backwards: if you have £4,000 a month spare after existing commitments and want to keep 1.25x cover, you can comfortably service about £3,200 of new monthly repayment — which, over 12 months, points to a facility in the low tens of thousands, more over a longer term.

Existing debt eats into the ceiling

Every pound you already repay each month reduces the room for new borrowing. Clearing or consolidating an expensive facility before applying can lift the amount a lender will offer — see consolidating business debt.

A longer term raises the number

Spreading the same loan over a longer term lowers each repayment, which improves cover and lets you borrow more for a given monthly outlay — at the cost of more total interest. It is the most common lever for making a larger amount fit. Read choosing a loan term.

Estimate your own ceiling

Use the calculator to enter your monthly cash available for debt and see the repayment — and rough facility — your business could support.

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