Borrowing £250k To £1m

Borrowing £50k for a business is largely an automated decision. Borrowing £250k to £1m is a credit paper written by a human being and signed off by a committee. Everything changes: the information required, the security involved, the questions asked and how long it takes. Understanding that shift is the difference between a six week process and a six month one that ends in a decline.

This guide sets out what lenders actually do with a larger request, what they want to see and where these applications most often fall apart.

What changes once you pass roughly £250k

Below this level most facilities are credit scored. Bank feeds, a credit search and filed accounts go in, a decision comes out, and the lender accepts a degree of loss across the book as a cost of doing business at speed.

Above it, the economics flip. A single bad debt of £500k has to be earned back across a lot of good lending, so the lender underwrites properly. In practice that means four things.

Security becomes the norm. Genuinely unsecured lending thins out considerably above £250k. Expect a debenture over the company, often a legal charge over property and frequently a charge over specific assets.
A named underwriter. Someone has to write the case and defend it. They will want to speak to you, understand the sector and form a view on management as well as numbers.
Covenants appear. Ongoing conditions on leverage, interest cover, net worth or information reporting, tested quarterly or annually. Breaching one is an event of default even if every payment has been made on time.
Group structure matters. Where there are multiple entities, intercompany loans, a holding company or property held personally, the lender wants the whole picture and will usually want guarantees or charges from more than one entity.

Security and personal guarantees

Security is simply the lender's fallback. For a facility in this range you will typically see a combination of the following.

A debenture, giving fixed and floating charges over the company's assets. This is close to standard and also means any existing debenture holder may need to grant a deed of priority, which takes time.
A legal charge over property, whether trading premises, an investment property or in some cases property held outside the business. This is what unlocks the lowest pricing and the longest terms.
A charge over specific assets, used where value sits in plant, machinery, vehicles or equipment.
A personal guarantee, almost always requested from the directors or shareholders behind the business.

Be clear eyed about personal guarantees. A PG is a personally enforceable promise to pay if the company does not. Ask three questions before you sign one. Is it capped at a stated figure or unlimited. Is it joint and several across directors, which means the lender can pursue any one guarantor for the whole amount. Does it carry a charge over your home, which converts a promise into a secured claim on the roof over your head. Each of those is negotiable in principle, particularly the cap, and personal guarantee insurance exists to cover a proportion of the exposure. A lender declining to lend without a PG is normal. A lender refusing to cap it on an otherwise strong case is worth questioning.

What the lender wants to see

Assemble this before you approach anyone. A complete pack, submitted once, is the single biggest factor in how fast a larger application moves, and a drip feed of documents reads to an underwriter as disorganisation.

The last two or three years of filed accounts, ideally full accounts rather than abridged filings, because abridged accounts hide the detail an underwriter needs and they will ask for it anyway.
Management accounts, current to within a month or two, with a profit and loss and a balance sheet. Accounts that are six months stale signal that nobody in the business is watching the numbers.
Bank statements, always the last six months across all trading accounts.
Aged debtor and creditor lists. The lender is looking at concentration, how overdue the ledger is and whether any single customer failing would take the business with it.
A forecast, covering 12 to 24 months, with the new facility and its repayments built in. It must reconcile to the management accounts and to the story you are telling.
The purpose, in writing. What the money buys, what it returns and over what period. Working capital is not a purpose. Funding a stock cycle that currently sits unfunded for 90 days is.
Existing debt in full. Every loan, lease, invoice facility, merchant cash advance, director's loan and overdraft, with balances and monthly commitments.
Your HMRC position, including any time to pay arrangement, with the agreement document.

Add asset detail where property or equipment is involved: addresses, tenure, current values, leases and any existing charges.

How a lender sizes the facility

Two tests run in parallel, and the lower of the two sets your limit.

Affordability, against profit. The starting point is usually EBITDA, meaning profit before interest, tax, depreciation and amortisation, adjusted for anything that will not recur and for directors' remuneration taken at a level that is not sustainable. Against that the lender measures total debt service, including existing commitments, and looks for cover comfortably above 1.0. Requiring something in the region of 1.25 times cover is common, so a business with £200k of adjusted EBITDA and £40k of existing annual debt service has roughly £120k of annual capacity for new repayments. On a five year term that points to a facility in the low hundreds of thousands, not £1m. Working out your own number before you apply tells you immediately whether the amount you want is realistic.

Asset cover, against security. Where property is charged, the lender applies a loan to value limit to the valuation. As a broad guide, commercial property is commonly funded to around 60% to 70% of value and residential investment property somewhat higher, with specialist or owner specific assets lower. On plant and equipment, refinance advances are set against a forced sale value rather than what you paid.

If affordability supports £400k but your security only covers £250k, you are offered £250k. Closing that gap means adding security, blending structures or reducing the request.

The structures that actually get used

A secured term loan against property. The cheapest money available at this size and the longest terms, often ten to twenty years where the security is strong. Slowest to arrange, because it needs a valuation and full legal work.
An unsecured or lightly secured term loan. Faster and based on trading performance, typically over two to six years with a debenture and personal guarantees. Pricing is higher and the available amount is governed almost entirely by affordability.
Asset refinance. Capital released against plant, machinery, vehicles or equipment the business already owns outright, repaid over the remaining useful life of the assets. An efficient way to raise several hundred thousand pounds without touching property, and often overlooked.
A revolving facility or invoice finance. Where the need is a cash cycle rather than a capital project, a revolving line or a facility advancing against your sales ledger fits better than a term loan. It flexes with turnover and you pay for what you draw. For a business with a substantial debtor book this is frequently the largest facility available to it.
A blend. Larger requirements are often met by stacking two or three of the above, for example a term loan against premises alongside an invoice facility for working capital. Structuring across products is usually how a request that one lender declines gets fully funded.

Timescales follow the structure. An unsecured term loan on a complete pack can move in two to four weeks. Asset refinance is similar. Anything secured on property runs six to twelve weeks once valuation, legal work and any deed of priority are factored in. Start earlier than feels necessary, especially where an existing lender's consent is needed.

The two things that most often sink a larger application

Late disclosure. The fastest way to lose a credit committee is for them to discover something you did not mention. Merchant cash advances, a CCJ, an HMRC time to pay arrangement, an existing debenture, a sizeable director's loan account or a dispute with a key customer. None of these is automatically fatal and underwriters see all of them regularly. Finding them in a search after you have described the position differently is fatal, because it reframes every other number you have given them. Disclose everything at the start with the explanation attached.

Numbers that do not reconcile. Management accounts that do not tie to the bank statements. A forecast showing a step change in margin with no stated reason. Filed accounts that bear no resemblance to the current trading narrative. Underwriters are not expecting perfection, they are testing whether the figures come from a business that knows its own position. Before submission, have whoever owns your numbers walk the pack end to end and be able to explain every material movement in one sentence.

What to do next. Calculate your adjusted EBITDA, subtract existing annual debt service, divide the remainder by 1.25 and you have a realistic annual repayment capacity. List the security available and its approximate value. Then gather the pack above. With that in hand we can compare 50+ lenders, tell you honestly whether the amount is achievable as a single facility or needs structuring across two and give you a timetable. We are an independent commercial finance broker arranging business funding only, and commercial lending of this type sits outside FCA regulation, so the facility documents and the guarantee wording deserve proper legal review before signature.

Can I borrow £500k without security?

It is uncommon. Genuinely unsecured lending at this level is limited to businesses with strong, consistent profitability and a clean balance sheet, and even then a debenture and personal guarantees are near universal, which means the borrowing is not unsecured in any practical sense. If you have property or owned assets available, offering them usually improves both the amount and the rate materially.

How long does a £500k facility take to arrange?

Two to four weeks for an unsecured term loan or asset refinance where the information pack is complete. Six to twelve weeks where the facility is secured on property, because valuation, searches, legal work and any existing lender's consent all sit on the critical path. Incomplete information is the most common cause of delay, not lender appetite.

Do I have to give a personal guarantee?

For most facilities in this range, yes. What is open to negotiation is the detail: whether it is capped at a figure rather than unlimited, whether it is supported by a charge over your home and how it is shared between directors. Personal guarantee insurance can cover part of the exposure. Always take independent legal advice before signing, particularly on joint and several wording.

How to borrow £250k to £1m for a business