Can a sole trader get a business loan?
Not through our cash flow panel, which lends to limited companies and LLPs. There is a regulatory reason as well as a commercial one, and it is worth understanding because it explains a lot of what you will run into elsewhere.
The £25,000 line
Lending of £25,000 or less to a sole trader or a partnership of three or fewer partners is regulated consumer credit, even when the money is purely for the business. Only agreements above £25,000 are exempt as business lending.
That changes what a lender needs permission to do and what disclosures have to be made. This site is built for unregulated commercial lending, so rather than half-handle it we do not place it.
Where sole traders can borrow with us
Farms. Through Farmzo we can place sole traders, partnerships and tenant farmers, for amounts above £25,000, because the farm lenders on that panel take those structures and the amounts clear the regulated threshold.
The market got narrower in 2026
This is not only our panel. Funding Circle, one of the largest business lenders in the UK, stopped accepting new applications from sole traders and partnerships on 23 February 2026, having lent to them for over a decade. Its own notice gives the reason: the market is moving to open banking and automated assessment, and the manual underwriting those structures needed did not survive the change.
So if you are a sole trader finding fewer doors open than you expected, it is not you. It is a change in how business lending is assessed.
What to do if you are a sole trader
Call us. We would rather point you somewhere useful than take an enquiry we cannot place. Incorporating is sometimes the right answer and often is not, and it is a question for your accountant rather than for a broker.
What regulated lending means in practice
When a loan is regulated consumer credit, the lender has to assess affordability against your personal finances, give you set information before you sign, and in most cases let you withdraw within fourteen days. Those are protections. They also mean fewer business lenders hold the permissions to offer it, which is part of why the market is thinner below £25,000.
Partnerships and LLPs
A partnership of four or more partners sits outside the consumer credit rules whatever the amount, and so does a limited liability partnership, which is a corporate body in its own right. Lenders that take ordinary partnerships still read each partner’s personal file closely, because the partners are personally liable for the firm’s debts.
Common questions
Will incorporating my business help me borrow?
Not quickly. A new limited company has no filed accounts and, for most lenders, no trading history of its own, so changing structure can reset the clock you were trying to beat. Some lenders will look at the history from before you incorporated, and many will not. Whether to incorporate is a tax and liability question for your accountant first.
Is a sole trader personally liable for business borrowing?
Yes. A sole trader and the business are the same legal person, so business borrowing is your borrowing and is assessed against your own file and income. That is the main practical difference from a limited company, where the company borrows in its own name and a director is only personally liable if they give a guarantee.
Does the £25,000 limit apply to each loan or to everything I owe?
Each agreement. The test looks at the credit provided under that agreement, not your total borrowing. It also means that splitting a large need into several small agreements does not get round the rules: each small one is regulated.
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