Yes, you can take out more than one business loan at the same time – this is a common way for businesses to fund different projects or manage cash flow.
However, whether you will be approved for another loan is a different question, and comes down to the lender’s assessment of your application and ability to keep up with your repayments.
Does UK Law Limit How Many Business Loans I Can Have?
No, there is no UK law that sets a limit on the number of business loans you can have open at once. However, your existing loan agreements might restrict it themselves.
Many lenders attach a “negative pledge” clause to secured loans – loans in which you would put up collateral in the form of an asset – which prevents you from taking out secured borrowing without first getting their written consent. Breaching this clause can put you in default on your existing loan, even if the new lender had no idea it existed.
Do Lenders Have to Check My Existing Loans Before Approving Another?
This depends on how your loan is classed. If you’re a sole trader or small business owner, some business loans are treated as regulated consumer credit agreements, and the FCA rules require the lender to assess your credit, including your existing debt commitments, before agreeing to lend.
Loans to limited companies are usually unregulated, so this specific legal requirement doesn’t apply in the same way, although most lenders still run credit checks and ask you to declare existing borrowing regardless.
Will Having Multiple Loans Affect My Chances of Approval?
Yes, having outstanding loans can impact your chances of approval for further simultaneous loan. Lenders will look at your current debt and monthly repayment commitments when deciding how much to lend and at what rate for additional loans. Running several loans at once increases your outgoings and can be seen as a higher risk, so it may reduce how much you’re offered, push up your rate, or lead to the application being declined altogether.
Do I Need to Tell a New Lender About My Existing Loans?
Yes, you’re expected to tell a new lenders about your existing borrowing when you apply – in fact, many application forms ask for this directly. If any of your current loans are secured against your business’s assets, you may also need consent from that lender before taking out new secured loans. Make sure you do this as well, because applying without checking this first could put you in breach of your existing agreement.
Is It Worth Taking Out More Than One Business Loan?
It can be worth taking out more than one business loan at once, provided you’re using the extra funding for a clear purpose and can comfortably manage both repayments. Remember, multiple loans mean multiple sets of interest and fees, so it’s worth working out your total monthly repayments across all your borrowing before taking on more, rather than looking at each loan individually.