Choosing a Peer to Peer Lender for an Established UK Limited Company

For an established UK limited company seeking £50,000 to £1m of growth capital, a peer-to-peer (P2P) platform will usually decide faster than a high street bank and weigh trading history more heavily than collateral. Expect a personal guarantee, two years of filed accounts, and a credit decision within 48 hours rather than the four to six weeks typical of a clearing bank.

How P2P platforms actually assess a limited company

Peer-to-peer lenders run a credit model that blends Companies House filings, bank transaction data via Open Banking, director credit files and sector risk. They are not collateral-led in the way a bank is. A surveyor will not visit your premises. The platform wants to see consistent turnover, positive operating cash flow and a debt service cover ratio above roughly 1.25x.

Most platforms pull two years of filed accounts from Companies House within minutes of you entering your registration number. They then ask for 6 to 12 months of business bank statements, usually through a read-only Open Banking feed rather than PDFs. Decisions on facilities up to £100,000 are often automated. Larger facilities go to a human credit committee.

The bar to clear is genuinely different from a bank. A clearer like NatWest or Virgin Money will often want a debenture, sometimes a charge over property, and a relationship manager review. A P2P platform will lend unsecured against the strength of the trading numbers, with a director personal guarantee as the backstop.

The minimum profile that gets funded

• UK Limited Company registered for at least 24 months (some accept 12)
• Turnover of £200,000+ in the last filed year
• Net profit or a clear, fundable loss-making position with growth trajectory
• Directors with no active County Court Judgments (CCJs) and a clean personal credit file
• No recent winding-up petitions or unsatisfied charges

What sets P2P apart from a high street bank

Speed is the obvious one. The slower, less obvious difference is how the money is actually sourced. On a P2P platform, your loan is funded by hundreds or sometimes thousands of retail and institutional investors who bid on the loan parts. The platform is the arranger, not the principal lender. That structure is regulated by the Financial Conduct Authority under the P2P36 rules introduced in December 2019.

For a director, the practical effects are these. Rates are risk-priced per loan rather than slotted into a published tier. There is no current account relationship to maintain. Early repayment is usually penalty-free or charged at a flat percentage. And the platform will not try to cross-sell you a card machine.

If you want to model the cost difference against an existing facility, the barclays Business loan refinance calculator gives a reasonable side-by-side.

Where Iwoca sits in the picture

Iwoca is not strictly a P2P platform. It funds loans from institutional credit lines rather than retail investors, but it competes directly with Funding Circle, Assetz and ThinCats for the same borrower. For an established limited company, the numbers are these: facilities from a few thousand pounds up to £1,000,000, funding inside 24 hours, interest rates between 1.6% and 5.6% per month, and a personal guarantee required from at least one director.

Iwoca's published criteria require 12+ months of trading, which is lower than most P2P platforms. Decisions up to £100,000 are instant. For facilities above that, expect a same-day human review. The trade-off for the speed is monthly interest rather than an APR-quoted term loan, so a 24-month facility at 3% per month is meaningfully more expensive than a Funding Circle equivalent at 9% APR.

When Iwoca beats a P2P platform

• You need funds inside 48 hours for a stock purchase or VAT bill
• Your trading history is between 12 and 24 months
• You want a flexi-loan structure rather than a fixed term loan
• You are borrowing under £50,000 where P2P arrangement fees bite hard

For directors weighing whether a guarantee is acceptable, our guide on Do Company Directors Need a Personal Guarantee for Unsecured Loans covers the enforcement risk and how guarantees are typically capped.

Choosing between the main UK P2P platforms

The UK P2P market for business lending narrowed sharply after 2020. RateSetter exited business lending. Zopa closed its P2P arm entirely. The platforms still actively writing limited company loans are Funding Circle, Assetz Capital, ThinCats and LendingCrowd, plus specialist property and asset-backed platforms like Folk2Folk and Kuflink.

Funding Circle

Loans from £10,000 to £500,000 over 6 months to 6 years. Personal guarantee from a majority shareholder is mandatory. Funding Circle now funds most loans from its own institutional vehicles rather than retail lenders. Decisions usually inside 48 hours, drawdown within a week. Rates from around 7.9% APR for the strongest credits. If you already have a Funding Circle facility and want to test refinancing, the Funding Circle refinance calculator handles the early settlement maths.

Assetz Capital

Now focused almost entirely on property-backed and asset-backed lending after winding down retail P2P in 2022. Loans from £150,000 to £10m. Suits established companies with property or equipment to charge. Decisions take longer than Funding Circle, typically 2 to 4 weeks, because of valuation work.

ThinCats

Loans from £100,000 to £15m, secured against business assets. Aimed squarely at established profitable SMEs with EBITDA over £500,000. Cash-flow lending, asset-based lending and acquisition finance are the three core products. Not suitable for sub-£100k requirements.

LendingCrowd

Scottish-based, loans £25,000 to £500,000. Will lend to limited companies with 2+ years of trading. Personal guarantee required. Rates from 8.9% APR. Smaller loan book than Funding Circle but often more flexible on sector.

For directors of wholesale or distribution businesses specifically, our piece on loans for wholesalers covers sector-specific underwriting quirks.

Matching the platform to the use case

The mistake most directors make is shopping on headline rate rather than fit. A platform that has historically declined your sector will decline you again, however good your numbers look. A platform built for £750,000 acquisition finance will not bother quoting on a £40,000 working capital request.

If your need is equipment rather than cash, P2P is rarely the cheapest route. Comparing Lombard Asset Finance vs Novuna against a P2P term loan usually shows asset finance winning on rate by 200-400 basis points because the kit itself acts as security.

Costs, fees and the real APR

Quoted rates on P2P platforms exclude the arrangement fee, which is deducted from the drawdown. A £100,000 loan at 9% APR with a 5% arrangement fee actually delivers £95,000 to your account while you repay against the full £100,000. The effective cost is closer to 11-12% APR depending on the term.

Other charges to read in the offer letter:

• Monthly servicing fees (Funding Circle: none on standard term loans; some platforms charge 0.5%-1% per annum)
• Late payment fees, usually £25-£50 per missed direct debit
• Default interest, typically 2%-4% above the contractual rate
• Early repayment charge, often 1%-2% of the settled balance
• Personal guarantee insurance premiums if you choose to insure the PG

The British Business Bank's Finance Hub publishes useful benchmarks on small business borrowing costs across the alternative lending market, and the Bank of England Money and Credit statistics give the broader rate context.

What to prepare before you apply

P2P platforms move fast when your paperwork is in order and slowly when it is not. The difference between a 24-hour decision and a three-week back-and-forth is almost always documentation.

Have these ready before you start the application:

• Two most recent sets of full filed accounts
• Year-to-date management accounts, no older than 60 days
• Last 6 to 12 months of business bank statements (Open Banking consent will pull these automatically)
• Most recent VAT returns if VAT-registered
• Aged debtor and creditor reports if relevant
• Directors' details: home addresses for the last 3 years, dates of birth, shareholdings
• A short use-of-funds statement, two or three sentences is enough

If you are arranging a larger facility, around the 1 million loan mark, expect a credit committee to also want a 12-month cash flow forecast and, for acquisition deals, the SPA heads of terms.

When P2P is the wrong answer

P2P is not always the right tool. For asset purchases over £100,000, hire purchase or a sale and leaseback usually delivers a lower cost of capital. The structures in our guides on 1m Hire Purchase Finance and 1m Sale and Leaseback Finance show where the rate gap opens up.

For recruitment, contractor and staffing businesses with lumpy receivables, invoice and payroll finance beats a P2P term loan on cost and cash flow shape. Looking at Sonovate vs Ultimate Finance is a sensible starting point for that comparison.

For businesses where the cash gap is purely receivables, selective invoice finance beats a term loan because you pay only when you draw. A look at Satago vs Ultimate Finance gives the practical contrast.

P2P also rules itself out for non-incorporated borrowers. Sole traders and partnerships generally cannot apply, and dedicated business loans for umbrella companies sit in a different market entirely. The definition and tax treatment of a corporate borrower matters here, and Peer-to-Peer Lending (P2P) as a category is structurally limited to companies with filed accounts.

Final advice and next steps

For a profitable UK limited company with two years of filed accounts and turnover above £200,000, a P2P platform will usually beat a high street bank on speed and beat Iwoca on headline cost for facilities above £100,000 over terms longer than 18 months. Iwoca wins below that threshold and on shorter durations because the monthly rate structure and instant decision matter more than APR.

Three practical steps to take this week:

• Pull your latest management accounts and bank statements into one folder. Most declines happen because of missing paperwork rather than weak numbers.
• Get quotes from two P2P platforms and one direct lender like Iwoca on the same day. Decisions are valid for 14 to 30 days and cost you nothing.
• Read the personal guarantee clause carefully. Caps, joint and several language, and insurance options vary widely.

If you are comparing across the wider market, our pillar guide to the best alternative small business loans covers the full set of options for an established trading company alongside the P2P route.