How to Secure a £1 Million+ Business Loan in the UK
If your business needs to borrow more than £1 million, one of the first conversations you should consider having is with an experienced commercial finance broker.
Not because UK banks have stopped lending.
And not because businesses cannot approach lenders directly.
They can.
The reason is that once a borrowing requirement moves into seven figures, the difference between lenders becomes considerably more important.
A £100,000 funding requirement may have a relatively straightforward solution.
A £1 million, £3 million or £10 million requirement can potentially be structured in several different ways, across lenders with very different credit appetites.
At that level, the question is no longer simply:
"Can my business get a loan?"
It becomes:
"How should this borrowing be structured, which lenders are most likely to support it, and what terms should the business realistically expect?"
Those are very different questions.
Can a UK business borrow more than £1 million?
Absolutely.
UK businesses regularly raise seven-figure facilities for acquisitions, property purchases, expansion, refinancing, working capital, equipment and other strategic investments.
But there is no universal £1 million business loan.
One company might borrow £1 million against commercial property.
Another might raise it against the strength of recurring cash flow.
A third could use its debtor book, machinery or other business assets.
Another transaction might require several forms of finance working together.
This is why searching online for the "best £1 million business loan" can quickly become misleading.
Before comparing lenders, you need to understand what type of transaction you actually have.
Start with a commercial finance broker, not a loan application
This is particularly important for larger borrowing requirements.
A common approach is to speak to the company's existing bank first.
There is nothing inherently wrong with that.
The problem arises when the bank's answer is treated as the market's answer.
If your bank offers £1.5 million, how do you know another lender would not offer £2 million?
If it declines the transaction, does that mean the business is unfinanceable?
If it requests additional property security, would another lender structure the facility differently?
And if it quotes a competitive rate, are the covenants, fees and repayment terms equally competitive?
Until the wider lending market has been considered, it is difficult to know.
An experienced commercial finance broker can assess the requirement before applications are made and identify the lenders most likely to have appetite.
That can be particularly valuable at £1 million and above.
Why £1 million+ borrowing is different
The larger the facility, the more important credit analysis becomes.
A lender advancing £2 million needs to understand exactly how that money will be repaid.
That usually means looking beyond turnover and headline profit.
The lender may examine:
historic financial performance,
current management accounts,
cash generation,
existing borrowing,
debt serviceability,
customer concentration,
sector exposure,
management experience,
security,
and financial forecasts.
Depending on the transaction, it may also examine property values, asset values, contracts, recurring revenue or the financial position of an acquisition target.
The numbers need to work.
But the story behind those numbers also needs to make sense.
Turnover does not determine how much you can borrow
A business turning over £20 million does not automatically qualify for a larger facility than one turning over £8 million.
Margins matter.
Cash conversion matters.
Existing debt matters.
A £20 million turnover business producing £400,000 of operating profit may have considerably less borrowing capacity than an £8 million company producing £1.5 million.
Lenders ultimately need repayment capacity.
This is why a broker will usually want to understand the financial position before discussing specific lenders.
The objective is to establish what level of borrowing the business can realistically support.
Be very clear about what the £1 million is for
Purpose matters enormously in commercial lending.
There is a difference between borrowing £1 million to purchase machinery expected to increase production and borrowing £1 million because the business has experienced unexplained cash flow problems for the last eighteen months.
The amount is identical.
The credit proposition is not.
Lenders generally want to understand how the capital changes the business.
Does it generate additional revenue?
Reduce costs?
Acquire an asset?
Complete an acquisition?
Refinance expensive debt?
Create working capital?
Purchase commercial premises?
The clearer the commercial rationale, the easier it becomes to structure the funding appropriately.
You may not actually need a conventional business loan
This is another reason speaking to a broker early can be valuable.
The borrower may ask for a £2 million business loan.
After examining the requirement, a different structure could make considerably more sense.
If the money is being used to purchase commercial premises, a commercial mortgage may be appropriate.
If it is being used for machinery, asset finance could preserve more working capital.
If cash is trapped in unpaid customer invoices, invoice finance may provide a revolving source of liquidity.
If the company is acquiring another business, acquisition finance could involve senior debt, asset-backed lending and vendor finance.
If substantial equity exists within existing commercial property, refinancing may provide another route.
The product should follow the purpose.
Not the other way around.
Why lender appetite matters more than lender size
Businesses naturally gravitate towards familiar banking names.
For straightforward transactions, the existing bank may indeed be the right lender.
For more complicated borrowing, familiarity can become unnecessarily restrictive.
The UK commercial finance market includes high-street banks, challenger banks, specialist lenders, asset-based lenders, private credit providers and alternative funders.
Different lenders want different transactions.
One may have significant appetite for manufacturing.
Another may understand healthcare.
Another may be particularly competitive on property-backed transactions.
Another may prefer recurring-revenue businesses.
A lender's appetite can also change over time.
That is one of the principal advantages of using a commercial finance broker.
The value is not simply having a long list of lender contacts.
It is knowing where a £1 million+ transaction belongs in the market today.
How your application reaches credit matters
A large commercial finance application should not look like a speculative request for money.
It should read like a coherent credit proposition.
The lender should be able to understand:
who is borrowing,
what the business does,
how it has performed,
why the money is required,
how much is being requested,
how it will be repaid,
what security is available,
and what happens if performance is weaker than forecast.
This is where experience on the lending side of the table becomes particularly useful.
Business owners naturally emphasise opportunity.
Credit teams examine opportunity alongside risk.
A broker who understands both perspectives can help structure the application around the questions the lender is likely to ask.
Poor presentation can weaken a strong business
Consider a profitable company seeking £2.5 million to expand.
The underlying transaction may be entirely financeable.
But the lender receives outdated accounts, no current management information, an unexplained forecast and a two-paragraph email saying the business needs £2.5 million for growth.
Credit now has to reconstruct the transaction itself.
That creates friction.
Compare that with an application clearly explaining historic performance, current trading, the investment requirement, projected financial impact, proposed repayment and downside sensitivities.
Same business.
Same £2.5 million requirement.
Very different lending conversation.
Good presentation does not make an unfinanceable transaction financeable.
It helps ensure a financeable transaction is properly understood.
Forecasts need to survive scrutiny
If the loan depends on future growth, lenders will want to understand the assumptions behind it.
Suppose turnover is expected to increase from £8 million to £12 million over two years.
Why?
Has a new contract been won?
Is production capacity increasing?
Are additional locations opening?
Is the forecast based on an acquisition?
Or has somebody simply applied an optimistic growth percentage to last year's revenue?
Lenders do not expect forecasts to be perfect.
They do expect them to be explainable.
For larger loans, sensible downside modelling can also strengthen the proposal.
What happens if sales are 10% below forecast?
Can the company still service the debt?
That headroom matters.
Security can materially change your options
A business seeking more than £1 million may have several assets capable of supporting finance.
Commercial property is the obvious example.
But machinery, receivables and other assets may also have funding value.
Offering security can potentially increase borrowing capacity or improve pricing because it changes the lender's risk position.
That does not mean every available asset should automatically be offered.
Security has value to the borrower too.
Giving one lender a wide debenture and charges over multiple assets could affect your ability to raise further finance later.
A broker should therefore consider the security structure as part of the wider transaction.
The question is not simply:
"What security will get this approved?"
It is:
"What security is appropriate for the facility without unnecessarily restricting the business?"
Personal guarantees may enter the conversation
Depending on the lender, business, facility and security available, directors may be asked to provide personal guarantees.
The existence and extent of those guarantees can differ materially between lenders.
This is another area where borrowers should look beyond the headline rate.
A slightly cheaper facility requiring substantially greater personal exposure may not automatically represent the stronger offer.
Terms need to be compared as a package.
Independent legal advice may also be required where guarantees or significant security arrangements are involved.
Don't approach every lender at once
This is a surprisingly common mistake.
If one lender is good, surely approaching fifteen lenders must be better?
Not necessarily.
A £1 million+ transaction should be targeted.
Different lenders should be approached because there is a reason to believe the deal fits their appetite.
Blanketing the market can create confusion and duplicate credit searches or applications without materially improving the outcome.
It can also make a transaction appear distressed if it has circulated widely without progressing.
A broker should be able to identify an appropriate lender strategy rather than simply distribute the proposal everywhere.
More applications do not automatically create more options.
Better-targeted applications do.
What if your bank has already declined the loan?
Do not immediately submit the same application elsewhere.
First establish why it was declined.
There is an enormous difference between:
"This business cannot support £2 million of debt"
and:
"This particular lender does not want this type of transaction."
Perhaps the bank was uncomfortable with the sector.
Perhaps there was insufficient security.
Perhaps leverage was too high.
Perhaps the proposed repayment period was too short.
Perhaps the application itself failed to explain the transaction properly.
A commercial finance broker can review the decline, determine whether the issue is structural or lender-specific and decide whether the proposal should be changed before another lender sees it.
Sometimes the solution is another lender.
Sometimes it is another structure.
A broker can create genuine negotiating leverage
This becomes increasingly important as the loan size increases.
Suppose two lenders are interested in providing a £3 million facility.
Now there is a meaningful comparison.
Rate.
Arrangement fee.
Term.
Amortisation.
Security.
Covenants.
Personal guarantees.
Early repayment charges.
Speed.
Flexibility.
The existence of another credible lending option can also strengthen the borrower's negotiating position.
Without alternatives, you are negotiating with the only lender willing to fund the transaction.
With alternatives, you are choosing between competing structures.
Those are very different positions.
A small pricing difference becomes meaningful at £1 million+
Cost matters more as the facility grows.
A relatively modest difference in interest rate or lender fees can translate into substantial sums over the life of a multi-million-pound facility.
But the reverse is also true.
Focusing too heavily on a marginal pricing difference can lead a borrower towards the wrong structure.
Imagine one lender is slightly cheaper but requires aggressive capital repayments.
Another charges more but gives the business greater cash flow headroom.
If the company is borrowing specifically to accelerate growth, preserving liquidity may be worth considerably more than the headline saving.
Finance should be assessed by its overall commercial effect.
Speed and certainty have value too
Sometimes a business does not have six months to complete a funding process.
An acquisition has an agreed completion timetable.
A property purchase is progressing.
Equipment needs ordering.
An existing facility is approaching maturity.
In those circumstances, the lender most likely to deliver becomes important.
The lowest indicative rate from a lender that cannot complete within the required timeframe may be practically worthless.
An experienced broker should understand which lenders can realistically deliver against the timetable.
This is particularly valuable when transactions contain several moving parts.
Prepare before you need the money
The strongest time to approach lenders is rarely when the business has three weeks of cash remaining.
Large commercial facilities take time.
Financial information needs gathering.
Structures need considering.
Lenders need approaching.
Credit approval may be required.
Security needs documenting.
Valuations may be necessary.
Lawyers may become involved.
If you know the business will require £1 million or more in six months, beginning the conversation early creates options.
Time improves negotiating power.
Urgency tends to reduce it.
What should you prepare for a £1 million+ finance application?
The exact information will depend on the transaction, but businesses should expect to provide a robust financial and commercial picture.
That may include:
Historic company accounts
Up-to-date management accounts
Bank statements
Cash flow forecasts
Existing borrowing details
Details of assets and security
Information on directors and management
A clear explanation of the funding requirement
Evidence supporting future projections
Details of major customers or contracts where relevant
The proposed repayment strategy
For acquisitions or property transactions, considerably more information may be required.
The objective is not to create paperwork for the sake of it.
It is to give the lender enough information to make a confident credit decision.
Why use a commercial finance broker for a £1 million+ loan?
Because at this level, access to money is only part of the problem.
You need to know how much the business can realistically borrow.
You need the right funding structure.
You need to understand which lenders currently have appetite.
You need the transaction presented properly.
You need terms compared beyond the headline rate.
And, where possible, you want lenders competing for a strong transaction rather than the business relying on one option.
A good commercial finance broker should improve each of those stages.
They should also be willing to challenge the original request.
Perhaps £1.5 million is enough.
Perhaps £2 million is achievable.
Perhaps the business should borrow against an asset rather than cash flow.
Perhaps two facilities will produce a better structure than one.
Or perhaps taking additional debt at all is not the right decision.
That is where brokerage becomes advice rather than introduction.
Seven-figure borrowing deserves a seven-figure approach
Securing a £1 million+ business loan is not simply about finding a lender prepared to say yes.
The facility needs to work after completion.
The business still needs cash.
It still needs flexibility.
It may need to borrow again.
And management still needs enough headroom to deal with the unexpected.
The best outcome is therefore not necessarily the largest loan or the lowest advertised rate.
It is a facility that provides the capital required, at an acceptable cost, with a structure the business can comfortably support.
At Otium Partners, we combine more than 30 years of lending and commercial finance experience with relationships across UK banks, challenger banks, specialist lenders and alternative finance providers.
For businesses seeking £1 million or more, we can assess the transaction before it reaches the lending market, identify appropriate funding structures, approach relevant lenders and negotiate the proposal through to completion.
If your business is considering a seven-figure funding requirement, contact Otium Partners before approaching the market to discuss what could realistically be achieved.