Can You Get a Business Loan With Existing Debt?

If your business already has loans, overdrafts or credit cards, you might assume that getting another business loan is off the table.

In reality, that’s often not the case.

Many UK small businesses successfully secure new finance even with existing debt – sometimes to fund growth, and sometimes to consolidate and simplify what they already owe.

In this guide, we’ll explain:

Whether you can get a business loan with existing debt
What lenders look at
When debt consolidation makes sense
And how to improve your chances of approval

The Short Answer: Yes, It is Often Possible

Having existing business debt does not automatically disqualify you from getting another loan.

UK lenders understand that:

Most established businesses use finance at some point
Debt can be part of normal cash flow management
Consolidation can actually reduce financial risk

What matters is how manageable your current debt is, not whether it exists.

What Counts as “Existing Debt”?

When lenders assess your application, they’ll usually look at things like:

Business loans (secured or unsecured)
Overdrafts
Credit cards
Merchant cash advances
Asset finance agreements
HMRC Time to Pay arrangements
Director’s loans linked to the business

Having one or more of these isn’t unusual – especially for businesses trading for two years or more.

What Lenders Really Care About

Rather than focusing on debt alone, lenders typically assess affordability and stability.

1. Cash Flow

Can your business comfortably meet repayments after covering existing commitments?

Consistent income often matters more than headline profit.

2. Debt-to-Income Balance

Lenders look at how your total repayments compare to:

Monthly turnover
Net profit
Available surplus cash

High-cost or short-term debt can sometimes weaken this – which is where consolidation comes in.

3. Payment History

Have you:

Kept up with repayments?
Avoided defaults or CCJs?
Managed HMRC arrangements sensibly?

A strong repayment track record works in your favour.

4. Time Trading & Business Structure

Most lenders prefer:

UK limited companies
Trading for 24+ months
Stable or improving performance

When a Business Loan With Existing Debt Makes Sense

1. Debt Consolidation

One of the most common reasons businesses take new finance.

Consolidation can:

Combine multiple repayments into one
Reduce overall monthly outgoings
Replace short-term or high-cost debt
Improve cash flow visibility

It’s not about borrowing more — it’s about borrowing smarter.

2. Refinancing Expensive Finance

If you took quick or short-term funding in the past, you may now qualify for:

Lower rates
Longer terms
More predictable repayments

This is especially common as businesses mature.

3. Funding Growth Despite Existing Commitments

Some businesses carry debt responsibly and still:

Invest in staff or equipment
Expand premises
Smooth seasonal cash flow

In these cases, lenders look at the bigger picture, not just the balance sheet.

When Existing Debt Can Be a Problem

Existing debt may limit your options if:

Repayments are already stretched
Debt is largely short-term or high-interest
There are recent defaults, CCJs or arrears
Cash flow is inconsistent or declining

That doesn’t always mean “no” but it may affect:

Loan size
Interest rate
Whether consolidation is recommended first

How to Improve Your Chances of Approval

If your business has existing debt, these steps can help:

Prepare clear, up-to-date bank statements
Know exactly what you owe and to whom
Avoid taking new short-term credit before applying
Be honest, lenders will see it anyway
Consider consolidation rather than adding another repayment

Working with a broker can also help match you with lenders comfortable lending in these situations.

Is Consolidation Right for Every Business?

Not always.

Debt consolidation isn’t about kicking the can down the road, it should:

Reduce pressure on cash flow
Improve clarity and control
Fit realistically within your business’s finances

A good adviser will tell you when it makes sense and when it doesn’t.