Learn: business lending

A short-term business loan is one way to cover a cash-flow gap, but it is not the only way, and it is not always the cheapest. Before your company borrows, it is worth knowing the main alternatives so you can pick the right tool for the job. This is a neutral overview — none of these is universally better, and the right choice depends on your situation.

Business bank overdraft

An overdraft attached to your business bank account lets you spend beyond your balance up to an agreed limit, and you usually pay interest only on what you use. It is flexible and well suited to small, short, unpredictable gaps that you clear quickly.

The catches: arranged overdrafts can be harder to obtain than they once were, the bank can often reduce or withdraw the facility, and unarranged overdraft costs can be high. If you have one, it is frequently the cheaper option for a brief dip. We compare the two directly in bank overdraft vs short-term business loan.

Business credit card

A business credit card suits smaller, recurring purchases and can be cost-effective if you repay the balance in full each month, since many cards offer an interest-free window on purchases. Used that way, the credit can effectively be free.

The risk is carrying a balance: interest on revolving card debt mounts up, and it is easy to let a short-term convenience become a long-term cost. A card is a poor choice for a sum you cannot clear quickly.

Invoice finance

If your business is owed money by customers, invoice finance lets you raise cash against unpaid invoices rather than waiting for them to be paid. A provider advances a proportion of the invoice value up front and releases the rest, minus their charge, when the customer pays.

It can work well for businesses with reliable but slow-paying customers, turning money you are already owed into money you can use now. The cost depends on the provider and the arrangement. We look at it alongside short-term borrowing in invoice finance vs short-term loan.

Grants and government-backed schemes

Depending on your sector, location and stage, your business may be eligible for a grant or a government-backed scheme — money that, in the case of a true grant, you do not repay. These are competitive and come with eligibility conditions, but free or subsidised funding is always worth checking before you take on debt.

The reliable starting point is gov.uk, which lists business finance support, grants and the Start Up Loans scheme. Start with the official source rather than third-party sites, and be wary of anyone charging a fee to "find" you a grant.

Other routes worth a thought

Depending on the situation, you might also consider negotiating longer payment terms with suppliers, asking customers to pay sooner, a director's loan into the company if funds are genuinely available, or asking HMRC about a Time to Pay arrangement for tax owed. Each has trade-offs, but several cost little or nothing.

Where a short-term loan fits

Against this backdrop, a short-term business loan like ours is best seen as one tool among several — useful when the gap is genuinely short and defined, the money to repay is reliable, and the alternatives above do not fit or cannot move quickly enough. It is, honestly, more expensive than an overdraft or a card paid off in full, so it earns its place only when speed and certainty matter and a cheaper option is not available in time.

If, after weighing these up, a short-term loan is the right fit, you can see the amounts, terms and costs we currently offer on our business loans page. If a cheaper option fits better, use it — we would always rather you chose the right tool than simply the quickest one.

See also: Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained, Your business credit score: how it works and how to improve it.

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"Bridging loan", "term loan" and "credit facility" are often used loosely, as if they were interchangeable. They are not. Each is built for a different kind of need, and choosing the wrong one can cost you money or leave a problem unsolved. Here is each in plain terms, and where our own products sit.

Term loan

A term loan is the most familiar shape of borrowing: you receive a lump sum up front, then repay it in instalments over a fixed period — the "term" — until it is cleared. The amount, the term and the repayment schedule are agreed at the outset, so you know from day one what you will pay and when.

Term loans suit a defined, one-off need with a known cost — buying a piece of equipment, funding a specific project — where you want predictable repayments over months or years. The defining feature is that once it is repaid, it is gone; to borrow again you take out a new loan.

Bridging loan

A bridging loan is short-term borrowing designed to "bridge" a temporary, well-defined gap — typically the gap between needing money now and having money arrive soon. It is meant to be repaid quickly, once the expected funds materialise, rather than carried over a long period.

For a business, a classic use is bridging a cash-flow gap: you have invoices due to be paid, but you need to cover stock or a supplier before they land. A bridging loan covers the short interval and is then repaid. Because it is short-term and usually unsecured for smaller sums, it is expensive relative to a long-term facility — it is a tool for a short, specific gap, not for ongoing funding. If you are weighing it up, read when not to take a short-term business loan honestly first.

Credit facility

A credit facility — often a revolving or running-credit facility — works differently again. Rather than a single lump sum, you are given access to a pre-agreed limit you can draw on, repay, and draw on again as you need to, much like an overdraft. You typically pay for what you actually use.

The advantage is flexibility: a facility suits recurring or unpredictable short-term needs, where you do not want to apply for a fresh loan each time. The distinction between a one-off loan and a revolving facility is set out in running credit vs a one-time loan.

Where our products fit

Our live product is a short-term Business Bridging Loan: £50 to £500 over 14 to 84 days, repaid weekly or fortnightly. It is a bridging loan in the sense above — a small, short facility to cover a specific, temporary cash-flow gap for your company, repaid on a clear schedule. Every figure (amount, term, total amount payable, total cost of credit and a simple annualised rate) is on your Key Information Sheet (KIS) before you sign.

We are also introducing a running-credit facility as a second product. Think of it as the credit-facility model described above — a limit you can draw on and repay as you need — but it is being introduced rather than available to everyone today, so please do not assume it is open to you yet. For what is currently on offer, always check our business loans page, which shows the amounts, terms and costs we actually provide right now.

Choosing the right shape

Match the product to the problem. For a one-off purchase with a known cost over a longer period, a term loan fits. For a short, specific gap you expect to close soon, a bridging loan fits. For recurring, unpredictable short-term needs, a facility fits. Getting the shape right is as important as getting the price right — and for a short gap, our bridging loan is built for exactly that.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Business credit reference agencies explained, Your business credit score: how it works and how to improve it.

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When your company applies for credit, the lender will usually check its file with one or more business credit reference agencies. These agencies are different from the consumer ones that hold your personal credit history, and the distinction matters. Here is who the main agencies are, what they do, and how your company can check its own file.

What a business credit reference agency does

A business credit reference agency (CRA) collects information about companies and turns it into a credit file and a commercial credit score. Lenders and suppliers use that score to judge how risky it is to extend credit to the business. The file draws on public records — including Companies House filings such as accounts and director information — along with trade payment data, county court judgments, and other signals about how the business behaves. Many files also carry a suggested credit limit, which is the agency's view on how much credit the company can safely take on.

Lenders use these files to help decide whether to lend, how much, and on what terms. Suppliers use them to set trade-credit terms. A stronger file generally means easier access to credit on better terms.

The main UK business credit reference agencies

Three names come up most often for UK businesses:

• Experian Business — maintains commercial credit files and a commercial delinquency score, drawing on payment performance and public data.
• Creditsafe — widely used for company credit reports and scores, often by suppliers and credit teams checking who they trade with.
• Equifax Business — provides commercial credit reporting and scoring alongside its consumer arm.

These are the agencies we use when we run a business credit check on the company applying. Note that each agency holds its own data and uses its own model, so a company can score differently with each. There is no single universal business score.

How they differ from personal (consumer) CRAs

Personal, or consumer, credit reference agencies hold information about individuals — your personal borrowing, repayments and defaults. Business CRAs hold information about companies. The two are separate systems with separate files.

This matters for directors. When your company borrows from us, the borrowing is recorded against the company's credit picture, not your personal consumer file. We do run an identity and anti-money-laundering check on you as director, but the loan itself does not appear on your personal credit report. We set this out in will applying for a Credicorp loan affect my credit file.

One nuance is worth knowing. For very small businesses, some commercial scoring also looks at information about the directors, because a micro-company's risk is closely tied to the people running it. Even so, the company's own trading record is the heart of a business file.

How your company can check its own file

You can — and should — see what the agencies hold about your business. Each of the main UK business credit reference agencies offers a way for a company to access its own commercial credit report, sometimes free and sometimes via a paid or subscription service. Checking your own file does not harm your score.

When you review it, look for: out-of-date company details, accounts that should have been filed, county court judgments (and whether any have been satisfied), and the payment-performance data suppliers have reported. If something is wrong, you can ask the agency to correct it. Keeping the file accurate and up to date is one of the most direct ways to support your company's score over time — we go into the practical steps in your business credit score: how it works and how to improve it.

Why this is worth your time

Your company's credit file affects more than loan decisions — it influences supplier terms, trade credit limits, asset leasing, and even some tender and contract awards. Because three different agencies may hold three slightly different pictures, it is worth checking each one rather than assuming they agree. A few minutes spotting an error or a missing filing can make a measurable difference to how your business is seen by everyone who extends it credit.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business finance options: a quick tour.

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There is no single best way to fund a business. The UK market offers several kinds of finance, each suited to a different need. Here is a plain tour so you can place any one option, including ours, in context.

Common types of business finance

• Term loan: a lump sum repaid over an agreed period. Good for defined, one-off needs.
• Revolving or flexible facility: an arrangement you draw against as needed. Good for variable working capital.
• Invoice finance: borrowing against unpaid invoices to release cash tied up in your sales ledger.
• Asset finance: funding specific equipment or vehicles, often secured on the asset itself.
• Overdraft: a buffer attached to a business bank account for short, small swings.
• Equity: selling a share of the business for investment, with no repayment but a loss of ownership.

Where Credicorp fits

Credicorp provides short-term lending to UK limited companies and LLPs through two products, Credicorp Flex and Credicorp Slice. These suit working-capital and defined-purpose needs over shorter horizons. They are not a substitute for long-term investment finance or equity.

Choosing well

Match the finance to the need: short-term tools for short-term gaps, longer or equity funding for long-term growth. Borrowing short to fund something permanent rarely ends well. If you are unsure which category your need falls into, talk it through with your accountant first.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Can business finance help bridge a short-term cashflow gap? and How to budget loan repayments into your cash flow.

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Birmingham anchors the West Midlands, the UK's largest regional economy outside the capital, with a deep base of manufacturing, trade, and professional services. Credicorp lends to limited companies and LLPs trading across Birmingham and the wider region, for genuine business purposes. We do not lend to individuals or sole traders.

The local picture

The region's heritage in manufacturing and engineering remains a defining feature, from automotive supply chains to precision components, where firms carry significant material and stock costs ahead of payment. The city's growing professional and financial services district around Colmore Row and Brindleyplace adds a layer of project-based service businesses. A strong logistics and distribution sector, helped by the region's central position and motorway network, runs on tight cash cycles, and a busy construction and trades scene works to staged payment terms.

How we tend to help

• Engineering and component firms funding materials against confirmed contracts.
• Logistics and distribution companies covering operating costs between invoices.
• Trades and contractors bridging the gap created by staged or retention payments.

What to keep in mind

Credicorp Flex and Credicorp Slice are short-term products for working capital and defined needs, not long-term investment. As with every agreement we make, the borrower is your company, no personal guarantee is taken from directors, and the full terms and cost appear in your offer before you commit. Because this is exempt business lending, it sits outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply.

See also: Business lending in Manchester: a quick guide, Business lending in Glasgow and Can business finance help bridge a short-term cashflow gap?.

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Manchester has one of the most diverse company economies outside London, and the funding needs of its businesses are just as varied. Credicorp lends to limited companies and LLPs registered to trade across Greater Manchester, for genuine business purposes. We do not lend to individuals or sole traders.

The local picture

The city's economy leans heavily on a few strong pillars. Professional and digital services cluster around the city centre and MediaCity, where agencies, software firms, and consultancies often need working capital to cover payroll between project milestones. Advanced manufacturing and engineering across the wider conurbation carry stock and equipment costs that fall due before customer invoices land. A large hospitality, retail, and events scene rides pronounced seasonal swings, from summer footfall to the Christmas trade.

How we tend to help

• Project-based service firms bridging the gap between delivering work and being paid for it.
• Manufacturers and wholesalers funding stock or materials ahead of confirmed orders.
• Seasonal trades smoothing the dip between busy periods.

What to keep in mind

Our products, Credicorp Flex and Credicorp Slice, are short-term tools. They suit timing gaps and defined needs, not long-term capital projects, for which other finance fits better. Whatever the sector, the agreement is with your company, no personal guarantee is taken, and the full cost and terms are set out in your offer before you commit. These agreements sit outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply.

See also: Business lending in Birmingham, Business lending in Glasgow and Business lending in Manchester.

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"Bad credit" stops a lot of directors before they even apply. It does not have to. The honest answer is that a less-than-perfect credit history rarely closes the door on its own, because a score is one input — not the whole decision. This guide explains the difference between your company's credit file and your own, what actually counts against an application and what does not, the "refer" route for borderline cases, and how a clean record from here rebuilds your standing over time.

Two credit files, not one

The single most important thing to understand is that your company and you as a director have separate credit files, and they are not the same thing.

• Your company credit file is held by business credit reference agencies and reflects the company's own record — how it pays suppliers and lenders, its Companies House filings, any county court judgments, and how long it has traded. We cover this in how a business credit score works and business credit reference agencies explained.
• Your personal consumer credit file is held by Experian, Equifax and TransUnion and reflects your own borrowing as an individual.

Because we lend to the company, it is the company we assess. We run a business credit check on the company and an identity check on the signing director, but the borrowing is the company's. The loan is not recorded as a personal debt on your own consumer file, so it does not sit there affecting your personal score. That separation is the foundation of everything below.

What actually counts — and what does not

When you ask "can I get a business loan with bad credit?", the real question is which kind of "bad credit" you mean, because they are not weighted equally.

What can count against a company application:

• Active, unresolved problems on the company — an unsatisfied CCJ, overdue Companies House filings, or a pattern of paying suppliers and lenders late.
• A bank-account picture that shows the borrowing genuinely is not affordable right now — that is an affordability question, not a "score" one.

What generally does not count, or counts for much less:

• A director's personal credit history. Because there is no personal guarantee, a director's own consumer credit standing is not the basis on which we lend. A bruised personal file does not, by itself, mean the company cannot borrow.
• A thin or short company file. A newer business has little history, which is not the same as a bad history — it is one of the most common reasons an application is referred rather than declined.
• A single old, satisfied issue. Where a problem has been put right — a CCJ paid and marked "satisfied", a late filing brought up to date — it weighs far less than something still outstanding.

Borderline? The 'refer' route

Plenty of applications do not land as a clean yes or a clean no — and that is exactly what the refer route is for. A referral is not a decline. It means the automated assessment landed near the line — often because the company file is thin, a figure needs confirming, or we have not yet been able to read the business bank account — so a person takes a closer look. Frequently all that is needed is a little more information, such as connecting the business bank account through read-only Open Banking. The outcome may be an offer, an offer for a smaller amount, or — only if the borrowing genuinely is not affordable — a decline with no obligation. If a company with an imperfect file is going to be able to borrow, the refer route is usually how. See what 'refer' means and what happens next.

How on-time repayment rebuilds your standing

Here is the part that turns "bad credit" from a permanent label into a starting point. When a company borrows a sensible amount and repays on schedule, it demonstrates — with evidence rather than promises — that it can comfortably carry that level of credit. That demonstrated affordability is exactly what our assessment is built to recognise, so over time a larger amount can become available to a business with a strong record. Where we report to business credit reference agencies, on-time settlement is recorded against the company, which supports the company's wider credit standing too.

This is not a fixed "next tier" that unlocks automatically, and it never overrides affordability — if the company's cash-flow picture tightens, the amount available can go down as well as up. But a clean, on-time record is the clearest signal a business can give, and it is the most reliable way to rebuild from a weak position. See how on-time repayment grows your available amount.

No personal guarantee — so your home is not on the line

This matters most precisely when credit is imperfect. We do not take a personal guarantee. The company is the borrower, the company is liable, and if the company cannot repay we pursue the company — not you. We never take a charge over your home or personal savings, and the borrowing is not a personal debt on your own credit file. So applying does not put your family's finances behind the loan, and an imperfect personal file is not the reason a sound company is turned away. You can read the full position in what is a personal guarantee — and why we don't take one.

The takeaway

Can your company get a business loan with bad credit? Often, yes — because we assess what the business can comfortably afford now, treat your company file and your personal file as the separate things they are, and never take a personal guarantee. Active, unresolved company problems and genuine unaffordability are what count; a bruised personal file or a thin trading history usually do not close the door. Borderline cases go to the refer route rather than straight to no, and a clean on-time record from here is what rebuilds standing and grows what is available next time. Every figure you would repay is set out in full on your Key Information Sheet (KIS) and Business Loan Agreement before you sign. See what we currently offer on our business loans page.

Because this is lending to a company for business purposes, it sits outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001 and is not covered by the Financial Ombudsman Service or the FSCS.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business finance options: a quick tour.

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Credicorp offers two products to UK limited companies and LLPs: Credicorp Flex and Credicorp Slice. They are built for different patterns of need, and choosing well starts with understanding how they are shaped rather than comparing prices.

Credicorp Flex

Flex is designed around flexibility. It suits businesses whose funding needs move with their trading, where you want the ability to draw against an agreed arrangement rather than take a single fixed lump. Because it accrues over the intervals you actually use, the cost tracks how you use it. It tends to fit companies with variable, ongoing working-capital needs.

Credicorp Slice

Slice is structured more like a defined facility taken for a specific purpose over an agreed term. It suits businesses that know what they need, when they need it, and want a clear, predictable shape to the agreement from the outset.

How to choose

• Think about whether your need is one-off and defined, or ongoing and variable.
• Consider how much predictability you want in your repayments.
• Look at the figures in each offer side by side; the actual rate, term, and total payable are always in your own documents.

Neither product is universally better. The right one is the one that matches how your company actually trades and spends. If you are unsure, our team can talk through both before you commit, and you will see the full terms of either before you sign.

See also: Bridging loan, term loan, or credit facility: what's the difference?, Business finance options: a quick tour, Credicorp Flex and Credicorp Slice: our two products explained.

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If you have ever seen an eye-watering APR on a short-term loan and wondered whether it could really be that expensive, you have run into a genuine quirk of how APR works. APR is a useful tool for some products and a misleading one for others. Here is the difference between daily interest and APR, why APR overstates the cost of very short-term borrowing, and what we show instead.

What APR is meant to do

APR — the Annual Percentage Rate — is designed to let you compare the cost of credit on a single, standardised, yearly basis. It rolls interest and certain charges into one annualised figure. For products you hold for a year or more — a mortgage, a multi-year loan, a credit card balance carried over time — APR does its job well, because the product genuinely lasts around a year or longer.

Why APR overstates very short-term borrowing

The problem appears when you take a figure designed for a year and apply it to something that lasts a few weeks. APR annualises the cost — it projects what the borrowing would cost if it ran, and compounded, for a whole year. But a short-term bridging loan does not run for a year. It runs for days or weeks and is then repaid.

Consider the shape of it without quoting any rate: a modest amount of interest charged over, say, a few weeks is a small cash sum. Annualise that short period — compound it as if it repeated all year — and the percentage looks enormous, even though the actual pounds you pay are limited and known in advance. The high APR is an artefact of the maths, not a reflection of what leaves your bank account. For a product measured in weeks, an annual percentage is simply the wrong unit. We unpack the concept further in what APR means on your loan.

What we show instead

Because our Business Bridging Loan is short-term — £50 to £500 over 14 to 84 days — we do not quote a consumer APR, which would distort rather than clarify. Instead we show you the figures that actually tell you what the borrowing costs:

• the amount borrowed;
• the term (how many days, and how many repayments);
• the total amount payable — every pound you will repay in total;
• the total cost of credit — the difference between what you borrow and what you repay; and
• a simple annualised rate, for a like-for-like reference point, shown without the compounding distortion of APR.

All of this appears on your Key Information Sheet (KIS) and again in the Business Loan Agreement, alongside the full repayment schedule, before you sign anything. The most honest comparison for short-term borrowing is the total cash cost: look at the total amount payable and the total cost of credit, and you know exactly what you are paying.

This does not make the loan cheap

Showing the cost honestly is not the same as the cost being low. Short-term unsecured borrowing is expensive relative to a bank facility, and we will not dress that up. The point of showing total cost of credit rather than a distorted APR is so you can see the real number and make a clear-eyed decision — not so the loan looks cheaper than it is. To see how the figures are built up, read our worked example in how interest is calculated.

How to compare honestly

When you compare short-term options, compare the total cost in pounds over the actual period you will borrow, not the headline annual percentages. APR is the right tool for a year-long product and a misleading one for a two-week one. Ask any lender for the total amount payable and the total cost of credit for your exact amount and term — that is the figure that tells you the truth, and it is the figure we put in front of you before you commit.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained.

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Amortisation describes the process of paying off a loan gradually over its term through a series of scheduled repayments, until the balance reaches zero. The word comes from the idea of bringing a debt down to nothing over time.

How it works

On an amortising agreement, each repayment does two jobs: it covers the cost of the borrowing for that period and it reduces the outstanding balance. Early on, more of each payment tends to go toward the cost of credit; as the balance shrinks, more goes toward clearing what you owe. By the final scheduled payment, the balance is cleared.

Why it matters

• It gives you a predictable path to clearing the debt, rather than an open-ended balance.
• It shows that part of every payment is genuinely reducing what you owe, not just servicing the cost.
• An amortisation schedule lets you see, payment by payment, how the balance falls.

In context

Not every facility amortises in the same way. A flexible arrangement that you draw against can behave differently from a fixed-term loan with a set repayment schedule. Your own agreement and statements show exactly how your balance reduces over time. If the shape of your repayments is ever unclear, ask us to walk you through your schedule.

See also: Glossary: debenture, Glossary: default (business lending), What is amortisation?.

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A debenture is a document by which a company grants a lender security over its assets. In UK business lending, it is one of the common ways a secured lender protects its position, giving it a claim over company property if the agreement is not honoured.

What it covers

A debenture can create a fixed charge over specific named assets, a floating charge over a changing pool of assets such as stock or debtors, or a combination of both. It is registered at Companies House so that others can see the lender's interest. Because it is granted by the company, it relates to company assets, not the personal assets of directors.

Why it matters

• It tells you whether finance is secured, and over what.
• A registered charge affects the order in which creditors are paid if the company fails.
• Existing debentures can affect a company's ability to grant security to a new lender.

In context

Whether any security applies to your agreement is set out in your own documents, and you should understand it before signing. A debenture is distinct from a personal guarantee: a debenture sits over company assets, whereas a personal guarantee reaches an individual's own property. If you are unclear what security, if any, attaches to a facility, ask the lender to explain it in plain terms.

See also: Glossary: amortisation, Glossary: default (business lending), What is a debenture?.

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In lending, a default means the borrower has failed to meet the terms of the agreement, most often by not making repayments as agreed. It is a defined event under the contract, not just an informal description of being behind.

Default versus a missed payment

A single late or missed payment is not always a default. Most agreements set out what has to happen, and over what period, before the account is treated as in default. Default is a more serious stage, usually reached after attempts to bring the account back on track have not succeeded.

Why it matters

• It can affect how the lender manages and reports the account.
• It can influence your company's credit profile and future access to finance.
• It can change what the lender is entitled to do under the agreement.

How to avoid it

The single most useful thing you can do is talk to your lender early. If your company is heading toward difficulty, raising it before payments are missed gives far more room to agree a workable path than waiting until the account has already fallen behind. At Credicorp, hardship is handled differently from ordinary arrears, and we would always rather have that conversation sooner. Your own agreement sets out exactly what default means for your account.

See also: Glossary: default, Glossary: debenture, Glossary: amortisation.

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The cost of borrowing for your company is not a fixed number — it is set by the lender based on a combination of risk, product type, and term length. Understanding how pricing works helps you compare offers accurately.

Risk-based pricing

Lenders assign a risk grade to each application based on factors such as trading history, cash flow, sector, and the size of the facility relative to revenue. A company with a long, clean track record and strong cash flow will typically be offered a lower rate than a younger company with patchy income. This is not arbitrary — the lender is pricing to cover expected losses across its entire book of borrowers.

Product structure affects the cost

Different products carry costs in different ways. A Business Loan charges interest over a fixed term — the total cost of borrowing is known from day one. A revolving facility such as Credicorp Flex charges only on what you draw and for how long you hold it, so the effective cost depends on how you use it. Credicorp Slice uses a flat fee of 6% rather than an interest rate at all, which makes it straightforward to compare with a trade discount or early-payment offer from your supplier.

What the rate does and does not include

Always check whether arrangement fees, draw-down fees, or early repayment charges are included in the headline rate or quoted separately. A lower headline rate with a large arrangement fee can cost more overall than a slightly higher rate with no upfront charge. For short terms in particular, fees can represent a significant proportion of total cost.

We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.

See also: How business lending affordability is assessed, How risk is assessed in business lending.

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The price of a business loan is not a single fixed number that applies to everyone. It is shaped by a set of factors specific to your company and the finance you are taking. This guide explains the moving parts in general terms so you can read your own offer with confidence.

What influences the price

• Your company's credit profile: how your business has handled credit and obligations over time.
• The amount and term: how much you borrow and over what period both feed into the figures.
• The product: Credicorp Flex and Credicorp Slice are structured differently, so they price differently.
• The wider picture: the strength and stability of your trading as it appears in your application.

Why two companies differ

Because pricing is risk-based, two businesses applying on the same day can be offered different terms. That is normal and expected. The offer reflects the lender's view of that specific agreement, not a comparison between you and anyone else.

Where to find your numbers

We do not quote a rate, fee, or cost on this page, because the only figures that matter are the ones in your own documents. The rate, any charges, the term, and the total amount payable are all set out in your offer and your Key Information Sheet before you commit. Read those carefully, and ask us if anything is unclear. You should always be able to see the full cost of the agreement before you sign.

See also: What credit score do I need for a business loan?, Slice vs a business credit card, What is a loan term and how is mine set?.

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Risk assessment is the process by which a lender estimates the probability that a company will repay its debt on time and in full. It sits at the heart of every approval decision and directly influences the terms offered.

Financial risk indicators

Lenders look at metrics such as revenue trend, gross margin, net profit, and the ratio of current assets to current liabilities. A business with growing revenues but shrinking margins may be flagged as higher risk than one with stable, modest growth. Lenders also look at concentration risk: if 70% of your revenue comes from a single client, a loss of that contract would be a significant event.

Sector and market risk

Some sectors are structurally more volatile than others — construction, hospitality, and retail, for example, tend to carry higher default rates in economic downturns. A lender operating across many sectors manages this by adjusting pricing or lending limits for higher-risk industries. This does not mean companies in those sectors cannot borrow; it means the terms reflect the broader pattern of risk in that market.

Structural risk mitigation

The structure of a product is itself a risk-management tool. Short terms reduce the window of uncertainty — a 90-day loan carries far less exposure than a five-year term loan, because a lender has a reasonable view of what will happen in the next three months. Credicorp Flex's revolving structure means the company draws only what it needs, reducing the chance of over-borrowing against a limit that does not reflect real demand.

We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.

See also: How a business lending decision is actually made, What lenders look for in a business borrower.

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When your company applies for a business loan or credit facility, the lender runs a structured assessment — not a gut feeling. The decision combines financial data, trading evidence, and the specific purpose of the borrowing.

What the lender reviews first

The starting point is almost always your company's filed accounts or management accounts, bank statements, and Companies House record. Lenders want to see that the business is actively trading, generating revenue, and meeting its existing obligations. A clean filing history and consistent turnover signal a company that is well-managed.

How the application is assessed

Underwriters look at three broad areas: capacity (can the business service the debt from cash flow?), character (does the company have a track record of repaying on time?), and capital (what does the balance sheet show?). For a short-term product like a Business Loan or a revolving facility like Credicorp Flex, the assessment focuses heavily on near-term cash flow rather than long-range projections.

The decision outcome

Most decisions result in an approval, a conditional approval subject to further information, or a decline. A conditional approval might ask for up-to-date bank statements or a clarification on an unusual transaction. Lenders are not obliged to explain a decline in full, but many will give a broad reason so you can address it before reapplying.

We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.

See also: What lenders look for in a business borrower, How business lending affordability is assessed.

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Affordability in business lending means something different from affordability in a personal mortgage. It is an assessment of whether your company's operating cash flow can comfortably cover the repayments on new debt, alongside any obligations the business already carries.

Debt service cover ratio

The most common metric lenders use is the debt service cover ratio (DSCR): the ratio of your company's net operating income to its total debt repayments in the same period. A ratio above 1.0 means income exceeds repayments; lenders typically want to see a margin of comfort above that threshold. For a short-term loan or a drawdown from Credicorp Flex, the calculation focuses on monthly rather than annual figures.

What counts as income

Lenders look at the money your company actually collects, not just what it invoices. Recurring, contractual income carries more weight than one-off project fees. If your business has predictable direct debits or subscription revenue coming in, that strengthens your affordability position considerably.

Stress-testing

A responsible lender will consider what happens if revenue dips by ten or twenty percent. Can your business still meet repayments without defaulting? This stress-test is not designed to be punitive — it protects your company from taking on debt that would become unmanageable at the first sign of a slow month.

Affordability is assessed at company level. There is no assessment of director personal income or personal assets.

We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.

See also: How risk is assessed in business lending, How business borrowing costs are priced.

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When you apply for business finance, the lender has to form a view: can this company repay comfortably, and on what terms? Understanding how that view is formed helps you present your business well and read your offer with context.

What gets looked at

• The company itself: its registration, structure, and trading history as a limited company or LLP.
• Credit behaviour: how the business has handled credit, suppliers, and obligations over time.
• Affordability: whether the repayments fit the way the business actually generates cash.
• Purpose: what the finance is for, and whether it is a genuine business purpose.

The role of data and judgement

Modern lending combines data with judgement. A lender may look at patterns over time, the context around any past difficulties, and the overall shape of the business, not just a single score. The aim is a decision that is fair to you and sustainable for both sides.

What helps your application

• Up-to-date, accurate company records at Companies House.
• A clear, honest explanation of what the money is for.
• Evidence that repayments fit your trading, not just your hopes.

A decline is not a verdict on your business. It usually means the agreement, as applied for, did not fit at that moment. Sometimes a different amount, term, or product changes the picture. You will always see the terms of any offer in full before you decide.

See also: Lender vs broker: what is the difference?, What is responsible business lending?, How business loan pricing works.

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You can settle your loan early at any time, and doing so usually saves you money. When you settle early there may be an early-settlement charge — here is exactly what it is, when it applies, when we waive it, and why settling early is still worth it.

The plain meaning

If your company chooses to repay the loan ahead of schedule, an early-settlement charge of up to 28 days' interest may apply. It is calculated from your own loan's figures — never invented — and it is the only charge for settling early. The exact amount, if any, is always shown in your settlement figure before you confirm, so you decide with the number in front of you.

When we waive it

We waive the early-settlement charge automatically in many cases. You will not pay it if your company is in financial difficulty, if settling early would not actually leave you better off, or in recognition of a consistent record of good standing. Because the decision is made from your own circumstances and recorded, the figure you see in your settlement quote already reflects any waiver — there is nothing to claim or ask for.

Why early repayment still saves you money

On our loan, interest accrues over the time you actually hold the money. The total amount payable shown on your Key Information Sheet (KIS) assumes you run the loan for the full term. If you settle sooner, you stop the remaining interest from accruing — so even after any early-settlement charge of up to 28 days' interest, you usually pay less than the original total. The earlier you settle, the more of the remaining interest you save. Our detailed walk-through is in early repayment: how and what you save.

How it works, in practice

Suppose a company takes a short-term loan over the full term but finds it can clear the balance partway through, when an expected payment arrives early. It asks for a settlement figure, which shows the balance, the interest accrued to the settlement date, and any early-settlement charge. The company pays that figure, the loan closes, and it has stopped the interest it would otherwise have paid over the rest of the term.

This is an illustration of the principle, not a quote — your figures are on your KIS and in your settlement quote, and the exact amounts depend on your loan and when you settle.

Getting a settlement figure

To repay early, you ask us for a settlement figure: the exact amount needed to clear the loan in full as at a given date, with any early-settlement charge (or waiver) already applied. Because interest stops accruing once the loan is settled, the figure is tied to the date you pay. The process is set out in how do I get a settlement figure. Always settle against an up-to-date figure rather than guessing, so the loan is cleared cleanly.

What it does not mean

To be clear about the limits: an early-settlement charge does not mean the borrowing is free, and settling does not erase interest that has already accrued for the time you have held the money. You still pay back what you borrowed plus interest up to settlement, plus any early-settlement charge that applies. What settling early does is stop the future interest — which, for most loans, is the larger number.

The takeaway

Settling early is still a borrower-friendly move: if the company can clear the loan early, it usually should, because it stops the remaining interest, and the early-settlement charge is capped at 28 days' interest. If you think you may be able to settle ahead of schedule, ask us for a settlement figure — the exact cost, including any charge, is in front of you before you commit.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained.

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A stronger business credit score means easier access to finance, better terms, and more generous supplier credit. Most of what moves it is within your control, and it responds to steady habits rather than one-off tricks. This guide sets out the practical steps that improve your company's score over time — and how a healthier score helps when your business borrows from us. If you want the background first, read your business credit score: how it works.

The steps that move your score

There is no shortcut that fixes a score overnight, but the actions below are the ones that count, in roughly the order of impact. Do them consistently and the file improves on the agencies' next refresh cycle.

1. File at Companies House on time. Submit your annual accounts and confirmation statement by their deadlines, every year, and keep your registered details — directors, registered office, SIC code — accurate. Late or overdue filings are public and visible to every agency, and they read as a clear warning sign. A late-filing penalty stays on the public record even once you have caught up, so the goal is never to be late in the first place. Set a calendar reminder a few weeks before each deadline, or have your accountant file early.
2. Keep the business bank account healthy. A current account that stays in credit, avoids unauthorised overdrafts, and isn't peppered with returned or bounced payments paints a picture of a business in control of its cash flow. Agencies and lenders increasingly look at how the account actually behaves, not just headline turnover. Avoid living permanently at the bottom of an overdraft, keep some headroom on any facility, and clear returned direct debits quickly — a routinely maxed-out facility reads as strain, while a little buffer reads as control.
3. Pay suppliers and any facility on time. Settling supplier invoices and any borrowing on or before the due date is the single most influential habit there is. Suppliers report "days beyond terms" to the agencies, so consistent on-time payment quietly supports your score while a pattern of late payment pulls it down. If you have borrowing with us and you can see a payment is going to be missed, tell us early — see the early settlement charge explained for how settling sooner reduces what you pay, and reach out before a payment falls due rather than after.
4. Register with the business credit reference agencies. Make sure your company is properly listed with the main UK agencies and that the data they hold is right. Claim or access your company's file, check it for errors — out-of-date details, accounts that should show as filed, county court judgments (and whether any are marked satisfied) — and ask the agency to correct anything wrong. Checking your own file does not harm your score. The main agencies and how to access your file are covered in business credit reference agencies explained.
5. Separate personal and business finances. Run the company's money through a dedicated business bank account, pay company costs from it (not your personal card), and avoid blurring director's-loan transactions with everyday trading. A clean separation gives the agencies a clear, complete trading record to score — and it means the company builds its own credit identity rather than leaning on yours. It also makes your accounts simpler to file accurately and on time, which feeds straight back into the first step.

A few more habits that help

Beyond the core steps, these support the score over the longer term:

• Build a track record. Using modest trade credit and repaying it reliably establishes a positive history, which matters most for a newer company with a thin file.
• Deal with CCJs promptly. If the company has a county court judgment, paying it and having it marked "satisfied" reads far better than leaving it outstanding.
• Keep details consistent. Use the same registered company name, number and address across Companies House, your bank, and supplier accounts, so the agencies can match all the data to one clean file.
• Check regularly, not just before you borrow. Reviewing your file every few months means you spot and fix an error long before it costs you a decision.

How a better score helps when you borrow from us

When your company applies, we run a business credit check as part of how we assess it. The score is one important input — not the whole decision: we also look at the company's turnover and bank-account history to judge whether the borrowing is genuinely affordable. A stronger, cleaner file makes that assessment smoother, and a healthy on-time record with us can grow what is available to the business next time. We set out how we weigh things in what we look at when we decide.

Treat your business credit score as a long-term asset of the company. Build it with on-time filings, on-time payments and a clean, well-run business account, keep personal and business money apart, and check your file regularly so you can fix problems before they cost you. The same habits that lift the score are the ones that make your business easier — and cheaper — to lend to.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business finance options: a quick tour.

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Before your company signs a loan agreement with us, we give you a Key Information Sheet (KIS) — a plain-English summary of the borrowing so you can see exactly what you are agreeing to. It is the single most useful document to read carefully before you commit. Here is a walk through its sections and what to check in each.

What the KIS is for

The KIS is the pre-contract summary: it sets out the key terms and costs of your loan in clear language, before you sign the binding Business Loan Agreement. Its purpose is to let you make an informed decision with the important numbers in front of you, rather than buried in contract clauses. For a broader overview of what it covers, see what the Key Information Sheet covers.

Read it in full, not just the headline figure. The whole point is that everything you need is on one sheet.

Who is borrowing, and from whom

Check the parties first. The borrower should be your company — the limited company or LLP — with its correct name and company number, because we lend to the business as a body corporate, not to you personally. Confirm the lender's details are right too. Getting the parties correct matters: the company is the one taking on the debt.

The core financial figures

This is the heart of the sheet. Look for, and check, each of these:

• Amount borrowed — the sum advanced to the company. Confirm it is the amount you actually need and asked for.
• Term — how long you have to repay (ours fall within 14 to 84 days), and how many repayments there are.
• Total amount payable — every pound you will repay in total, principal plus interest. This is the number that tells you the full size of the commitment.
• Total cost of credit — the difference between what you borrow and what you repay; in other words, what the borrowing costs you in cash terms.
• Simple annualised rate — a reference rate shown without the compounding distortion of a consumer APR.

We deliberately show the total cost of credit rather than a consumer APR, because APR overstates the cost of very short-term borrowing — the reasoning is in daily interest vs APR. The honest comparison is the total cash cost, so anchor on the total amount payable and the total cost of credit.

The repayment schedule

The KIS sets out your repayment schedule: how much each repayment is, how often (weekly or fortnightly), and on what dates. Check that the amounts and dates are ones the company can genuinely meet, alongside its other commitments. If the dates clash with when money comes in, that is something to address before you sign, not after.

To understand how the interest behind these figures is built up, our worked example in how interest is calculated walks through an illustrative case step by step.

Costs, rights and what happens if things change

The sheet will also cover the practical terms: how repayments are collected, what happens if a payment is missed, and your rights — including that you can repay early and save interest. An early-settlement charge of up to 28 days' interest may apply if you settle early, though we waive it in many cases; the exact amount is shown in your settlement figure before you confirm. It is worth checking how a missed payment is handled so there are no surprises, and noting that settling early still reduces what you pay.

Before you sign

Treat the KIS as your decision document. Read every section, make sure the parties and amounts are correct, confirm the total amount payable is one the company can afford, and check the repayment dates against your cash flow. If anything is unclear or looks wrong, ask us before signing — never sign a document you do not fully understand. Once you are satisfied, the Business Loan Agreement will carry the same figures through into the binding contract. To see what we currently offer before you even get to a KIS, visit our business loans page.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained.

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When you look for business finance you will meet two very different kinds of company: lenders and brokers. They do different jobs, and knowing which one you are talking to helps you understand who actually holds your agreement.

What a lender does

A lender provides the money itself. It assesses your application, makes the credit decision, sets out the offer, and holds the agreement. When you repay, you repay the lender directly. Credicorp is a lender. The agreement is between your company and us, and we manage your account from start to finish.

What a broker does

A broker does not lend its own money. It introduces you to one or more lenders, often comparing options on your behalf, and may earn a commission for the introduction. The agreement you sign is still with whichever lender ultimately funds you, not with the broker.

Why it matters to you

• Who decides: with a lender, the lender makes the decision. A broker only forwards your details.
• Who you pay: you repay the lender, never the broker.
• Who to contact: for account questions, you contact the lender that holds the agreement.
• Costs: a broker may charge a fee or take commission; a direct lender does not have that layer.

Because Credicorp lends directly, there is no introducer between you and us. You apply to us, we decide, and you deal with us throughout the life of the agreement.

See also: Direct lender vs broker: which should you use?, How lenders assess a business loan application, Understanding the total cost of credit.

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Many business lenders ask a director to sign a personal guarantee. That document makes the individual personally responsible for the debt if the company cannot pay. Credicorp does not do this. We do not take personal guarantees from directors. The agreement is with the company, and it stays with the company.

What a personal guarantee normally does

A personal guarantee pierces the separation between a director and their company. If the business defaults, the lender can pursue the individual's own assets, which can include savings and, in some arrangements, the family home. It turns a business debt into a personal liability.

What it means that we do not take one

• The borrower is the limited company or LLP, not you as an individual.
• We do not ask directors to put personal assets on the line for the company's borrowing.
• The company's obligations stay within the company.

What still applies

Not taking a personal guarantee does not mean obligations vanish. The company is still fully responsible for repaying under the agreement, and directors retain their ordinary legal duties to run the company properly. Acting fraudulently, or continuing to trade improperly while insolvent, can carry personal consequences entirely separate from our agreement.

The point of this approach is straightforward: business finance should sit with the business. If you ever see a request for a personal guarantee on a Credicorp agreement, it is wrong, and you should query it with us before signing anything.

See also: What is a personal guarantee — and why we don't take one, What is a personal guarantee (and why Credicorp does not take one)?, Why we only lend to limited companies and LLPs.

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"Regulated" and "unregulated" are among the most consequential words in business lending, and among the least explained. Whether a loan is regulated decides which legal protections you get if something goes wrong. Here is the dividing line, what protections apply on each side, and why we publish our terms openly even though our lending is not regulated as consumer credit.

The dividing line

Most UK consumer-credit regulation exists to protect individuals. The key test is in Article 60B (read with the definitions in Article 60L) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (FSMA RAO 2001). In broad terms, a credit agreement is regulated when it is made with an individual or a "relevant recipient of credit".

A limited company or LLP is not an individual — it is a body corporate, a separate legal person. So a loan made to a company for business purposes generally falls outside that consumer-credit regime. This is not a "Consumer Credit Act exemption" — that statute governs consumer credit, which a loan to a company is not. The point is simpler: a company is not the kind of borrower the consumer rules are designed to protect.

It is not just about the borrower

Being a company is necessary, but the purpose of the borrowing matters too. The lending sits outside the consumer regime where it is for a wholly or predominantly business purpose. That is why you sign a declaration confirming the loan is for the business. A company borrowing for a director's personal spending would not fit the picture — and we would not lend for that.

What protections apply — and what don't

On a regulated consumer-credit agreement, an individual borrower gets a suite of statutory protections and, importantly, access to the Financial Ombudsman Service (FOS) if they have an unresolved complaint, plus certain Financial Services Compensation Scheme (FSCS) protections in defined circumstances.

On an unregulated business loan like ours, those consumer protections do not apply. This product is not covered by the FOS, the FSCS, or the Business Banking Resolution Service (BBRS). If you have a complaint, it goes through our internal complaints process; if it cannot be resolved that way, the final escalation is the courts, not an ombudsman. We explain exactly what those bodies are, and why business loans usually fall outside them, in what FOS and FSCS cover.

We say this plainly because you deserve to know what is and is not behind the borrowing. The absence of the consumer safety net is a real difference between an unregulated business loan and a personal loan.

Why we publish transparency anyway

Not being regulated as consumer credit does not mean operating in the dark. We take the view that fewer external protections make our own transparency more important, not less. So we voluntarily set out our terms, our costs and how we treat customers in difficulty, and we show every figure — amount borrowed, term, total amount payable, total cost of credit, a simple annualised rate and the full repayment schedule — on your Key Information Sheet (KIS) before you sign. You can see how we approach this on our transparency page.

We also follow fair processes for customers who fall into difficulty, signpost free independent debt advice, and let you verify the company itself on the public register. None of that is required of an unregulated lender; we do it because it is the right way to lend.

What to do with this

If your company is considering a business loan, check whether it is regulated, and if it is not, understand which protections you are giving up. Then judge the lender on how openly it behaves anyway: are the full costs shown before you sign, is there a clear complaints route, and are customers in difficulty treated fairly? Regulation is one safeguard; a lender's conduct is another, and on an unregulated loan the second matters all the more.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained.

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When you compare business loans, one of the first distinctions you will meet is "secured" versus "unsecured". It sounds technical, but it comes down to a single question: if the loan is not repaid, what can the lender take? The answer shapes how much you can borrow, how much it costs, and how much is at risk. Here is what each means, and where our own lending sits.

What "secured" means

A secured business loan is backed by collateral — an asset the lender can take and sell if the loan is not repaid. The asset might be commercial property, vehicles, machinery, or another item of value the business owns. Because the lender has something to fall back on, secured loans usually allow larger sums, longer terms and lower interest rates.

The trade-off is risk. If the business cannot repay, the lender can enforce against the asset. For property-backed lending, that can mean losing premises the business depends on. Secured lending suits larger, longer-term borrowing where the business has assets it is comfortable pledging.

What "unsecured" means

An unsecured business loan is not tied to a specific asset. There is no collateral for the lender to seize, so the lender relies on its assessment of the business's ability to repay. Because the lender carries more risk, unsecured loans tend to be smaller, shorter, and priced higher than equivalent secured borrowing.

That higher price is the honest cost of not pledging an asset. It is worth weighing against the alternatives before you borrow — our overview of alternatives to short-term lending sets out options such as overdrafts, cards and invoice finance.

Where the personal guarantee comes in

Here is the part many directors miss. An unsecured business loan is not automatically risk-free for the people behind the company. Many lenders that offer "unsecured" loans still require a personal guarantee from one or more directors. A personal guarantee is a separate promise: if the company cannot repay, the director becomes personally liable, and the lender can pursue their personal assets — potentially including their home.

So an "unsecured" loan with a personal guarantee can still put your personal finances on the line. When you compare lenders, always check not just whether collateral is required, but whether a personal guarantee is.

Where our loan sits

Our Business Bridging Loan is unsecured, and we do not take a personal guarantee. We lend to your company as a separate legal person, and the debt stays with the company. We do not ask you to pledge an asset, and we do not ask you to sign a personal promise to repay if the company cannot. If the company defaults, we pursue the company — not your house, and not your personal savings.

That structure does not make the loan cheap. Unsecured short-term credit is expensive compared with a bank facility, and we say so plainly. What it does mean is that the risk is contained to the business that took the borrowing. You can see the amounts, terms and costs we currently offer on our business loans page, with every figure repeated on your Key Information Sheet (KIS) before you sign.

Choosing between them

If you need a large sum over a long period and you have an asset you are willing to pledge, a secured loan will usually be cheaper. If you need a smaller amount over a short period and you do not want to risk an asset, unsecured borrowing may suit — but read the small print for a personal guarantee, and make sure the company can afford the repayments. The right answer is whichever genuinely fits the size, length and purpose of your need, at a cost the business can comfortably carry.

See also: Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained, Your business credit score: how it works and how to improve it.

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When comparing business finance, it is tempting to fix on a single rate. A more useful question is: how much will this agreement cost in total over its life? The total cost of credit is the figure that tells you that, and it is the one worth focusing on.

What goes into the total cost

The total cost of credit brings together everything you pay beyond the amount you borrow. Depending on the agreement that can include interest accrued and any applicable charges. Your own documents set out exactly which of these apply to you and what they add up to. We do not quote figures here because only your offer carries the numbers that bind.

Why it beats a single rate

• A headline rate alone does not tell you the cash you will part with.
• Two agreements with different structures can be compared honestly on total payable.
• It reflects the term, not just the price per period.

Where to find your numbers

Before you sign, your Key Information Sheet and offer set out the total amount payable in clear terms. Read that figure, sit with it, and ask whether your trading can comfortably support it. With Credicorp Flex, the way cost accrues depends on how you draw against the arrangement, so your statements show what you have actually incurred.

The honest test is simple: if you cannot see the full cost of an agreement before signing, do not sign it. You always should be able to with us.

See also: Where to find the cost of credit before you sign, Daily interest vs APR: which is the honest comparison?, Glossary: total cost of credit.

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When your company borrows from us, you confirm that the loan is for a "wholly or predominantly business" purpose. It is a short phrase that carries real weight: it is part of what keeps the lending outside the consumer-credit regime, and it defines what the money can and cannot be used for. Here is the test, with examples, and the declaration you sign.

What the test means

"Wholly or predominantly business" means the borrowing must be entirely, or mostly, for the purposes of your business — not for personal or household spending. "Wholly" is straightforward: the whole loan is for the business. "Predominantly" recognises that life is not always tidy: if the main purpose is genuinely business, an incidental personal element does not automatically take it out of scope. But the centre of gravity must clearly be the business.

This is not a box-ticking formality. The business-purpose test, together with the borrower being a company, is what places the lending outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001. We explain that framework in regulated vs unregulated business loans. The test exists precisely because consumer protections are for personal borrowing, and this is not personal borrowing.

Examples of a business purpose

Borrowing that would normally count as wholly or predominantly business includes:

• buying stock or raw materials for the business to sell or use;
• covering a short cash-flow gap before customer invoices are paid;
• paying suppliers, business rent, or business bills;
• repairing or replacing equipment, tools or vehicles the business uses;
• funding a specific, time-limited business opportunity.

The common thread is that the money serves the trading needs of the company.

Examples that would not qualify

Borrowing that is really for personal or household use does not fit, even if a company technically takes it out. That would include funding a director's personal spending, a family holiday, personal debts unrelated to the business, or household costs. If the true purpose is personal, dressing it up as a company loan does not change its nature — and we would not lend for it.

The borrower also has to be the right kind of entity. Our lending is to a company or LLP — a body corporate — borrowing for its own business. The purpose test and the borrower test work together.

The declaration you sign

Because the purpose is so central, we ask you to confirm it explicitly. As part of taking out the loan, you sign a business-purpose declaration — a statement that the borrowing is wholly or predominantly for the purposes of your business. You can read about it in business purpose declaration.

This is a meaningful statement, not a rubber stamp. By signing, you are confirming the loan is for the business, which is one of the foundations on which the agreement rests. You should only sign if it is true. If you are unsure whether your intended use counts, the honest course is to ask before you sign, or to choose a product designed for personal borrowing instead — but note that we lend only to businesses.

Why this protects you too

It can feel like extra paperwork, but the purpose test is not only about us. It keeps the product honest: it ensures our short-term business facility is used for business cash flow, the thing it is built for, rather than for personal spending where a different kind of product — and different protections — would be more appropriate. If your need is genuinely a business need, you are in the right place. If it is personal, a business loan is the wrong tool, regardless of who signs the form.

To see what we currently offer, and to check the amounts, terms and costs, visit our business loans page.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained.

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This is one of the most-searched questions in business borrowing, and the honest answer surprises people: with Credicorp there is no fixed minimum credit score you must clear to get a business loan. We do not run your company through a single number and stamp it pass or fail. We assess the business as a whole — how it trades, how its bank account behaves, and what its business credit file shows — and ask one practical question: can this company comfortably repay this amount on this schedule?

Why there is no single "minimum score"

A business credit score is genuinely useful, but it is one input, not a gate. It also is not a single standardised figure: each business credit reference agency uses its own scale and model, so the same company can score differently with Experian Business, Creditsafe and Equifax Business. There is no industry-wide threshold a company must beat. For how those ratings are built and why they differ, see how a business credit score works and business credit reference agencies explained.

Because the score is just one signal, a strong picture in one area can balance a weaker one in another. A healthy, well-run bank account can offset a thin or middling credit file; steady trading income can outweigh a quiet recent month. No single factor passes or fails on its own.

What we actually assess — the company, not a number

We assess the company, because the company is the borrower and we take no personal guarantee. The assessment draws on four things working together:

For the full picture of how these combine, read what information goes into a lending decision and what an affordability assessment looks at.

How we handle a thin or young company file

A newer company, or one that has not yet built much of a business credit history, does not have a "bad" file — it has a thin one. A short credit history is not an automatic decline. Where the file is light, the company's bank-account behaviour carries more of the weight: regular income, an account that is not constantly at its limit, and an absence of returned payments tell us a great deal that a young credit file cannot yet. This is exactly why connecting your business bank account by read-only Open Banking gives the most accurate, up-to-date view — and why a young company with a healthy account can still be approved. Provided the business has been trading long enough and the borrowing is genuinely affordable, a thin file is something we work with, not against.

The soft check does not mark the director's personal credit file

People worry that searching for a business loan will leave a footprint on their own credit record. It will not. We run a business credit check on the company, and the identity check we carry out on the director is a verification and anti-money-laundering step — not a personal credit search. We do not record this loan, or the application for it, against the director's personal consumer credit file with Experian, Equifax or TransUnion, and it will not show up when you next apply for a personal mortgage, card or loan.

So, what do you actually need?

Rather than a magic number, focus on the things that genuinely move a decision: a business that has been trading for at least six months, a UK business bank account run in a healthy way, borrowing for a genuine business purpose, and an amount that is comfortable against the company's cash flow. Get those right and a middling — or thin — credit score is rarely the obstacle people fear. If parts of the picture are weaker, we may offer less than you asked for rather than decline, and a clean repayment record can mean more becomes available over time.

Because this is lending to a company for business purposes, it sits outside FCA consumer-credit regulation under Article 60B of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, and is not covered by the Financial Ombudsman Service or the FSCS. For the principles behind how we assess, read how we lend.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business finance options: a quick tour.

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Lenders do not simply check whether your company is profitable — they build a picture of the whole business before committing funds. Understanding what they prioritise helps you present your application in the strongest way.

Trading history and stability

A business that has been trading for at least twelve months, with consistent or growing revenue, is significantly easier to underwrite than a brand-new company. Lenders want evidence that your company has operated through at least one full trading cycle and can demonstrate predictable income. Very young companies face higher scrutiny because there is less data to work with.

Cash flow health

Profitability and cash flow are not the same thing. A business can be profitable on paper but routinely run short of cash between invoices. Lenders focus on whether real money moves through your account in a pattern that can accommodate repayments. Bank statements are often the most important document in an application for a short-term facility.

Existing debt obligations

If your company already services a significant loan, finance lease, or overdraft, a new lender will factor that into their calculation. The question is not whether you have existing debt — most businesses do — but whether total repayments remain proportionate to your monthly income. Disclosing existing facilities accurately speeds up the assessment; lenders almost always find them anyway.

Purpose of the borrowing

A clear, credible purpose — bridging a gap before a known payment arrives, purchasing stock, covering a specific invoice via Credicorp Slice — is more reassuring than a vague request for general working capital. You do not need to justify every pound, but being able to explain the need simply works in your favour.

We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.

See also: How a business lending decision is actually made, Why trading history matters to business lenders.

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The Financial Ombudsman Service and the Financial Services Compensation Scheme are two pillars of consumer financial protection in the UK. Many people assume they cover all financial products. They do not. Here is what each one is, who they protect, and why a business loan to a company usually falls outside both.

What the FOS is

The Financial Ombudsman Service (FOS) is a free, independent service that resolves disputes between financial firms and their customers. If a customer has complained to a firm and is not satisfied with the outcome, eligible customers can ask the FOS to review the complaint. The FOS can direct a firm to put things right, and its decisions are binding on the firm if the customer accepts them.

The key word is eligible. The FOS covers regulated financial activities and a defined set of customers — principally consumers and certain small businesses, micro-enterprises and other defined groups, in relation to activities that fall within its jurisdiction. It is not an open door for every financial dispute.

What the FSCS is

The Financial Services Compensation Scheme (FSCS) is the UK's statutory "lifeboat". It pays compensation, up to set limits, when an authorised financial firm fails and cannot meet claims against it — for example, protecting deposits in a failed bank up to a cap. Like the FOS, the FSCS covers specific regulated activities and specific categories of claimant; it is not blanket cover for any money you might lose.

Why business loans usually fall outside both

Both schemes are built around regulated activity and, largely, around protecting individuals and certain small enterprises in defined circumstances. A loan made to a limited company or LLP for business purposes is generally not a regulated consumer-credit agreement at all, because a company is a body corporate rather than an individual, under Article 60B FSMA RAO 2001. We explain that line in full in regulated vs unregulated business loans.

Because the lending sits outside the consumer-credit regime, the consumer safety net built on top of it does not apply. To be clear about our own product: a Credicorp business loan is not covered by the FOS, is not covered by the FSCS, and is not covered by the Business Banking Resolution Service (BBRS). We are not FCA-authorised for consumer-credit lending, and we do not imply that any of these schemes stand behind this borrowing.

So what is your route if something goes wrong?

You are not without recourse — the route is just different. If you have a problem, you raise it through our internal complaints process. We take complaints seriously, investigate them, and aim to put things right where we have got something wrong. You can raise a complaint using our Make a Complaint form, and the step-by-step is in making a complaint: options and process.

If a complaint cannot be resolved through our internal process, the final escalation is the courts, rather than an ombudsman. That is a genuine difference from a regulated consumer loan, and we would rather you knew it up front than discovered it later.

Free help is still available

Separately from any complaint, if your business is struggling with repayments there is free, independent help. For the business, you can contact Business Debtline (businessdebtline.org), the Federation of Small Businesses (fsb.org.uk), or explore HMRC Time to Pay arrangements at gov.uk. If you, as a director, are struggling personally, free services such as StepChange (stepchange.org) and Citizens Advice (citizensadvice.org.uk) can help.

The bottom line

The FOS and the FSCS are valuable, but they are tied to regulated activity and defined claimants. A business loan to a company usually falls outside both. Knowing that lets you weigh the protections you do and do not have, and reminds you to choose a lender on how transparently and fairly it behaves — because on an unregulated loan, that is what you are relying on.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained.

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You will see the phrase "body corporate" in our agreements and across this site, and it is not just legal decoration. Whether the borrower is a body corporate or an individual decides which rules apply to the loan — including whether consumer-credit protections are in play. Here is what a body corporate is, and why the distinction shapes how we can lend.

What is a body corporate under UK law

A body corporate is an organisation that the law treats as a separate legal person, distinct from the people who own or run it. In practice, for our purposes, that means a limited company (registered at Companies House) or a limited liability partnership (LLP).

Because it is a separate legal person, a body corporate can do things in its own name: it can own property, enter contracts, sue and be sued, and — importantly here — borrow money. The debts of the company are the company's debts, not automatically the personal debts of its directors or members. That principle of separate legal personality is the cornerstone of how limited liability works.

Body corporate vs the individual behind it

Contrast this with a sole trader. A sole trader is not a separate legal person from the human running the business; in law, they are the same. So a loan to a sole trader is, legally, a loan to an individual.

A loan to a limited company or LLP is a loan to the body corporate. The director who signs does so on behalf of the company, not as the borrower. This is exactly why our product is built the way it is: we lend to the company, the company is liable, and we do not take a personal guarantee from the director. The borrowing belongs to the business.

Why it matters for regulation

Here is the part with real consequences. Most consumer-credit protection in the UK is built around lending to individuals. Under Article 60B (read with the definitions in Article 60L) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (FSMA RAO 2001), regulated credit agreements are essentially those made with an individual or a "relevant recipient of credit".

A body corporate is not an individual. So lending to a limited company or LLP for business purposes generally falls outside FCA consumer-credit regulation. This is not a "Consumer Credit Act exemption" — that statute governs consumer credit, which a loan to a company is not. The cleaner way to put it is that a company simply is not the kind of borrower the consumer regime is designed to protect. We explain the wider picture in regulated vs unregulated business loans.

The conditions still apply

Being a body corporate is necessary but not the whole story. The borrowing also has to be for a genuine business purpose. The lending sits outside the consumer regime only where it is for a wholly or predominantly business purpose, which is why you sign a declaration to that effect. A company borrowing for, say, a director's personal spending would not fit, and we would not lend for that.

What this means for you

If your business is a limited company or an LLP, it is a body corporate, and it can borrow in its own name. The upside is that the debt stays with the company and we take no personal guarantee. The trade-off is that the consumer-credit safety net — including the Financial Ombudsman Service and the FSCS — does not apply to this borrowing. We think that makes transparency more important, not less, which is why we publish our terms and costs openly and show every figure on your Key Information Sheet (KIS) before you sign. You can verify the company itself on the Companies House register (company number 16093826).

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained.

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A business loan is money borrowed by a business, and repaid with interest, to be used for business purposes. That sounds simple, but the detail matters: a business loan is legally and practically different from a personal or consumer loan, and the difference changes who is responsible for the debt, what protections apply, and how the borrowing is assessed. Below: what a business loan is, who can take one out, and how our own lending works.

Business loan vs personal loan

A personal (or consumer) loan is taken out by an individual for their own use — a car, a holiday, consolidating personal debts. A business loan is taken out for the needs of a business: buying stock, covering a gap before an invoice is paid, repairing equipment, or smoothing seasonal cash flow.

The purpose is not just a label. When the borrowing is genuinely for business, and the borrower is a company rather than an individual, the loan usually sits outside the consumer-credit rules that protect personal borrowers. That has real consequences, so it is worth understanding before you apply. We cover the test for what counts as a business purpose in what counts as a "wholly or predominantly business" purpose.

Who can borrow, and who is liable

Business loans can be offered to sole traders, partnerships, limited companies and limited liability partnerships (LLPs). Who can borrow depends on the lender. Some lenders advance money to the individual behind a sole-trader business; others lend only to incorporated businesses.

We lend to the company — a limited company or LLP — not to you personally. The borrower on the agreement is the business as a separate legal person, known as a body corporate. That distinction is the foundation of how our product is structured: the debt belongs to the company, and we do not take a personal guarantee from the director. In short, the company borrows, the company repays, and the company is the party named on the Business Loan Agreement.

What you typically agree to

Whatever the lender, a business loan agreement will set out a handful of core things: how much is borrowed, the term (how long you have to repay), how interest is charged, the total amount payable, and the repayment schedule. Before you sign anything, you should be able to see the full cost of credit in writing.

With us, those figures appear on your Key Information Sheet (KIS) — a plain-English summary — and again in the Business Loan Agreement itself. You see the amount borrowed, the term, the total amount payable, the total cost of credit, a simple annualised rate, and the full repayment schedule before you commit. We deliberately do not quote a consumer APR; we explain why in our article on what APR means on your loan.

Our business loan, specifically

Our live product is a short-term Business Bridging Loan of £50 to £500 over 14 to 84 days, repaid weekly or fortnightly. It is designed to bridge a short, defined cash-flow gap — not to fund long-term spending. Short-term borrowing of this kind is, in cost terms, expensive relative to a bank facility, so it suits a genuine short gap rather than an ongoing shortfall. For the amounts, terms and costs we currently offer, see our business loans page.

If you are weighing up whether this is the right tool at all, we would rather you read when not to take a short-term business loan first. A business loan is useful when it solves a clear, short problem and the company can comfortably afford the repayments. It is the wrong choice when it simply postpones a deeper shortfall.

The short version

A business loan is borrowing by a business, for the business, repaid with interest. Ours is made to your company as a body corporate, with no personal guarantee, and every figure is shown to you up front on your KIS. Understand the purpose, the cost and who is liable, and you will know whether a business loan is the right fit.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained.

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A personal guarantee is one of the most important things to check before your company borrows — and one of the easiest to overlook. It can turn a company debt into a personal one. Here is what a personal guarantee is in UK business lending, how lenders use it, and why we do not take one.

What a personal guarantee is in UK business lending

A personal guarantee is a separate, legally binding promise by an individual — usually a company director — to repay the company's debt if the company cannot. The borrower on the loan is still the company, but the guarantee sits alongside it as a form of security. If the company defaults, the lender can pursue the guarantor personally. Where more than one director signs, a guarantee is often "joint and several", meaning each guarantor can be pursued for the full amount, not just their share.

That is a significant shift in risk. Normally, the whole point of a limited company is that it is a separate legal person — a body corporate — and its debts are its own. A personal guarantee deliberately pierces that protection for one specific debt, exposing the director's personal assets, which can include personal savings and, in some cases, their home.

How other lenders use it

Personal guarantees are common in business lending, especially for "unsecured" loans. Because an unsecured loan has no asset behind it, lenders often manage their risk by asking a director to guarantee it personally. That is why a loan can be advertised as "unsecured" yet still put your personal finances on the line — the security is you. We explain that distinction in secured vs unsecured business loans.

Some lenders go further and pair a guarantee with a debenture or floating charge over company assets, layering security on top of security. When a personal guarantee is in place and the company fails to pay, the lender can demand the money from the guarantor, take court action against them as an individual, and enforce against their personal assets. Directors sometimes take out separate personal-guarantee insurance precisely because the exposure is real.

Why we do not take one

We do not take a personal guarantee. We lend to your company, the company is the borrower, and the company is liable for the debt. If the company cannot repay, we pursue the company — not you personally.

We made that choice deliberately. Our product is a short-term facility for the business, and we keep the risk where the borrowing is: with the business. It keeps the line between company and director clean, and it means a director is not putting their family's finances behind a short-term business loan. We assess affordability on the company itself — its turnover, bank-account history and business credit file — not on your personal income, which is consistent with not relying on you as a backstop.

What this means for directors

Because there is no personal guarantee, a director's personal assets are not on the line for this loan. We also do not record the loan on your personal consumer credit file — we run a business credit check on the company and an identity check on you, but the borrowing itself is the company's. You can read more in will applying for a Credicorp loan affect my credit file.

That said, "no personal guarantee" is not the same as "no consequences". The company is still fully responsible for repaying, and a default can affect the company's own credit standing and its ability to borrow in future. Directors also have separate legal duties to their company, and there are situations — quite apart from any guarantee — where a director can face personal liability, for example through wrongful trading. Those are general company-law matters, not part of our loan; if you want the wider picture, see can a director be personally liable.

The takeaway

A personal guarantee makes a director personally responsible for a company's debt. Many lenders require one even on unsecured loans. We do not. The borrowing is the company's, the liability is the company's, and the figures you will repay are set out in full on your Key Information Sheet (KIS) and in the Business Loan Agreement before you sign. When comparing offers, always ask whether a personal guarantee is required — it is one of the most consequential terms in any business loan. See what we currently offer on our business loans page.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business credit reference agencies explained.

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Responsible lending is not only a regulatory phrase. For a business lender operating in the exempt market, it is a standard we choose to hold ourselves to, because finance that a company cannot sustain helps no one.

What responsible lending means to us

• Affordability first: we look at whether your company can comfortably repay from its trading, not just whether it can be approved.
• Clear terms: you see the full cost, the term, and the structure before you commit, in plain language.
• No hidden surprises: the figures in your offer are the figures that apply.
• Right product, right need: we would rather steer you to the product that fits than push the one that sells.

Support if things get hard

Responsible lending does not end at the point of sale. If your company runs into difficulty, we want to hear from you early. Talking to us sooner gives more room to find a workable path than waiting until a payment is missed. Hardship is treated differently from ordinary account management.

What you can do

You are part of this too. Borrow only what serves a genuine business purpose, read your documents, and be honest with us about your position. Responsible lending works best when both sides are straight with each other. The exemption from the consumer-credit regime changes the rules around the agreement; it does not change our commitment to lending fairly.

See also: What protections apply when a loan is outside the FCA regime?, How difficulty support differs for business borrowers versus consumers and Our responsible lending standards.

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Business finance is not one-size-fits-all. The right product depends on whether you need a fixed sum for a specific purpose, ongoing access to a buffer, or a way to smooth out a large one-off cost. Here is how the three structures differ in practice.

Business Loan — fixed sum, fixed term

A Business Loan delivers a single lump sum to your company account, which you repay over an agreed short term in fixed instalments. The total cost is known from the outset. This suits purposes where you know exactly how much you need and when you will be able to repay — for example, purchasing equipment before a contract starts, or bridging a gap ahead of a known payment from a customer.

Credicorp Flex — revolving credit facility

A revolving credit facility gives your company a borrowing limit that you draw against, repay, and redraw as needed. You only pay for what you use and for the time you hold it. This suits businesses with irregular or seasonal cash flow where the need to borrow varies month to month. Rather than taking a single large loan and sitting on idle funds, you draw what you need when you need it and repay as cash comes in.

Credicorp Slice — bill spreading

Credicorp Slice is designed for a very specific situation: you have a single known bill that you would rather pay in instalments. Slice breaks that cost into three or four weekly payments and charges a flat 6% fee — no interest, no compounding, no variable rate. It is simple to compare against other options: if the cost of paying the bill early via a supplier discount exceeds 6%, Slice is likely the cheaper route.

We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.

See also: How business borrowing costs are priced, How business lending affordability is assessed.

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In the UK, lending to consumers is tightly regulated by the Financial Conduct Authority (FCA) under the consumer-credit regime. But not all lending is consumer lending. Where a loan is made to a business, for genuine business purposes, it can fall within an exemption from that regime. This is what people mean by the exempt business lending market.

Why the exemption exists

The consumer-credit rules are designed to protect individuals borrowing for personal reasons. A limited company taking finance to fund its trading is treated as a commercial party that does not need the same protections. Parliament drew that line so that genuine business borrowing is not weighed down by rules built for household credit.

How Credicorp fits

Credicorp is an exempt business lender. We lend only to UK limited companies and limited liability partnerships, and only for business purposes. We are the lender ourselves, not a broker who passes you on.

• We do not lend to individuals or sole traders.
• Our lending sits outside the FCA consumer-credit regime.
• That means the Financial Ombudsman Service and the Financial Services Compensation Scheme do not cover these agreements.

None of this removes our responsibility to lend fairly and transparently. It simply changes the regulatory framework around the agreement. The rest of this guide series explains what that means in practice.

See also: Regulated vs exempt business lending: what it means for you, Why doesn't the Financial Ombudsman Service apply to my complaint? and What protections apply when a loan is outside the FCA regime?.

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Because Credicorp lends to businesses for business purposes, our agreements fall outside the FCA consumer-credit regime. A common worry is that this leaves a company with no protection at all. That is not the case. Several frameworks still apply.

What does not apply

• The Financial Ombudsman Service does not handle disputes about these agreements.
• The Financial Services Compensation Scheme does not cover them.

We say this plainly because you should know it before you borrow, not afterwards.

What still protects you

• Contract law: the agreement is a binding contract, and we are held to its terms just as you are.
• Transparency before you sign: you receive a Key Information Sheet and an offer setting out the full cost and terms.
• Data protection: UK GDPR governs how we handle your information, with rights you can exercise.
• Our own conduct standards: we set out how we treat customers, including those in difficulty, and we hold ourselves to that.
• The courts: commercial disputes can ultimately be resolved through the legal system.

If something goes wrong

Start with our complaints process. We aim to resolve issues directly and fairly. The absence of the Ombudsman does not remove our duty to deal with you honestly and to put genuine mistakes right.

See also: What does it mean that Credicorp is an exempt business lender?, What is a \"body corporate\", and why it matters for lending and Why doesn't the Financial Ombudsman Service apply to my complaint?.

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We lend, so it might seem odd for us to write an article about when not to borrow from us. But a short-term business loan is a specific tool for a specific job, and using it for the wrong job can make a difficult situation worse. We would rather you borrowed only when it genuinely helps. This is an honest guide to when a short-term business loan is the wrong choice.

First, the honest part: it is expensive

Short-term, unsecured borrowing is expensive compared with a bank overdraft or a longer-term facility. That is the trade-off for speed and for not pledging an asset. Used well — to bridge a short, defined gap that genuinely pays off — that cost can be worth it. Used badly, the cost compounds the problem. Everything below flows from that single fact: borrow only when the benefit clearly outweighs the cost, and you can see that cost in full on your Key Information Sheet (KIS).

When a short-term loan is the wrong tool

• To plug an ongoing, structural shortfall. If the business loses money every month, a short-term loan does not fix that — it adds a repayment on top of an existing gap and postpones the reckoning. Short-term credit bridges a temporary gap; it cannot cure a permanent one.
• To repay other expensive debt by taking on more. Borrowing short-term to service other borrowing is a warning sign. It rarely reduces the total owed and often increases it.
• For a long-term or large purchase. Funding something you will use for years with borrowing you must repay in weeks is a mismatch. A longer-term product fits better — see bridging loan, term loan, or credit facility.
• When you are not confident you can repay on schedule. If the funds you are counting on to repay are uncertain, a missed repayment can affect the company's credit standing and add to the strain. Only borrow against money you are genuinely confident is coming.
• For personal or household spending. Our lending is for business purposes only, and you sign a declaration to that effect. If the need is personal, this is the wrong product entirely.

Questions to ask before you apply

A short, honest checklist:

• What exactly is the gap, and when will it close? If you cannot answer precisely, pause.
• Where is the money to repay coming from, and how sure is it?
• Can the company comfortably afford the repayments alongside everything else?
• Is there a cheaper option that would do the same job in time?
• Will this solve the problem, or just delay it?

Consider the alternatives first

Before taking short-term credit, it is worth checking whether a cheaper or more suitable option fits. An overdraft, a business credit card, invoice finance, or a government-backed scheme may suit better depending on your situation. We set these out neutrally in alternatives to short-term lending. None is universally better — the right answer depends on your need — but you should know they exist before you commit.

If you are already in difficulty

If the real situation is that the business is struggling, borrowing more is usually not the answer, and free help is available. For the business, Business Debtline (businessdebtline.org, 0800 197 6026) and the Federation of Small Businesses (fsb.org.uk) offer free advice, and HMRC Time to Pay (gov.uk) may help with tax. If you are struggling personally as a director, StepChange (stepchange.org) and Citizens Advice (citizensadvice.org.uk) are free. Seeking advice early is a sign of good management, not failure.

When it is the right tool

To be balanced: a short-term business loan can be a sensible choice when the gap is genuinely short and defined, the money to repay is reliable, the company can afford the repayments, and the cost is worth the benefit. If that describes your situation, you can see what we currently offer on our business loans page. If it does not, the most useful thing we can tell you is: not yet, or not this.

See also: Business credit reference agencies explained, Your business credit score: how it works and how to improve it, Business finance options: a quick tour.

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Trading history is the closest thing a business lender has to a track record. It tells the lender not just whether your company has made money, but whether it has survived setbacks, managed its obligations, and remained operational over time.

Why tenure signals stability

The first twelve to eighteen months are statistically the highest-risk period for any business. A company that has traded past that point, filed accounts, and maintained a bank account without serious disruption has already demonstrated a level of durability. Lenders use tenure as a proxy for operational resilience — not a perfect proxy, but a meaningful one. A company trading for three or four years with consistent bank activity is considerably easier to underwrite than one that is six months old with no filed accounts.

What consistent trading looks like

Lenders are looking for a pattern, not a peak. Consistent monthly credits to the business account, a stable or growing revenue line in accounts, and a predictable seasonal pattern (where applicable) are all positive signals. Erratic cash flow — large inflows followed by long gaps — requires more explanation, even if the annual total looks healthy.

How it affects the terms on offer

A company with a longer, cleaner trading history is likely to be offered a higher credit limit, a more competitive rate, or both. Lenders are not being arbitrary — they are reflecting the fact that more data reduces uncertainty, and reduced uncertainty reduces the risk premium they need to charge. If your company is relatively new, the most effective thing you can do is build a clean trading record before seeking a larger facility.

We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.

See also: What lenders look for in a business borrower, How business borrowing costs are priced.

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Business lending and personal credit may look similar on the surface — a company borrows money and repays it over time — but the two operate under fundamentally different rules, and the differences matter to every director who borrows on behalf of their company.

The regulatory boundary

Personal credit in the UK is regulated by the Financial Conduct Authority under the Consumer Credit Act 1974. Lenders in that market must follow strict rules around affordability, cooling-off periods, and mandatory disclosures. Business lending to limited companies and LLPs is outside that regime entirely. Lenders are assessed on FCA exemption criteria rather than full authorisation for consumer credit.

Who carries the obligation

In a business loan, the borrower is the company — a separate legal entity from its directors and shareholders. The loan does not appear on any director's personal credit file, and the director does not sign a personal guarantee with Credicorp. This is materially different from many high-street small business loans, where a personal guarantee from the director is standard. The company's ability to repay is assessed on the company's own merits.

Protections that do and do not apply

Because business lending sits outside the consumer-credit regime, the Financial Ombudsman Service and the Financial Services Compensation Scheme do not cover disputes or losses arising from these facilities. Businesses are expected to take independent advice where needed, and the contractual terms of the facility are governed by commercial contract law.

We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.

See also: Why trading history matters to business lenders, How a business lending decision is actually made.

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Credicorp lends exclusively to UK incorporated businesses: limited companies and limited liability partnerships (LLPs). We do not lend to individuals, and we do not lend to sole traders or ordinary partnerships. This is a deliberate boundary, not a temporary policy.

The legal reason

A limited company or LLP is a separate legal entity, distinct from the people who own or run it. It can borrow in its own name. Because our agreements are with these entities for business purposes, they sit within the exemption from the FCA consumer-credit regime. Lending to an individual or sole trader would generally pull the agreement into that regime, which is built for personal borrowing.

What this means in practice

• The borrower is the company, identified by its Companies House registration.
• The director applies on behalf of the company, not in a personal capacity.
• The agreement is a commercial one between two businesses.

If you are a sole trader

If you trade as an individual rather than through a company, our products are not available to you. That is not a judgment on your business; it simply falls outside what we are set up to do. Some sole traders choose to incorporate as a limited company for separate commercial reasons, but that is a decision to take with your accountant, not something to do solely to access finance.

Keeping this boundary clear protects both sides: you know exactly who the borrower is, and we lend within the framework we are built for.

See also: What is a \, What is the exempt business lending market?, Does Credicorp lend to sole traders or individuals?.

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Working capital is the everyday money a business needs to keep operating: the funds that cover stock, wages, suppliers, and bills while you wait for customers to pay you. It is one of the most important figures in any trading company, even though it rarely makes the headlines.

Why the gap appears

Most businesses spend before they earn. You buy materials, pay staff, and fulfil an order weeks before the invoice is settled. That timing difference creates a gap. A profitable company can still run short of cash simply because money goes out before it comes back in.

How finance helps

Short-term business finance exists to bridge that gap. Used well, it smooths the timing mismatch so you can take on work, hold the right stock, or cover a seasonal dip without stalling. The point is to unlock activity you can already see coming, not to plug a permanent hole.

• Good use: funding a confirmed order, covering a known seasonal swing, taking a supplier discount for early payment.
• Riskier use: covering ongoing losses, or borrowing without a clear path to repay from trading.

The honest test

Before borrowing for working capital, ask whether the finance is bridging a timing gap that will close, or masking a deeper cash problem. If it is the latter, more borrowing can make things harder. Credicorp lends to limited companies and LLPs for genuine business needs, and we would always rather you take finance that your trading can comfortably repay.

See also: Can business finance help bridge a short-term cashflow gap?, Funding everyday working capital for your company, What is responsible business lending?.

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Your business credit score is a number that tells lenders and suppliers how risky it is to extend credit to your company. A stronger score can mean easier access to business finance, better terms, and more generous supplier credit. Much of what feeds it is within your control. This guide explains how the score works, and the practical steps that move it.

What a business credit score is and how it works in the UK

A business credit score is a rating, produced by a business credit reference agency, that summarises the likelihood your company will pay what it owes — in short, your company's creditworthiness. A business credit score in the UK is not standardised. Each agency uses its own scale and its own scoring model, so your company can score differently with different agencies, and there is no single universal number. The main UK agencies are covered in business credit reference agencies explained.

Crucially, this is a score on the company, not on you as an individual. It is built from the business's own record, not your personal consumer credit history.

What feeds the score

Most agencies turn the score into a risk band and a suggested credit limit that suppliers and lenders use at a glance. While each agency weighs things differently, business credit ratings generally draw on:

• Payment history — whether the company pays suppliers and lenders on time. Trade references and "days beyond terms" data show how promptly invoices are settled: late payments reported by suppliers can pull a score down, while consistent on-time payment supports it.
• Companies House filings — filing your annual accounts and confirmation statement on time, and keeping company and director details accurate. Late or overdue filings are a visible red flag.
• Public records — county court judgments (CCJs), which signal unpaid debts that ended up in court.
• Credit utilisation and commitments — how much credit the business is using relative to what it has available.
• Business age and stability — a longer, steady trading history generally reads as lower risk than a very new one.
• Director information — for small companies, agencies may consider data about the directors, since a micro-company's risk is tied to the people running it.

Practical steps to improve it

You will not change a score overnight, but steady habits move it in the right direction:

• Pay on time, every time. Settling supplier invoices and any borrowing on or before the due date is the single most influential habit. If you are heading for a missed payment on borrowing with us, tell us early — see early repayment: how and what you save for how settling sooner reduces interest.
• File at Companies House on time. Submit your accounts and confirmation statement by their deadlines and keep your registered details current. Overdue filings are easy to fix and visibly damaging.
• Check your own file. Review what each agency holds, and challenge errors. Checking your own file does not harm your score.
• Deal with CCJs. If your company has a CCJ, paying it and having it marked "satisfied" is better than leaving it outstanding.
• Build a track record. Using modest trade credit and repaying it reliably helps establish a positive history, especially for a newer company.
• Keep utilisation sensible. Routinely maxing out every facility can read as strain; leaving some headroom reads as control.

How your score relates to borrowing from us

When your company applies, we run a business credit check as part of how we assess it. But the score is one input, not the whole decision. We also look at the company's turnover and bank-account history to judge whether the borrowing is genuinely affordable. You can read about our approach on how we lend.

And borrowing from us is assessed on, and recorded against, the company — not your personal consumer credit file. A strong business credit score helps your company across the board: with lenders, suppliers and partners. Treat it as a long-term asset of the business. Build it with consistent, on-time payments and tidy filings, and check it regularly so you can fix problems before they cost you.

See also: Alternatives to short-term lending: overdraft, card, invoice finance, grants, Bridging loan, term loan, or credit facility: what's the difference?, Business finance options: a quick tour.

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