Learn: comparing loans

Before borrowing from any outside lender, some directors ask a fair question: should I just lend my company my own money instead? Putting your own funds in can be quick and cheap, but it is not free of rules. A director's loan has tax and legal consequences in both directions — money you lend to the company, and money the company lends to you. This article gives you the lie of the land. It is not our product, and it is not tax advice; for the detailed rules and current thresholds, use gov.uk and speak to an accountant.

What a director's loan account is

Your director's loan account (DLA) is simply a record of money owed between you and your company that is not salary, dividend or expense repayment. If you put your own cash into the business, the company owes you and the DLA is in credit. If you take money out that is not pay or a dividend, you owe the company and the DLA is overdrawn. Because a limited company is a separate legal person from its director — a point we explain in what is a body corporate — these are real debts between two distinct parties, and they need to be recorded properly in the company's books.

Lending money to your company

Lending your own money in is generally the simpler direction. The company can repay you when cash allows, and you can charge interest if you choose — though interest the company pays you is income you must declare, and the company may need to operate tax on it. Drawing the loan back out later is just repayment of what you are owed, not income, so it is often tidier than taking it as salary or dividend. Keep clear records and ideally a short written note of the terms, even with yourself, so the position is unambiguous.

When the company lends to you: s455 and benefit-in-kind

The rules bite harder the other way. If your DLA is overdrawn — the company has effectively lent you money — and it is not repaid within a set period after the company's year end, the company can face a temporary tax charge under what is commonly called section 455. That charge is repayable to the company once you clear the loan, but it is a real cash cost in the meantime. Separately, if the loan is large and interest-free or below a set rate, it can count as a benefit in kind, creating a personal tax charge for you and a reporting duty for the company. The exact thresholds and rates change, so check the current figures on gov.uk rather than relying on a number you half-remember.

Why this matters when comparing finance

Using your own money avoids external interest and keeps things in the family, which can be attractive for a small, short gap. But it ties up your personal cash, it must be documented, and getting the DLA wrong can create tax charges that outweigh the saving. An external loan keeps your own funds free and the obligation on the company, with costs set out plainly in advance — in our case on your Key Information Sheet (KIS) and Business Loan Agreement. We lend to the company, not to you personally, and we do not take a personal guarantee. That said, separateness has limits: there are narrow situations where a director can be exposed, which we cover in can a director be personally liable for a company loan.

Where to get the detail

This article is orientation, not advice. Director's loan tax — s455, benefit-in-kind, reporting — depends on current thresholds and your specific circumstances, so use the guidance on gov.uk and talk to your accountant before you act. Decide on the facts, recorded properly, not on assumptions.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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When you have more than one finance offer in front of you, it is easy to fixate on the headline rate and miss the things that change the real cost. A consistent framework helps you compare like with like rather than being swayed by whichever provider presents most confidently.

Five questions to ask of every option

• What is the total amount I will repay? Not just the rate, but every cost added across the agreed term.
• How and when do I repay? Daily, weekly or monthly, and whether the schedule flexes with your cash flow.
• What happens if I repay early? Some structures charge interest only for the time you borrow; others do not.
• What is secured or guaranteed? Credicorp lends to the company and does not take personal guarantees from directors.
• Who am I dealing with? A direct lender, like Credicorp, or a broker who arranges finance through others.

Write it down

Put each option in a column and answer the same five questions for all of them. The exercise often reveals that the cheapest-looking rate carries the least flexible terms, or that a slightly higher cost buys repayment terms that suit your business far better.

A note on protection

Credicorp lends only to UK limited companies and LLPs for business purposes. As an exempt business lender we sit outside the consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply. Weigh that alongside the commercial terms when you compare.

See also: Asking for extra time or plain language on calls, How to plan Flex repayments around your cash flow and How to build a sensible shortlist of business lenders.

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Rates are designed to be comparable, but they can flatter or mislead depending on how a facility is structured. When comparing business finance, the most reliable anchor is usually the total amount you will repay, not a single percentage.

Why a rate alone can mislead

A representative annual rate assumes a particular amount and term. On short or flexible facilities, fees and the way interest is applied can mean two products with similar-looking rates leave you repaying noticeably different totals. A rate is a useful shorthand, but it is not the whole picture.

What the total cost tells you

The total amount repayable rolls every charge into one figure. It answers the question that matters most: across the life of this facility, how much will leave my account beyond what I borrowed? Compared like for like, totals are harder to dress up than rates.

How to use both

• Use the rate to get a rough sense of where an offer sits.
• Use the total repayable, plus any early-settlement terms, to decide.
• Check whether repaying early reduces the cost or not.

Reading a Credicorp offer

Your Credicorp Flex or Credicorp Slice offer sets out the rate, the term and what you will repay. We will not quote you a figure in general guidance like this; the numbers that matter are the ones in your own agreement. Credicorp lends only to UK limited companies and LLPs.

See also: Daily interest vs APR: which is the honest comparison?, How to compare the total cost of credit (the honest way) and Understanding the total cost of credit.

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If the reason you need money is a specific purchase, such as a van, a machine or new kit, you may be weighing asset finance against a general-purpose business loan. They solve overlapping problems in different ways.

Asset finance

Asset finance is tied to the thing you are buying. The asset itself usually acts as security, and you pay for it over time while using it. It is purpose-built for capital purchases, but the funding is locked to that asset and cannot be redirected to other needs such as stock or payroll.

A general business loan

A business loan or facility gives you funds you can deploy where the business needs them, whether that is equipment, stock, hiring or smoothing a quiet month. The flexibility is the point; you are not limited to one purchase.

Comparing the two

• Buying one big item only? Asset finance may be a clean fit.
• Need funds you can move around? A general facility is more versatile.
• Either way, compare the total you will repay across the term, not just the rate.

How Credicorp fits

Credicorp provides general-purpose business funding through Credicorp Flex and Credicorp Slice to UK limited companies and LLPs. The amount, term and cost that apply appear in your offer. If your need is a single asset, it is worth weighing dedicated asset finance alongside a general facility.

See also: A simple framework for comparing business finance options, What is asset finance?, Flex or Slice for funding an asset purchase?.

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A business overdraft and a short-term loan solve overlapping problems in different ways. An overdraft is a flexible buffer attached to your current account; a short-term loan is a fixed sum you draw, then repay on a set schedule. Neither is automatically cheaper or better. Here is when each tends to fit, so you can choose with the trade-offs in front of you.

How each one works

An overdraft lets your account go below zero up to an agreed limit. You usually pay interest only on the amount you are actually overdrawn, day by day, plus any arrangement or usage fees your bank sets. It is revolving: as money comes in, the balance recovers and you can dip in again. A short-term loan is different. You agree a fixed amount over a fixed term, the money lands, and you repay it in instalments until it is cleared. Our live product is a short-term Business Bridging Loan of £50 to £500 over 14 to 84 days, repaid weekly or fortnightly.

Flexibility vs certainty

The core trade-off is flexibility against certainty. An overdraft is flexible: ideal for a balance that swings up and down, where you cannot predict the exact day or amount you will need. But that flexibility has a sting — many overdrafts are repayable on demand, meaning the bank can reduce or withdraw the facility, sometimes at short notice. If you rely on it as permanent working capital, that is a real risk.

A fixed-term loan gives you certainty instead. You know the amount, the instalments and the end date from day one, and the lender cannot simply call it in if you keep to the schedule. The cost is that you commit to repaying the whole sum even if you end up needing less. For a known, one-off gap with a clear repayment date, that certainty is often worth more than flexibility.

Comparing the cost honestly

On cost, an overdraft can be cheaper if you dip in only occasionally and clear it quickly, because you pay for what you use. A short-term loan is an expensive way to borrow when measured as an annual rate, because the fixed cost of arranging a small, short advance is spread over only a few weeks. We say that plainly. What we offer in return is transparency: before you sign, your Key Information Sheet (KIS) and Business Loan Agreement show the amount, term, total amount payable, total cost of credit, a simple annualised rate and the full schedule, and if you settle early, any early-settlement charge (up to 28 days' interest) is shown in your settlement figure first. We do not quote a consumer APR. Overdraft pricing comes from your bank, so compare its published rates and fees against our figures for your specific need.

Worth noting on regulation: lending to a company is outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001, so our loan is not covered by the Financial Ombudsman Service or the FSCS. Your bank's overdraft sits under its own regulatory regime. These are not like-for-like protections.

Which to pick

Choose an overdraft for an unpredictable, recurring buffer — provided your bank will grant or keep one, and you are comfortable it could be reviewed. Choose a short fixed-term loan for a specific, time-boxed gap where a guaranteed end date matters more than flexibility. And sometimes the answer is neither. If the pressure is ongoing rather than a one-off, more borrowing can deepen the problem. We set out steadier options in our guide to alternatives to short-term lending, and we are blunt about the situations where you should pause in when not to take a short-term business loan. Read both before you decide.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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When a limited company needs funds quickly, directors often consider lending their own money to the business via a director's loan account (DLA). It is a legitimate option, but it comes with tax and structural implications that external finance avoids.

The case for director loans

A director lending to their own company is simple and fast — no application, no third-party approval. If the director has surplus personal cash and the loan is repaid within the tax year, there may be no immediate tax charge. It can also signal commitment to other stakeholders.

The risks and complications

If the company lends money to a director (a debit DLA), a Corporation Tax charge of 33.75% applies on any balance outstanding nine months after the accounting period ends — and the charge is not repaid until the loan is fully cleared. Even director-to-company loans can create issues: if interest is charged, it is taxable income for the director; if not charged, HMRC may query the arrangement. In both cases, the director's personal capital is at risk if the company cannot repay.

Why external finance keeps things cleaner

A Credicorp Business Loan or Flex facility provides working capital to the company without entangling the directors' personal finances. Repayment terms are fixed and transparent. The directors' personal balance sheets remain separate, and there is no director personal guarantee on the facility. For most companies, keeping the corporate and personal financial boundary clear is both commercially and tax-efficiently sensible.

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: Credicorp vs a bank business loan, Credicorp vs a business credit card.

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A business credit card and a short-term loan are both ways to borrow, but they behave very differently in your accounts. A card is revolving credit you can use again and again up to a limit; a loan is a fixed sum you repay on a set schedule and then it is done. Which is cheaper depends almost entirely on how you use it. Here is the difference, and where each one earns its place.

Revolving vs fixed

A credit card gives you a limit you can spend up to, repay, and spend again. If you clear the full balance within the interest-free window each month, short-term purchases can cost nothing in interest — that is the card's strongest feature. A short-term loan is fixed: you agree an amount and a term, the money is advanced, and you repay in instalments until it clears. Our live product is a short-term Business Bridging Loan of £50 to £500 over 14 to 84 days, repaid weekly or fortnightly. The difference between revolving and fixed credit is worth understanding in its own right; we cover it in running credit vs a one-time loan.

When a card is cheaper

For small, everyday business spending that you can repay in full each month, a card is usually the cheaper tool, because you avoid interest entirely inside the interest-free period. Cards also suit purchases you want to keep separate and easy to reconcile. The catch is what happens when you do not clear the balance: revolving interest then applies to the carried amount, and because there is no fixed end date, a balance can sit and accrue for a long time. A card rewards discipline and quietly punishes drift.

The discipline a card demands

That is the real distinction. A card hands you the schedule; a loan imposes one. With a card, only a minimum payment is compulsory, so it is easy to pay the minimum, carry the rest, and let the cost build month after month. A fixed-term loan removes that temptation: every instalment is set, and the debt clears on a known date whether you feel disciplined that month or not. If you know a balance might linger, the structure of a fixed loan can actually cost you less in the end than a card used loosely.

Cost and transparency

Being honest about our side: a short-term loan is an expensive way to borrow when expressed as an annual rate, because a small sum's fixed arrangement cost is spread over only weeks. We do not hide that. We show the amount, term, total amount payable, total cost of credit, a simple annualised rate and the full repayment schedule on your Key Information Sheet (KIS) and in your Business Loan Agreement before you commit, and if you settle early, any early-settlement charge (up to 28 days' interest) is shown in your settlement figure first. We do not quote a consumer APR. Card pricing comes from the card provider, so compare its published rate and fees against our figures for the specific amount and period you have in mind.

One structural point: lending to a company sits outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001, so our loan is not covered by the Financial Ombudsman Service or the FSCS. A business card may sit under a different regime — do not assume the protections are identical.

Choosing between them

Use a card for routine, recoverable spending you can clear monthly and reconcile cleanly. Use a short fixed-term loan when you need a defined sum bridged over a defined period and you want a guaranteed end date rather than an open balance. And if neither feels right — if the underlying issue is a persistent cash-flow gap rather than a one-off — borrowing of any kind may not be the answer. We set out steadier routes in our guide to alternatives to short-term lending.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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A business grant and a short-term business loan are both ways to bring money into your company, but they are fundamentally different instruments, and they answer different questions. A grant is money you are awarded and do not repay. A loan is money you borrow and do repay, with a cost attached. Neither is "better" in the abstract — the right choice depends on what you need the money for, how quickly you need it, and whether you are eligible. This is a neutral explainer of how each works, when each tends to fit, and why, in practice, they are not an either/or choice.

What a business grant is

A grant is non-repayable funding, usually from a government body, local authority, devolved administration, an enterprise agency, a charity or a sector scheme. You apply, you compete against other applicants, and if you are successful the money is awarded to your business with no obligation to pay it back. That is its defining strength: it is, in effect, free capital.

The trade-offs follow from how grants are funded and run:

• Competitive. Grants are limited pots, often heavily oversubscribed. A strong application can still be turned down simply because the funding ran out or another bid scored higher.
• Slow. Application windows, assessment panels and award decisions take weeks or months. Many grants run on fixed rounds rather than rolling decisions, so you may have to wait for the next window to even apply.
• Restricted in use. Grants are almost always tied to a specific purpose — a particular project, a piece of equipment, hiring, R&D, training, decarbonisation, a defined location or sector. You generally cannot use a grant to plug a general cash-flow gap or to cover day-to-day running costs.
• Conditional. Eligibility criteria can be narrow (your size, age, sector, location, or what you intend to spend the money on), and awards often come with reporting requirements, match-funding expectations or clawback terms if you do not deliver what you proposed.

None of that makes grants a bad idea — free or subsidised funding is almost always worth checking before you take on debt. It just means a grant is a planned, project-shaped source of money, not a fast or flexible one.

What a short-term business loan is

A short-term business loan is borrowing: you receive a defined sum, and you repay it over a defined period with a cost on top. Its strengths are the mirror image of a grant's weaknesses. It is fast — a decision can come quickly and funds soon after. It is flexible in purpose — it can be used for any genuine business need rather than a single approved project. And it is available on demand rather than on a funding round's timetable. The cost of all that is that it is repayable, and borrowing a small sum over a short period is, measured as an annual rate, an expensive way to raise money.

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 for a specific, time-boxed gap rather than long-term or project funding. We are upfront about the cost: before you sign, your Key Information Sheet (KIS) and Business Loan Agreement show the amount, the term, the total amount payable, the total cost of credit, a simple annualised rate and the full repayment schedule, and if you settle early any early-settlement charge (up to 28 days' interest) is shown in your settlement figure first. We do not quote a consumer APR. You can see the real amounts, terms and costs we currently offer on our business loans page.

Side by side

When a grant is the right fit

Reach for a grant first when the money is for a defined project you can plan around — buying equipment, funding research and development, taking on and training staff, an energy-efficiency upgrade, or expanding into a new area — and when the timing is yours to choose. If you can wait for an application window and you meet the eligibility criteria, free funding that never has to be repaid is hard to beat. It is worth building grant applications into your planning precisely because they are slow: start early, and the wait stops being a problem.

When a short-term loan is the right fit

A short-term loan earns its place when speed and certainty matter more than cost, and when the need does not fit a grant's restricted purpose. Covering a brief, defined gap before a known payment arrives, bridging a few weeks until an invoice is settled, or seizing a time-limited opportunity that will be gone before any grant round closes — these are loan-shaped problems, not grant-shaped ones. The honest caveat is that it is more expensive than a grant (which costs nothing) or than a cheaper form of borrowing, so it suits a short, repayable, well-understood gap rather than a structural shortfall. If the strain is ongoing rather than a one-off, more borrowing tends to make it worse — we are blunt about that in when not to take a short-term business loan.

They are not mutually exclusive

The most important point is that this is rarely a straight either/or. A grant and a loan do different jobs, and many businesses use both — sometimes for the same plan. You might bridge a short-term cash-flow gap with a small loan now, while a grant application for a larger project works its way through a funding round that will not pay out for months. A grant might cover the bulk of a project's cost, with a short loan covering a timing gap until the grant funds actually arrive. Used together, deliberately, they cover each other's blind spots: the grant brings free capital but slowly and for one purpose; the loan brings fast, flexible money but at a cost. Match each tool to the part of the problem it actually fits.

Weighing it up

If you have time on your side and the money is for a defined project, look hard at grants first — non-repayable funding is the cheapest money there is. If you need a small, specific sum quickly and the alternatives cannot move in time, a short-term loan may suit. And remember the two are not rivals: the right answer is often a grant for the planned project and a loan for the immediate gap, each doing what it does best. Before borrowing at all, it is worth knowing the wider set of options — overdrafts, cards, invoice finance and grants together — which we set out neutrally in alternatives to short-term lending.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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It is one of the most common worries a director has before borrowing: if the company cannot repay, will the lender come after me personally? For a loan from us, the general answer is no. But "generally" is not "never", and it is fairer to explain the exceptions than to pretend they do not exist. Here is the normal position, and the narrow situations where a director can become exposed.

The general rule: the company is separate

A limited company is a separate legal person from the people who own and run it. The company enters into the loan, the company owes the money, and the company's debts are its own — not yours. This is the foundation of limited liability, and it is why incorporation matters so much; we explain the concept in what is a body corporate. When we lend, we lend to the company, for business purposes, and we assess the company's ability to repay. We do not lend to you personally.

We take no personal guarantee

A personal guarantee is the usual way a director becomes liable for a company's debt: by signing a separate promise to pay if the company does not. We do not take a personal guarantee on our loan. That is a deliberate choice and a real difference from many lenders, who do ask directors to guarantee borrowing. Because we take no guarantee, the most common route to personal liability simply is not present in our agreement. If you want to understand the mechanism in general, see what is a personal guarantee — and always check whether any other lender you deal with is asking for one, because that changes your exposure entirely.

The narrow exceptions

Limited liability is strong, but it is not absolute. A director can become personally liable in specific, narrow circumstances, and these come from company and insolvency law rather than from our loan terms:

• Fraud or misrepresentation. If you obtain finance dishonestly — for example by giving false information — the protection of the company will not shield you, and there may be criminal as well as civil consequences.
• Wrongful or fraudulent trading. If you keep running up debts when you knew, or should have known, there was no reasonable prospect of avoiding insolvency, a court can order you to contribute personally. This typically arises in an insolvency process.
• A personal guarantee given elsewhere. If you have signed a guarantee for a different lender or supplier, you are liable under that document — even though our loan carries no guarantee.
• Breach of director's duties or misuse of company money. Directors owe legal duties to the company, and serious breaches can lead to personal claims.

None of these flow from simply borrowing from us and the company later struggling to pay. Genuine business difficulty, honestly handled, does not make you personally liable for our loan.

What to do if the company is struggling

The single most important protection is to act early and honestly. If repayment is becoming difficult, talk to us — there are options before things escalate — and take free, independent advice for the business from Business Debtline (businessdebtline.org) or a licensed insolvency practitioner (r3.org.uk). Continuing to trade and pile up debt while ignoring the warning signs is exactly the behaviour that can put a director at risk. Dealing with it promptly protects both the company and you.

The short version

For our loan: the company is liable, not you; we take no personal guarantee; and personal liability arises only in narrow cases such as fraud, wrongful trading or a guarantee you have given to someone else. If you are ever unsure where you stand, take advice — but do not let an unfounded fear of personal liability stop you from dealing openly with a problem.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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There is an honest trade-off in business finance that providers do not always spell out: the faster money arrives, the more it can cost. Quick decisions mean lighter checks and more risk for the lender, and that risk has a price. Comparing options well means being clear about which side of that trade-off you actually need.

When speed is worth paying for

• A time-limited opportunity, such as discounted stock you can resell.
• An urgent operational need that will cost more if it waits.
• A short, self-liquidating use where the funds are repaid quickly.

When it probably isn't

• A purchase that can wait a few weeks without harm.
• Long-term investment where a slower, lower-cost route serves better.
• Cases where rushing leads you to skip reading the terms.

How to compare fairly

Ask each provider how quickly they can decide and fund, then ask what the total cost across the term will be. Put those side by side. A few days saved rarely justifies a much larger total repayment unless the timing genuinely earns its keep.

Credicorp's approach

Credicorp aims for clear decisions for UK limited companies and LLPs, with the cost and term set out in your offer. We would always rather you took the time to read your agreement than felt rushed. Speed should serve your business, not pressure it. For a like-for-like view on cost, see Credicorp vs a bank business loan.

See also: Direct lender vs broker: which should you use?, How to build a sensible shortlist of business lenders, A simple framework for comparing business finance options.

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It is easy to compare business finance on price alone, but a low cost is irrelevant if you do not meet the lender's criteria. Comparing eligibility early saves wasted applications and protects you from the disappointment of being declined after pinning hopes on one offer.

What lenders typically look at

• Business type: some lend to sole traders, others only to incorporated businesses.
• Trading history: how long you have been operating.
• Turnover and trading pattern: the size and steadiness of income.
• Purpose: whether the funds are for business use.

Why criteria differ so much

Each lender sets criteria around the kind of risk it is comfortable with. That is why one will fund a business another turns away. Reading the criteria first tells you where you genuinely stand before you compare costs.

Credicorp's eligibility in brief

Credicorp lends only to UK limited companies and LLPs, and only for business purposes. We do not lend to individuals or sole traders. If you trade as a sole trader, you would need to be an incorporated company or LLP to apply. We lend to the company, not its directors, and do not take personal guarantees from directors.

A practical tip

Make a shortlist of lenders whose criteria you clearly meet, then compare cost and terms within that list. Comparing the right way round keeps your search efficient and realistic.

See also: Red flags to watch for when comparing business lenders, I have an offer but don't want to go ahead — what now? and Top-up eligibility: when can you borrow again?.

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It is reasonable to want to compare us with the wider market before you borrow. This guide lays out how several common types of business borrowing are priced, using each provider's own published figures, shown neutrally as Provider A–D. It is deliberately even-handed: in several cases the alternatives are cheaper per pound, and we say so.

How to read this

These are different products for different needs and amounts, so this is not a like-for-like swap. The fair way to line them up is the method in how to compare the total cost of credit — total cost in pounds for your real term, and cost per £100 per 30 days across sizes. Provider figures are quoted from each provider's own website and were accurate when sourced; rates change, so always verify with the provider.

The market, in each provider's own words

Where Credicorp sits

Credicorp is built for the small, short end that these mostly do not serve: amounts from £50, for a few days or weeks. On a normalised per-pound basis, micro short-term credit is more expensive than a large multi-year loan — that is honest maths, not a flaw. What we add is a hard 100% total-cost cap, no personal guarantee, and every figure shown before you sign. For our exact numbers on a specific amount and term, use the calculator on our main site rather than a "from" rate.

Sources

Competitor figures are quoted from each provider's own website: iwoca (Flexi-Loan), Funding Circle (Business Loan), 365 Finance (Merchant Cash Advance) and NatWest (Small Business Loan). Figures change — please check the current rate with the provider before deciding. For the full sourced comparison and an interactive chart, see the borrowing-options comparison on credicorp.co.uk.

Business lending to a company is outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001 and is not covered by the Financial Ombudsman Service or the FSCS; weigh the protections alongside the price.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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A bank overdraft and Credicorp Flex are both revolving facilities — you draw what you need, repay when you can, and the headroom resets. The differences lie in how you access them, how quickly limits can change, and what they cost.

Access and approval

Bank overdrafts are typically tied to your business current account and granted (or renewed annually) at the bank's discretion. The bank can reduce or withdraw an overdraft with relatively short notice, particularly if your account behaviour triggers a review. Credicorp Flex is a standalone facility, independent of your banking relationship, with an agreed limit and clear terms that your bank's decisions cannot affect.

Speed of access to funds

Once a Flex facility is active, drawing funds is fast — you are not waiting for bank authorisation each time. An overdraft is similarly instant once set up, but the set-up process itself can be slower, particularly if it requires a business relationship manager review or formal credit application through the bank's internal process.

Cost structure

Bank overdrafts typically charge a combination of an annual arrangement fee, a daily or monthly utilisation fee, and sometimes an EAR (effective annual rate) on balances. Credicorp Flex charges on the drawn balance only; there is no idle-limit fee for headroom you hold but have not drawn. For companies whose drawing pattern is intermittent, paying only on what is used can be materially cheaper than an overdraft with standing fees regardless of usage. Read the terms of each carefully and model your expected drawing pattern before comparing headline rates.

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: Revolving credit facility vs term loan, Slice vs a business credit card

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An overdraft and a revolving credit facility both let you draw and repay funds repeatedly, but they are not the same product. Understanding the difference helps your company choose the right tool for the job.

Commitment and stability

A bank overdraft is typically an uncommitted facility — the bank can reduce or remove it at any point, including at renewal or if your account behaviour changes. Credicorp Flex gives your company a confirmed credit limit it can draw against, repay, and redraw for the term of the facility, providing more planning certainty.

How costs work

Overdrafts usually charge a daily usage fee plus an arrangement fee, and the all-in cost can be opaque. With Credicorp Flex, you pay only when you draw: the cost is applied to the drawn balance, so a zero drawn balance costs nothing. There are no charges for having the facility available.

No personal guarantee and no current-account dependency

A bank overdraft is tied to your business current account with that bank. Credicorp Flex is a standalone facility — you do not need to switch your banking, and there is no cross-default clause linking it to your day-to-day account. Critically, there is no director personal guarantee: the facility is with the company.

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: Credicorp vs a bank business loan, How Credicorp Flex works.

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Credicorp offers two products, Credicorp Flex and Credicorp Slice. Both are for UK limited companies and LLPs borrowing for business purposes. They are designed for different shapes of need, so the right choice depends on how you expect to use the money.

Credicorp Flex

Flex is built around flexibility. It suits businesses whose funding needs move around, where you may want to draw on funds, repay as income comes in, and adjust to an uneven trading pattern. If your cash flow is seasonal or hard to predict, the flexible shape can work in your favour when used with discipline.

Credicorp Slice

Slice is structured for a more defined need with a clearer repayment path. It suits a specific purpose funded over an agreed term, where predictability and a steady plan matter more than the ability to flex.

How to decide

• Is the need open-ended and variable? Flex leans that way.
• Is the need defined with a clear repayment horizon? Slice leans that way.
• Compare the cost and terms of each as they appear in your offer.

One important point

Whichever you choose, the facility is to the company, not to its directors, and we do not take personal guarantees from directors. As an exempt business lender, Credicorp sits outside the consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply.

See also: Fixed vs flexible repayments: which suits your cash flow?, Working capital vs growth finance: matching finance to purpose, Merchant cash advance vs term loan.

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Credicorp Slice and a business credit card can both defer the cash impact of a supplier invoice or one-off bill, but they work differently and suit different companies. Slice is a structured instalment product; a credit card is open-ended revolving credit.

How Slice works

When you use Slice, a specific bill is split into three or four weekly instalments. The cost is a flat 6% fee on the amount spread — there is no interest clock running in the background, no minimum payment trap, and the facility closes once the final instalment clears. You know exactly what you will pay before you commit.

How a business credit card works

A business credit card gives you a revolving limit you can spend against repeatedly. If you clear the balance in full each month you typically pay no interest; if you carry a balance, interest accrues and compounds. For a company that consistently clears its card, the effective cost of deferring a single bill can be low — but only if the discipline is there. Late payments, minimum-payment behaviour, and interchange fees add costs that are less visible than Slice's flat fee.

Which fits which company

Slice is better suited to companies that want a ring-fenced, predictable cost for one specific payment — particularly where the business does not already carry credit card facilities or wants to keep a large bill off its card limit. A credit card is more flexible for ongoing purchases but demands consistent monthly repayment discipline to remain cost-competitive. The two can also complement each other: a card for routine spend, Slice for an unusually large invoice.

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: Revolving credit facility vs term loan, Credicorp Flex vs a bank overdraft

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Buy-now-pay-later (BNPL) has expanded from consumer retail into business payments, with several providers now targeting SMEs. Credicorp Slice occupies similar territory but is structured differently — and designed specifically for UK limited companies.

How most business BNPL products work

Business BNPL typically integrates at the point of supplier checkout, splitting an invoice into instalments — often two to four payments. Some charge the buyer a flat fee; others charge the supplier a percentage and pass costs on indirectly. Terms, fees, and eligibility vary significantly by provider, and some products carry late-payment penalties that compound the cost quickly.

How Credicorp Slice works

Credicorp Slice is not a checkout integration. You bring a specific company bill — a supplier invoice, a tax charge, a renewal, or any other business cost — and Credicorp advances payment to the payee. Your company then repays over three or four weekly instalments. The fee is a flat 6% of the bill value, applied once. There is no compounding interest, no penalty for early completion within the schedule, and no variable rate. The cost is known from the moment you apply.

Who it is designed for

Slice is for UK limited companies and LLPs that need to spread a defined, one-off business cost without drawing down a full revolving facility or taking on a longer-term loan. It keeps working capital free for other uses and turns a large single outgoing into four manageable weekly amounts. There is no director personal guarantee — the facility is with the company.

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: Credicorp vs a business credit card, Credicorp vs a merchant cash advance.

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Government-backed business lending schemes — such as the Growth Guarantee Scheme (successor to the Recovery Loan Scheme) — can offer attractive pricing because the government partially guarantees the lender against default. That guarantee is not free: it comes with defined eligibility criteria, accredited lenders only, and typically a longer decision timeline. Private lenders such as Credicorp operate outside those schemes and offer a different trade-off.

Eligibility and access

Government-backed schemes are available only through accredited lenders and are subject to the scheme's own eligibility rules — turnover thresholds, trading history requirements, and sector restrictions can rule out early-stage or specialist companies. Credicorp assesses each application on its own merits, without reference to a government scheme's criteria.

Speed and process

Scheme-backed facilities often involve additional underwriting steps to meet the guarantee conditions, which can extend the decision and drawdown timeline to weeks. Credicorp's process is designed to reach a decision quickly — relevant when your company is time-sensitive on a contract, payment, or purchase.

Cost and terms

Government-backed loans frequently carry lower headline rates because the partial guarantee reduces the lender's risk. Credicorp pricing reflects an unguaranteed, short-term product — the total cost may differ. For some companies the speed, simplicity, and absence of scheme conditions outweigh the rate difference; for others, the lower rate of a scheme-backed loan is the priority. It is worth applying to both if time allows.

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: Short-term loan vs long-term loan, Credicorp vs peer-to-peer lending

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A merchant cash advance (MCA) and a Credicorp Business Loan both provide a lump sum of working capital, but how you repay them is very different — and that difference has a significant effect on cash-flow planning.

How a merchant cash advance works

An MCA provider advances a sum and recovers it by taking a fixed percentage of your daily or weekly card terminal receipts until the total owed (advance plus a factor fee) is repaid. In high-revenue periods you repay faster; in slow periods repayment slows. There is no fixed term — the payback timeline depends entirely on your sales volume.

How Credicorp works

A Credicorp Business Loan is a fixed sum over a fixed short term with a known repayment schedule from day one. You know exactly what goes out and when. This predictability matters when you are managing supplier commitments, payroll, or tax deadlines alongside the repayment. Credicorp Flex offers draw-and-repay flexibility, but again with clear, pre-agreed terms — not a variable sweep of your revenue.

Eligibility and sector fit

MCAs are almost exclusively available to businesses with significant card-terminal revenue — typically retail, hospitality, or food service. Credicorp lends to a wider range of UK limited companies and LLPs across sectors, provided the company meets our trading and credit criteria. There is no card-terminal integration required, and no director personal guarantee.

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: Credicorp vs invoice finance, Credicorp vs a bank business loan.

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Asset finance — covering hire purchase, leasing, and finance leases — and a Credicorp working-capital facility both put money to work in your business, but they serve quite different purposes and are structured very differently.

What asset finance is for

If your company needs to acquire a specific piece of equipment, machinery, or vehicles, asset finance is often the most efficient route. The asset itself typically secures the facility, which allows lenders to offer longer terms and lower rates than unsecured finance. Hire purchase builds ownership over time; an operating lease keeps the asset off your balance sheet. The facility is tied directly to that one asset acquisition.

What Credicorp is for

Credicorp's Business Loan and Flex facility are working-capital products — they fund the business operation rather than a specific asset purchase. Common uses include bridging a gap between invoicing and payment, covering a VAT or PAYE bill, funding a stock purchase before a busy period, or smoothing seasonal revenue dips. No asset is pledged as collateral. There is no restriction on how you deploy the funds within normal business use.

Can you use both?

Yes, and many companies do. A company might use hire purchase to fund a new van and simultaneously use Credicorp Flex to manage day-to-day working capital. The two facilities are independent of each other and do not cross-default. Neither carries a director personal guarantee with Credicorp — the lending is to the company.

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: Credicorp vs invoice finance, Should I use a broker or apply directly?.

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Invoice finance — whether factoring or invoice discounting — and a Credicorp facility both provide working capital, but they work in fundamentally different ways. The right choice depends on where your cash-flow pressure sits.

How invoice finance works

Invoice finance advances a proportion of the face value of unpaid customer invoices, typically 70–90%. The lender takes an interest in your debtor book, and in the case of factoring, manages your collections. It is well-suited to businesses with strong recurring B2B sales but slow-paying customers. Fees include a service charge and a daily interest rate on the advance.

How Credicorp works instead

Credicorp does not require you to assign invoices or share your debtor book. A Business Loan advances a fixed sum to the company based on its trading profile and creditworthiness — you repay on a fixed schedule regardless of when your customers pay you. Credicorp Flex lets you draw and repay against a confirmed limit as your cash cycle moves. This suits companies whose working-capital need is not tied specifically to outstanding invoices.

Relationship with your customers

Disclosed factoring means your customers know a third party manages your sales ledger. Credicorp lending is entirely confidential — there is no contact with your customers, and no assignment of receivables. Directors also carry no personal liability: the facility is with the company.

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: Credicorp vs a merchant cash advance, Credicorp vs a bank business loan.

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Peer-to-peer (P2P) business lending platforms act as marketplaces: your loan request is listed, and individual or institutional investors bid to fund it. Credicorp is a direct balance-sheet lender — we underwrite and fund from our own book, with no investor marketplace in the chain.

Certainty of funding

On a P2P platform, drawdown is conditional on your loan being fully funded by investors. In periods of lower investor appetite this can be slow, partial, or unsuccessful. With a direct lender like Credicorp, an approved facility is funded by us — there is no investor pool to fill before your money moves.

Decision and data handling

P2P platforms typically publish a loan listing that investors can read, which may include some business information. Credicorp's process is bilateral — your application data is assessed by our team and not exposed to a marketplace. For businesses that are sensitive about financial information becoming visible to third-party investors, this is a material difference.

Regulation and redress

P2P platforms are FCA-authorised investment platforms; the regulatory framework governing them and the investor protections that apply are distinct from the framework that applies to Credicorp as a commercial lender. Neither route involves FSCS protection for the borrowing company, but the regulatory context differs and is worth understanding before choosing.

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: Credicorp vs a government-backed loan, Secured vs unsecured business finance

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When you look for business finance you will meet two kinds of company: direct lenders, who lend their own money, and brokers, who arrange finance through a panel of lenders. Knowing which you are talking to changes how you read the offer.

Borrowing from a direct lender

A direct lender makes the decision and provides the funds itself. Credicorp is a direct lender. There is one relationship, one set of terms and one point of contact, which usually means clearer communication and a single, transparent cost.

Using a broker

A broker does not lend; it matches you to a lender, sometimes across many. That can be useful if your circumstances are unusual and you want options surfaced for you. The points to check are how the broker is paid, whether a fee is added to your cost, and which lender you ultimately contract with.

Questions worth asking

• Are you the lender, or are you arranging finance through someone else?
• Is there a broker fee, and is it shown separately?
• Who will I actually have a contract with?

The Credicorp position

Because Credicorp lends directly to UK limited companies and LLPs, there is no intermediary fee layered on top, and your agreement is with us. As an exempt business lender we sit outside the consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply.

See also: Is Credicorp a lender or a broker?, What is the difference between interest and fees? and Secured vs unsecured business lending: what's the difference?.

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Two facilities can carry a similar cost yet feel completely different to live with, because the repayment structure shapes your day-to-day cash flow. When comparing options, look at how you repay as closely as how much you repay.

Fixed repayments

A fixed structure means predictable, equal instalments across the agreed term. Budgeting is simple because every payment is the same, which suits businesses with steady, even income. The trade-off is that the schedule does not bend if a quiet month arrives.

Flexible or revolving structures

A flexible facility lets you draw, repay and redraw within an agreed limit, so your outstanding balance and cost move with how much you actually use. This suits businesses with uneven or seasonal income. The discipline it demands is the discipline to repay when funds come in, rather than letting a balance drift.

How to choose

• Map your income over a typical year. Is it even or lumpy?
• If even, fixed instalments keep things simple.
• If seasonal, a facility that flexes can cost less when used carefully.

Credicorp products

Credicorp offers Credicorp Flex and Credicorp Slice. The repayment shape, frequency and term that apply to you are set out in your offer. Read those terms against your own cash-flow pattern before deciding. Credicorp lends only to UK limited companies and LLPs for business purposes.

See also: How to plan Flex repayments around your cash flow, Business credit card vs short-term loan, What is cash flow?.

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If your limited company needs short-term funding, a high-street bank loan is the obvious first thought — but the two products differ in speed, security requirements, and eligibility criteria in ways that matter to most SMEs.

Speed and process

A bank business loan often involves weeks of underwriting, audited accounts, business plans, and multiple meetings. Credicorp's application is designed for limited companies that need a decision without that overhead. You apply online, connect your accounting data, and receive a credit decision without a lengthy back-and-forth.

Security and personal liability

Most bank SME loans require a director personal guarantee — meaning if the company defaults, your personal assets can be at risk. Credicorp lends only to the limited company or LLP itself. There is no director personal guarantee attached to any Credicorp facility. This is a fundamental structural difference, not a minor detail.

Flexibility and product fit

Banks offer term loans with fixed monthly repayments over years. Credicorp's Business Loan is a short-term fixed-sum product designed for working-capital gaps, seasonal peaks, or one-off costs. If you need a revolving draw-repay-redraw facility instead, Credicorp Flex may suit better — something most bank SME desks do not offer at this scale without significant collateral.

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: Credicorp vs a business overdraft, Credicorp vs a business credit card.

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Searching for business finance can surface dozens of providers, and comparing all of them in depth is impractical. A short, structured process turns an overwhelming list into a manageable shortlist of two or three options you can examine properly.

Step one: define the need

Write down what the money is for, roughly how much you need, and over what period you expect to repay. This single sentence rules out a surprising number of providers straight away.

Step two: filter on eligibility

Remove any lender whose criteria you clearly do not meet. There is no point comparing a facility you cannot access. Credicorp, for example, lends only to UK limited companies and LLPs for business purposes.

Step three: filter on structure

Keep those whose repayment shape, flexible or fixed, suits your cash flow. Drop the ones that would fight against how money moves through your business.

Step four: compare the finalists

• Total amount repayable across the term.
• Early-repayment terms.
• Whether anything is secured or guaranteed.
• Who you contract with and how they handle difficulty.

Then decide

By this point you are comparing a few genuinely viable, suitable options on the things that matter, rather than drowning in a long list. If Credicorp is on your shortlist, the cost and term that apply to you will be set out clearly in your offer.

See also: A simple framework for comparing business finance options, How to compare early repayment terms across lenders and Red flags to watch for when comparing business lenders.

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If there is any chance you will repay a facility ahead of schedule, the early-repayment terms can change the maths considerably. Two offers that look alike at the start can diverge sharply if your business is in a position to clear the balance sooner than planned.

The two broad approaches

• Cost tied to time borrowed: you pay for the period you actually use the money, so repaying early reduces the total.
• Cost fixed at the outset: the charge is set when you draw the funds, so repaying early may save little or nothing.

Questions to ask each lender

• If I repay early, does my total cost go down?
• Is there an early-settlement or exit fee?
• How is any saving calculated, and can you show me an example?

Why it matters for comparison

A facility that looks slightly more expensive on day one can end up cheaper if your business clears it early and the cost falls with time. The opposite is also true. Map your realistic repayment plans against each offer's early-repayment rules before you decide.

Your Credicorp terms

The early-repayment terms that apply to your Credicorp Flex or Credicorp Slice facility are set out in your agreement. Read that section carefully, and ask us if anything is unclear. Credicorp lends only to UK limited companies and LLPs for business purposes.

See also: Is there a penalty for repaying early?, What is early repayment?, Comparing lenders on eligibility, not just price.

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When you compare borrowing, the number you reach for is usually the APR. For a multi-year loan that is fine. For short-term borrowing it can badly mislead — so this guide shows a fairer way to compare, the way a careful business owner would.

Why APR distorts short-term credit

APR expresses cost as if you borrow for a whole year. Borrow for a few days or weeks and that annualisation makes a small actual cost look enormous. It is simply the wrong lens for credit you will hold briefly. Some products have no APR at all — a merchant cash advance, for example, is a fixed cost repaid from card takings — so they cannot even be lined up in an APR column. For a worked example of this on our own product, see what APR means on a short-term loan.

The two comparisons that actually help

1. Total cost of credit, in pounds, for your real amount and term. Ask each lender: for exactly this amount, over exactly this long, what is everything I will pay on top of what I borrow? That single figure cuts through the noise.
2. Cost per £100 borrowed, per 30 days. To line up products of different sizes, normalise to a common basis — what does £100 cost for 30 days? It is illustrative, not a quote, but it lets a small short loan and a large long one sit side by side honestly.

A checklist before you commit

• Get the total cost in pounds for your amount and term, not a "from" rate.
• Check whether there is a cost cap — at Credicorp the total cost is capped at 100% of what you borrow.
• Ask what happens if you pay early, and what happens if you fall behind.
• Check the protections, not just the price — see the decision guide.

You can model our figures for a specific amount and term on the calculator at credicorp.co.uk, and there is a sourced provider comparison in comparing providers: a neutral view. Business lending to a company is 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: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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Invoice finance (factoring or invoice discounting) advances a proportion of your outstanding debtor book — typically 70–90% of approved invoice values — so you receive cash before your customers pay. A Credicorp Business Loan injects a fixed sum of new capital, repaid on a fixed schedule, regardless of your debtor position. Both address working-capital gaps but from different starting points.

When invoice finance is the right tool

If your company's cash-flow problem is structural — you invoice promptly but customers take 60 or 90 days to pay — invoice finance solves the root cause. It scales automatically with your sales: as you raise more invoices, more cash is available. The facility grows with your business without requiring re-application. The cost is tied to the face value of invoices advanced and the time they are outstanding.

When a business loan is the right tool

A business loan is better suited to needs that sit outside your debtor book: paying a supplier before you have raised the invoice, funding a stock build, covering a tax payment, or bridging a gap that has nothing to do with slow payers. It is also simpler — one lump sum, a fixed term, a defined total cost. There is no need to assign invoices, no third-party contact with your customers (as happens in disclosed factoring), and no ongoing debtor-management admin.

Using both together

There is no conflict in holding invoice finance alongside a Credicorp facility. Many growing companies use invoice finance for their day-to-day debtor cycle and a separate short-term facility for episodic capital needs. Discuss with your accountant which layer fits which part of your balance sheet.

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: Short-term loan vs long-term loan, Secured vs unsecured business finance

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If your business is owed money it has not yet been paid, invoice finance and a short-term loan answer the same symptom — a cash-flow gap — from opposite directions. Invoice finance advances money against your unpaid invoices; a short-term loan advances a fixed sum you repay on a schedule. For a business sitting on a healthy sales ledger, the two are genuinely different choices, and one is often a much better fit than the other.

How invoice finance works

Invoice finance unlocks cash that customers already owe you. You raise an invoice, and the provider advances a percentage of its value up front, paying you the balance (less their charge) once the customer settles. It usually takes two broad forms. With factoring, the provider also takes over collecting the debt, so they chase your customers directly. With invoice discounting, you keep control of collections and the arrangement is typically confidential. Either way, the borrowing scales with your sales: more invoices, more available funding. It works best for businesses that invoice other businesses on credit terms and wait weeks to be paid.

How a short-term loan works

A short-term loan does not depend on your invoices at all. You agree a fixed amount over a fixed term, receive it, and repay in instalments. Our live product is a short-term Business Bridging Loan of £50 to £500 over 14 to 84 days, with weekly or fortnightly repayments. Because it is small and short, it suits a specific, time-boxed gap rather than ongoing working-capital needs. You can see what we currently offer, with the real amounts, terms and costs, on our business loans page.

Comparing the two

The decisive question is whether you have a strong sales ledger. If you are owed substantial sums by reliable customers, invoice finance is often the more natural and proportionate tool: it draws on money you have genuinely earned, and the facility grows with your turnover. It does, though, tie you into an arrangement around your ledger, can involve your customers in collections (with factoring), and carries its own charges set by the provider.

A short-term loan is simpler and faster to arrange for a small amount, and it does not involve your customers at all. But it is an expensive way to borrow when expressed as an annual rate, because the fixed cost of arranging a small sum is spread over only a few weeks. We are upfront about that. In return we show the cost plainly — amount, term, total amount payable, total cost of credit, a simple annualised rate and the full repayment schedule, all on your Key Information Sheet (KIS) and Business Loan Agreement — and if you settle early, any early-settlement charge (up to 28 days' interest) is shown in your settlement figure first. We do not quote a consumer APR.

A note on regulation

Both invoice finance and our lending are typically business-to-business arrangements outside FCA consumer-credit regulation; in our case that is because a company is not an individual under Article 60B FSMA RAO 2001. So our loan is not covered by the Financial Ombudsman Service or the FSCS, and the same broad point may apply to an invoice finance facility. Check the provider's own terms rather than assuming a particular protection applies.

Which to choose

If unpaid invoices are the heart of the problem and your ledger is solid, look hard at invoice finance first — it is usually the better-matched answer. If you do not invoice on credit terms, or you simply need a small, defined bridge over a short period, a short fixed-term loan may suit better. And if the strain is structural rather than a one-off, more borrowing can make it worse; we set out steadier routes in our guide to alternatives to short-term lending. If a bank overdraft is another option you're weighing, see bank overdraft vs short-term business loan. Match the tool to the cash-flow problem, not the other way round.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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There is no single "best" business lender, only the one that fits a particular need. A director comparing iwoca, Cubefunder, Capify and us is really comparing four different models: how much you can borrow, how long for, whether a human or an algorithm decides, and what the money costs. What follows describes those differences in general terms. We will not invent another lender's rates or fees, and we will be honest about where we are not the right answer.

What each model tends to suit

The wider market is varied. Some lenders specialise in larger facilities and longer terms, often with a flexible drawdown line and a credit decision that blends data with human review. Others build their proposition around merchant cash advances, where repayments flex with your card takings. Others again focus on speed and a largely automated decision for smaller, shorter amounts. Each of those has a place. If you need tens of thousands of pounds over a year or more, you are not really in our part of the market at all.

We are deliberately small-ticket and short-term. Our live product is a short-term Business Bridging Loan of £50 to £500 over 14 to 84 days, with weekly or fortnightly repayments. That is a narrow, specific tool: a small gap, bridged quickly, then closed. If you want to compare what we actually offer today, the current amounts, terms and costs are set out on our business loans page.

Speed, decisions and who you are dealing with

Speed matters, but it is not the whole story. We typically approve within an hour and fund the same business day where everything checks out. We still credit-check your company through business credit reference agencies, and we run an identity check on the director. A faster "yes" is not always a better "yes" — the right question is whether the borrowing genuinely solves the problem, or just moves it a few weeks down the road.

Who you are lending to also differs. We lend to UK limited companies and LLPs (bodies corporate), for business purposes, to the company rather than to you personally. We do not take a personal guarantee. Other lenders structure things their own way, and some do ask for guarantees or security; that is for them to set out in their own documents, so always read them.

Cost and transparency

Here is the honest part: a short-term loan is an expensive way to borrow when you express the cost as an annual figure, because the fixed cost of arranging and servicing a small sum is spread over only a few weeks. We do not pretend otherwise. What we do is show the cost plainly before you commit — the amount borrowed, the term, the total amount payable, the total cost of credit, a simple annualised rate and the full repayment schedule, all on your Key Information Sheet (KIS) and in your Business Loan Agreement. We do not quote a consumer APR. Settling sooner still saves you money because it stops the remaining interest; an early-settlement charge of up to 28 days' interest may apply, and the amount is shown in your settlement figure before you confirm.

One important point of difference: lending to a company is outside FCA consumer-credit regulation, because a company is not an individual under Article 60B FSMA RAO 2001. That means our loan is not covered by the Financial Ombudsman Service, the FSCS or the BBRS; after our internal complaints process, the final step is the courts. A different lender's regulatory position may differ — check theirs, do not assume ours applies to them.

How to choose well

Start from the need, not the brand. How much, for how long, and what happens to your cash flow while you repay? If the honest answer is that borrowing would make a strain worse, the better move may be no loan at all. We set out cheaper or steadier routes in our guide to alternatives to short-term lending, and we would rather you used one of those than take finance that does not fit. If a small, short, transparent bridge genuinely is what you need, compare the real figures and decide with your eyes open. If you are weighing a revolving facility against a one-off loan, see Flex vs a one-off Business Loan.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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Whether we can lend to your business depends heavily on how it is legally structured. We can lend to limited companies and limited liability partnerships (LLPs); we cannot lend to sole traders as structured. That is not about the size or health of your business — it is about what kind of legal entity is doing the borrowing. Here is the difference and why it matters, so you know where you stand before you apply.

The three structures in brief

A limited company is a separate legal person, distinct from its owners and directors. A limited liability partnership (LLP) is also a body corporate — a separate legal person — owned by its members. A sole trader is different in kind: there is no separate entity at all. The business and the individual are legally the same person, so the trader owns the assets, keeps the profits and bears the liabilities personally. That single distinction — separate legal person or not — is what drives our eligibility rules.

Why we can lend to companies and LLPs

We lend to UK limited companies and LLPs because both are bodies corporate: there is a separate legal entity to enter the loan and to owe the money. We lend to that entity, for business purposes, and we assess the company or LLP itself — its turnover, bank-account history and business credit file. We explain what a body corporate is in what is a body corporate. Because we lend to the entity rather than to an individual, the borrowing sits outside FCA consumer-credit regulation: a company or LLP is not an individual or relevant recipient of credit under Article 60B FSMA RAO 2001. That framing is central to how, and to whom, we can lend.

Why we cannot lend to sole traders as structured

A sole trader has no separate legal entity, so a loan to "the business" would in fact be a loan to the individual. Lending to an individual is a different kind of activity that falls within the consumer-credit regime, which our product is not built for and which we are not set up to provide. So it is not that we doubt sole traders or their businesses — it is that the structure puts the borrowing in a different legal category from the one we operate in. This is a feature of how the law treats the structures, not a judgement about you.

What this means in practice

If you trade through a limited company or an LLP, you are in principle eligible to apply, subject to our checks on the company's affordability and a credit check on the entity plus an identity check on the director or member. You can see what we currently offer, with the real amounts, terms and costs, on our business loans page. If you trade as a sole trader, we will not be able to lend to you as you are, however well your business is doing.

If you are a sole trader and want access

One route some sole traders consider is incorporating — forming a limited company — which creates a separate entity we could lend to. But that is a significant business decision with tax, legal and administrative consequences, and it does not make you eligible automatically: a brand-new company has little trading history to assess. Weigh it properly rather than doing it just to borrow. We set out the trade-offs in should I switch from sole trader to limited company before applying for finance. Whatever you decide, decide on the full picture, not on a single loan.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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When you borrow from us, the contract you sign depends on the kind of credit you are taking. A one-time loan of a fixed sum is governed by a Business Loan Agreement. Running credit — a line you can draw on, repay and draw again — is governed by a Revolving Credit Facility Agreement. They look similar at a glance but commit you to different things. Here is the distinction, so you know what you are signing.

The Business Loan Agreement: a fixed one-time loan

A Business Loan Agreement covers a single, fixed advance. You agree an amount and a term, the money is paid out once, and you repay it in set instalments until it clears. There is a defined beginning and a defined end. This is the contract behind our live product, the short-term Business Bridging Loan of £50 to £500 over 14 to 84 days, repaid weekly or fortnightly. What you are committing to is precise: a known sum, a known schedule and a known finish date. Once it is repaid, the agreement has done its job and there is nothing left running.

The Revolving Credit Facility Agreement: running credit

A Revolving Credit Facility Agreement is built for a different shape of borrowing. Rather than a single advance, it sets up a limit you can draw against, repay, and draw against again, as your needs rise and fall over time. The agreement governs the whole facility — the limit, how drawdowns work, how interest applies to what you have actually drawn, and your ongoing obligations — rather than one fixed loan. A running-credit facility is a second product we are introducing; we are describing the concept here, not claiming it is available to everyone today. For what we currently offer, the position is set out on our business loans page. The broader difference between borrowing once and having a line to dip into is covered in running credit vs a one-time loan.

What each one commits you to

The practical difference is the nature of the commitment. Under a Business Loan Agreement you commit to repaying one defined sum on a fixed timetable — simple, finite and easy to budget for, but inflexible if your needs change. Under a Revolving Credit Facility Agreement you commit to the rules of an ongoing arrangement: you are not obliged to draw the full limit, and you typically pay for what you draw, but the facility and its terms persist until ended, and the discipline of managing a revolving balance is on you. One is a single transaction; the other is a relationship with a limit.

What both have in common

Whichever agreement applies, the essentials are the same. We lend to the company, not to the director personally, and we take no personal guarantee. Before you sign, you receive a Key Information Sheet (KIS) — the plain-English pre-contract summary — setting out the cost in clear terms: the amount or limit, the term, the total amount payable, the total cost of credit, a simple annualised rate and the repayment details. We do not quote a consumer APR. Knowing how to read that summary is the best protection you have; we walk through it in how to read a Key Information Sheet. And in both cases the borrowing sits outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001, so it is not covered by the Financial Ombudsman Service or the FSCS.

The short version

Use a Business Loan Agreement when you need a fixed sum once, with a clear end date. A Revolving Credit Facility Agreement is for an ongoing line you draw on as needed. Read whichever applies alongside your KIS before you sign, so you know exactly what you are committing to.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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A merchant cash advance (MCA) gives a business a lump sum in exchange for a fixed percentage of future card-terminal takings until the advance and a factor fee are repaid. Credicorp Flex is a revolving credit facility with a defined limit, drawn and repaid at the company's direction. Both can suit businesses with variable revenue, but the repayment mechanic is fundamentally different.

How a merchant cash advance repays

An MCA provider integrates with your card-payment processor. Each day a set percentage of your card sales is swept automatically to the provider. In quiet periods you repay less; in busy periods you repay more — the total repayable is fixed regardless of how long it takes. This aligns repayment with revenue but also means the provider has visibility of your terminal data and a prior claim on card receipts.

How Credicorp Flex repays

Flex has no link to your card terminal or revenue stream. You draw funds when needed, repay on the schedule agreed in your facility terms, and retain full control of your cash flow. There is no daily sweep and no third party integrated with your payment processing. For businesses that want to keep their banking and lending relationships separate, this is a meaningful distinction.

Comparing total cost

MCAs are often quoted as a factor rate (e.g. 1.2 times the advance) rather than an interest rate, which can make cost comparison difficult. Before choosing, convert any MCA quote to an effective annualised cost and compare it directly with the cost disclosure for Flex or a term loan. The results can be surprising — MCA factor rates that look modest can translate to high effective annual costs if repayment is stretched.

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: Revolving credit facility vs term loan, Credicorp Flex vs a bank overdraft

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A merchant cash advance (MCA) and a term loan both give you a lump sum now, but they collect it back in completely different ways. An MCA takes a percentage of your future card takings; a term loan takes fixed instalments on set dates. If your business runs on card sales, the choice between flexible and predictable repayment is the heart of the decision. Here is how each works, and where each fits.

How a merchant cash advance works

With an MCA, a provider advances you a sum and you repay it as a fixed percentage of your daily or weekly card takings until the agreed total is cleared. The defining feature is that repayments flex with trade: on a strong sales day you repay more, on a quiet day you repay less. There is no fixed instalment and often no fixed end date — how fast you clear it depends on how busy you are. That makes an MCA naturally suited to businesses with steady card income, such as shops, cafés and restaurants, whose revenue is seasonal or uneven.

How a term loan works

A term loan is the opposite shape. You agree a fixed amount over a fixed term and repay in set instalments, regardless of how trade goes that week. Our live product is a short-term Business Bridging Loan of £50 to £500 over 14 to 84 days, repaid weekly or fortnightly. You know the amount, the instalments and the end date from the outset, which makes budgeting straightforward. You can see what we currently offer, with the real amounts, terms and costs, on our business loans page.

Predictability vs flexibility

This is the core trade-off. An MCA's flexibility is genuinely useful when income is lumpy: a slow week automatically means a smaller repayment, easing pressure when you most feel it. But that flexibility cuts both ways. Because there is no fixed end date, a long run of quiet trading stretches the advance out, and the total cost can be hard to compare with a fixed loan precisely because the repayment amount keeps moving. A term loan gives you certainty instead: the instalments do not change, so you can plan around them — but you must meet them even in a poor week. Neither is simply better; they suit different revenue patterns and different temperaments.

Comparing the cost

On cost, both can be an expensive way to borrow, and we will not pretend our short-term loan is cheap when expressed as an annual rate — the fixed cost of arranging a small, short advance is spread over only a few weeks. What we commit to is showing the cost plainly before you sign: the amount, term, total amount payable, total cost of credit, a simple annualised rate and the full repayment schedule on your Key Information Sheet (KIS) and in your Business Loan Agreement. We do not quote a consumer APR. Settling early still saves you money because it stops the remaining interest; an early-settlement charge of up to 28 days' interest may apply, and the amount is shown in your settlement figure before you confirm. An MCA's pricing is usually expressed as a factor on the advance rather than an interest rate, which makes a like-for-like comparison harder — read the provider's figures carefully.

On regulation, our lending to a company is outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001, so it is not covered by the Financial Ombudsman Service or the FSCS. An MCA provider's regulatory position may differ; check theirs rather than assuming.

Which to choose

If your income arrives mostly through card payments and varies week to week, an MCA's repayment flexibility may genuinely fit better. If you want a defined sum, a fixed end date and instalments you can plan around, a short term loan may suit. And if the underlying problem is ongoing rather than a one-off bridge, more borrowing can deepen it — we set out steadier routes in our guide to alternatives to short-term lending. If a bank overdraft is another option you're considering, see bank overdraft vs short-term business loan.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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Peer-to-peer platforms connect businesses that want to borrow with individuals and institutions that want to lend. It is a different model from borrowing directly from a single lender, and the differences are worth understanding before you compare offers.

How peer-to-peer works

On a peer-to-peer platform, your borrowing may be funded by many separate lenders, with the platform handling the matching and administration. Funding can depend on demand from those lenders, and the platform's fees and processes sit between you and the people whose money you are using.

How a direct lender works

A direct lender, such as Credicorp, lends its own funds and makes its own decision. You deal with one organisation, one agreement and one point of contact, which tends to make the cost and the relationship simpler to follow.

Points to compare

• Certainty of funding: is it guaranteed or dependent on lender demand?
• Fees: platform charges versus a single, direct cost.
• Who you contract with and who you contact if something changes.

The Credicorp position

Credicorp lends directly to UK limited companies and LLPs for business purposes through Credicorp Flex and Credicorp Slice. As an exempt business lender we are outside the consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply. Weigh that against the platform's own protections when you compare.

See also: iwoca, Cubefunder, Capify or Credicorp: an honest comparison, What is due diligence? and A director's loan to your own company: tax and legal points.

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Most business lenders are straightforward, but comparing offers is also a chance to spot the ones that are not. A few recurring warning signs are worth keeping in mind whoever you are talking to, including us.

Red flags in how an offer is presented

• Pressure to sign quickly before you have read the agreement.
• A rate quoted with no clear total of what you will repay.
• Fees that only appear late or are buried in the small print.
• Upfront payments demanded before any funds are advanced.
• Vagueness about who you are actually contracting with.

Red flags in the terms

• Penalties that make leaving early disproportionately costly.
• Personal guarantees presented as routine when you did not expect them.
• Unclear answers about what happens if you hit difficulty.

How to protect yourself

Ask for everything in writing, read the agreement in full, and never feel rushed. A genuine lender will give you time. Credicorp lends to the company, not to its directors, and does not take personal guarantees from directors. We will always set out your cost and term in your offer in writing. As an exempt business lender we sit outside the consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply, which makes reading the terms carefully all the more important.

See also: Comparing lenders on eligibility, not just price, How do I spot the early warning signs of cashflow trouble? and A simple framework for comparing business finance options.

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When comparing business finance you may notice that some lenders operate under consumer-credit regulation and others do not. The distinction is not a quality judgement; it reflects who the borrower is and what the loan is for. Understanding it helps you compare protections honestly.

Regulated consumer credit

Consumer-credit regulation is designed to protect individuals, and certain smaller business borrowers, when they take on credit. Where it applies, borrowers generally have recourse to the Financial Ombudsman Service and other consumer protections.

Exempt business lending

Some business lending falls outside that regime because of who borrows and why. Lending to incorporated businesses for genuine business purposes, above the consumer thresholds, can be exempt. In that case the consumer-credit protections, including the Financial Ombudsman Service and FSCS, do not apply.

What this means when comparing

• Check which regime each offer sits under, not just the cost.
• Where consumer protections do not apply, read the agreement especially carefully.
• Ask the lender directly if you are unsure.

Where Credicorp sits

Credicorp is an exempt business lender. We lend only to UK limited companies and LLPs, for business purposes. Because of that, our lending is outside the consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply. We aim to make our terms clear and fair regardless, and we are always happy to explain them.

See also: What is the exempt business lending market?, What does it mean that Credicorp is an exempt business lender?, What protections apply when a loan is outside the FCA regime?.

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A term loan delivers a fixed sum upfront and you repay it over an agreed schedule — once it is paid, it is gone. A revolving credit facility gives your company a standing limit you can draw against, repay, and draw again, indefinitely while the facility is open. Credicorp Flex is a revolving facility; Credicorp's Business Loan is a term product.

The practical difference in day-to-day use

With a revolving facility you only pay for what you have drawn. If your company draws £30,000 of a £50,000 limit, you are charged on £30,000. Repay it and the full £50,000 is available again immediately. This suits businesses with lumpy, recurring cash-flow needs — payroll bridges, rolling supplier payments, or seasonal peaks — where the requirement resets rather than resolves.

A term loan is cleaner for a one-off investment: you know the amount, the schedule, and the exit date. There is no temptation to redraw, and the commitment is finite.

Cost structure differs too

Term loans typically quote a flat fee or total repayable amount. Revolving facilities usually charge interest only on the drawn balance, which can be lower in total if your company repays quickly — but can accumulate if the balance is rarely cleared. Read the cost-of-credit disclosure for either product before committing.

Choosing based on your cash-flow profile

Map your expected drawing pattern over the next six months. If you anticipate a single lump-sum need, a term loan is usually simpler and cheaper. If your needs are recurring or unpredictable in timing, a revolving facility preserves flexibility without requiring you to re-apply each time.

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: Short-term loan vs long-term loan, Credicorp Slice vs a business credit card

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When a lender describes finance as secured, it means the loan is backed by collateral — a charge over company property, equipment, debtors, or sometimes a director's personal assets. Unsecured lending is extended on the strength of the company's financial profile alone, with no asset pledged as security. Credicorp's products are unsecured business finance: no charge over company assets, and no director personal guarantee.

What security actually means in practice

Security gives a lender a route to recover funds if the company cannot repay — they can appoint a receiver over the charged asset or enforce a personal guarantee against a director personally. For the borrowing company this means the asset cannot be freely sold or encumbered during the loan term, and a personal guarantee exposes a director's private wealth. Both are significant commitments that many company directors are understandably reluctant to give.

Why unsecured finance often costs more

Without collateral, the lender bears more risk. That risk is priced into the cost of credit — unsecured facilities typically carry a higher fee or rate than an equivalent secured facility from the same lender. The premium is the price of keeping company assets free and directors personally unexposed. Whether that premium is worth paying depends on the value of the assets at stake and the company's appetite for encumbering them.

When each makes sense

Secured finance is often appropriate for large, long-duration facilities where the asset being financed is itself collateral — commercial mortgages and asset finance being the clearest examples. Unsecured short-term finance is better suited to working-capital needs, where the amount is moderate, the term is short, and the company wants to preserve its asset position and credit headroom for future secured borrowing.

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: Credicorp vs peer-to-peer lending, Credicorp vs a government-backed loan

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One of the first distinctions to grasp when comparing business finance is whether a facility is secured or unsecured. The label changes what is at stake and how a lender views your application.

Secured lending

A secured facility is backed by a specific asset, such as commercial property, plant or equipment. If the company cannot repay, the lender can look to that asset. Security can support larger amounts or longer terms, but it ties a named asset to the borrowing and the paperwork is usually heavier.

Unsecured lending

An unsecured facility is not tied to a particular asset. The lender relies on the trading position and history of the company rather than a charge over property. Decisions are often quicker, but the assessment of the business itself tends to be the deciding factor.

Where Credicorp sits

Credicorp lends to the company, not to its directors. We do not take personal guarantees from directors as a condition of borrowing. That means the directors' personal assets are not pledged against a Credicorp Flex or Credicorp Slice facility. The terms specific to your offer, including any security, are set out in your agreement.

Comparing the two

• Secured can unlock more, but commits a named asset.
• Unsecured is typically faster to arrange.
• Always check what, if anything, is being pledged before you sign.

See also: Direct lender vs broker: which should you use?, Regulated vs exempt business lending: what it means for you and Secured vs unsecured business loans: what's the difference?.

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A short-term business loan is designed to plug a defined, near-term gap — typically repaid within months rather than years. A long-term loan amortises the cost of a significant capital outlay over a longer horizon, keeping each repayment manageable. The right choice depends on what you are funding, not on which option looks cheaper per month.

When a short-term loan wins

Short-term finance makes sense when the underlying opportunity or obligation has a clear, near-term pay-off: a bulk-purchase discount from a supplier, a bridging gap before a known payment arrives, or a seasonal stock build that will sell through within weeks. Credicorp's Business Loan is structured precisely for this — a fixed sum over a fixed short term, so you know your total cost from day one and the facility closes once repaid.

When a longer horizon is justified

Equipment, fit-out, or technology that will generate returns over several years can justify spreading repayment over a longer term. However, longer terms usually mean more total interest and a longer commitment on your balance sheet. Many lenders also require security or personal guarantees for longer-duration facilities — costs worth factoring into the comparison.

Mixing durations

There is no rule that prevents a company from holding both a short-term revolving facility (such as Credicorp Flex) alongside a longer fixed-term facility from another provider. Layering instruments by purpose — liquidity buffer versus capital investment — is standard treasury practice for growing businesses.

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: Revolving credit facility vs term loan, Credicorp vs a government-backed loan

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Two of the most common shapes of short-term business borrowing are the fixed-sum loan and the revolving credit facility. They sound similar but behave quite differently, and choosing the right shape matters more than chasing the lowest headline rate. This guide walks through how to decide.

What each one is

A short-term loan is a single fixed sum, advanced once, repaid over an agreed term. You know the amount, the schedule and the total cost from the start. A revolving credit facility is an agreed limit you can draw against repeatedly, paying down and re-drawing as your cash flow moves; you are typically charged only on what you have actually drawn.

Which fits which situation

Match the borrowing to the shape of the need, not the other way round.

• One known cost, one time — a specific purchase, a one-off bill — points to a fixed-sum loan. It is simpler and the total cost is fixed.
• Recurring or unpredictable gaps — a wages month that is tight, stock you buy in waves, the occasional surprise — point to a revolving facility, because you only pay for what you use and the limit stays available.
• A single supplier bill you want to spread — points to a split-payment product rather than either of the above.

Questions to ask yourself

At Credicorp these shapes map to a one-time Business Loan, Credicorp Flex, and Credicorp Slice respectively. Whichever you consider, business lending to a company is outside FCA consumer-credit regulation under Article 60B FSMA RAO 2001 and is not covered by the Financial Ombudsman Service or the FSCS — so always weigh the protections as well as the price.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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A commercial finance broker can be valuable when you are unsure which product or lender suits your company, or when your circumstances are complex. However, for many limited companies there are clear advantages to applying directly.

What a broker adds

Brokers hold relationships with many lenders and can match your profile to options you might not find yourself — including niche asset-based products, specialist sector lenders, or larger structured deals. If your credit profile is complex or your needs are unusual, a whole-of-market broker can save you time and improve your chances. Brokers typically charge either an upfront fee or a commission paid by the lender, which may be reflected in the cost to you.

Applying to Credicorp directly

Credicorp accepts direct applications from UK limited companies and LLPs. There is no broker fee, and you deal directly with the credit team. You receive a decision on our product range — Business Loan, Flex, and Slice — without a third party in the middle. You retain full visibility of terms before accepting anything.

When each makes sense

If you already know you want a short-term business loan, a revolving facility, or to spread a specific bill over instalments, applying directly is straightforward. If you need a wider market comparison — including secured lending, asset finance, or longer-term bank facilities — a broker adds genuine value. Credicorp does not pay broker referral fees that are hidden from applicants; we are transparent about costs.

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: Credicorp vs a bank business loan, Credicorp vs asset finance.

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If you trade as a sole trader and have found you cannot borrow from us as you are, you may be wondering whether to incorporate — to set up a limited company — before applying. It is a reasonable question, but it is a real business decision with tax, legal and administrative consequences, not just a box to tick for a loan. Here is what changes when you incorporate, what it means for borrowing from us, and where to get the proper detail. Incorporating does not automatically make you eligible, and you should not do it for that reason alone.

Why your structure affects lending with us

We lend to UK limited companies and LLPs — bodies corporate — for business purposes, and we lend to the company rather than to its director personally. We cannot lend to a sole trader as structured, because a sole trader is not a separate legal person: there is no company to lend to, and lending to the individual would be a different kind of regulated activity entirely. We explain how the structures compare for borrowing in limited company, LLP or sole trader: lending eligibility compared. So incorporating changes the picture because it creates a separate entity we can lend to — but it is one factor among several, not a guarantee.

What incorporating actually changes

Becoming a limited company is more than a name change. The main shifts are:

• Limited liability. The company becomes a separate legal person, so in most cases your personal assets are protected if the business runs into trouble — though directors still have duties and there are narrow exceptions.
• Tax. Company profits are subject to corporation tax, and you take money out as salary and/or dividends rather than simply drawing profits. This can be more or less efficient depending on your numbers; it is not automatically cheaper.
• Administration. A company must file accounts and a confirmation statement at Companies House, keep statutory records, and meet reporting deadlines. There is more paperwork and more visibility.
• Public record. Your company's existence, directors and filings are on the public register.

What it does not change

Incorporating does not, by itself, make you a good lending prospect. A brand-new company has little or no trading history and may have a thin business credit file, and we assess affordability on the company — its turnover, bank-account history and business credit file — not on your personal income. So a freshly formed company can still be declined, or offered less, simply because there is not yet enough to assess. Forming a company the week before you apply will not conjure a track record. If and when you do qualify, you can see what we currently offer, with the real amounts, terms and costs, on our business loans page.

Weigh it as a business decision

The honest framing is this: incorporate if it makes sense for your business overall — for liability protection, tax position, credibility with customers and suppliers, or growth plans — and treat improved access to company lending as a possible benefit, not the reason. Switching purely to chase a small, short-term loan rarely stacks up, especially once you account for the running costs and admin of a company.

Where to get the detail and how to incorporate

The mechanics of forming a company, and your filing duties afterwards, are handled through Companies House — start at gov.uk, which sets out how to register and what you must file. For the tax consequences of moving from sole trader to company, take advice from an accountant, because the right answer depends on your figures. Decide on the full picture, not on a single application. Once incorporated, see how soon after incorporation you can borrow.

See also: A simple framework for comparing business finance options, APR vs total cost: which number should you trust?, Asset finance vs a business loan: how to compare them.

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Business credit cards and Credicorp products both offer revolving-style access to funds, but they are designed for different use cases. For many companies the answer is to use both — for different purposes.

What credit cards do well

A business credit card is excellent for recurring supplier purchases, travel, and expenses that fit neatly within a monthly statement cycle. Rewards programmes and purchase protection add value for frequent small transactions. Most cards offer an interest-free window if the balance is cleared in full each month.

Where Credicorp fits instead

Credit cards typically carry low limits and high revert rates once the interest-free period lapses. They are not designed to fund a £20,000 stock order, cover a quarterly VAT bill, or bridge a large debtor gap. Credicorp's Business Loan provides a fixed lump sum for a defined short term. Credicorp Slice spreads a specific company bill — such as a supplier invoice or tax charge — over three or four weekly instalments at a flat 6% fee with no compounding interest. Neither product requires a director personal guarantee.

Director liability

Many business credit cards require a director or sole-trader personal guarantee, making the director personally liable for the company's card debt. Credicorp lends to the company directly — no personal liability for directors.

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 Credicorp Slice spreads a bill, Credicorp vs a bank business loan.

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Before comparing rates and terms, it pays to be clear about what the money is for. Finance that suits day-to-day working capital is not always the right fit for a long-term growth investment, and choosing the wrong shape can cost you whatever the rate looks like.

Working capital

Working-capital needs are short-term and recurring: covering payroll in a quiet month, buying stock before a busy season, or bridging the gap between paying suppliers and getting paid. These suit flexible, shorter facilities that you can draw on and repay as cash comes in.

Growth finance

Growth needs are larger and longer: opening a second site, a major piece of equipment, or a step change in capacity. These suit finance with a defined amount and term that matches the period over which the investment is expected to pay back.

Matching the two

• Short, recurring need? Lean towards a flexible facility.
• Large, one-off investment? Lean towards a structured term.
• Avoid funding a long-term asset with short-term money, or vice versa.

How Credicorp can help

Credicorp Flex and Credicorp Slice are designed for different shapes of need by UK limited companies and LLPs. Being honest about the purpose first makes every later comparison clearer. The amount, term and cost that apply to you appear in your offer.

See also: Asset finance vs a business loan: how to compare them, Short-term loan vs revolving credit facility: a decision guide, Credicorp Flex vs Credicorp Slice: how to choose.

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