Daily Junction.mobi portalPersonal Finance · June 8, 2026 · Harper Quinn · 3 min
Before signing any lending agreement, run through this 10-point checklist to compare cost, speed, and whether a personal guarantee puts your assets at risk.
Taking out a business loan is one of the most significant financial decisions a company director can make. Yet many business owners focus solely on the monthly repayment figure and miss the details that really determine whether a deal is right for them. Work through the following 10-point checklist before you sign anything.
1. Total cost of borrowing. The annual percentage rate (APR) is a useful starting point, but always ask for the total amount repayable. Factor in arrangement fees, early repayment charges, and any mandatory insurance products.
2. Fixed versus variable rate. A fixed rate gives certainty over your cash flow. A variable rate may start lower but can rise if the Bank of England base rate increases.
3. Loan term. Shorter terms mean higher monthly payments but less interest paid overall. Match the term to the asset or purpose being funded — a three-year loan for a piece of equipment you will replace in two years makes little sense.
4. Repayment flexibility. Some lenders allow capital repayment holidays or the option to overpay without penalty. If your revenue is seasonal, this flexibility can be the difference between managing repayments comfortably and struggling in a quiet month.
5. Secured or unsecured? Secured loans use business or personal assets as collateral. Unsecured loans do not, though they often carry higher rates. Credicorp's unsecured business loans are designed for UK SMEs that want access to capital without pledging collateral.
6. Personal guarantee requirement. This is the point many borrowers overlook until it is too late. A personal guarantee makes you personally liable if the business defaults. Not every lender demands one — Credicorp offers no-personal-guarantee options worth exploring if protecting your personal assets is a priority.
7. Director credit check. Even for a limited company loan, most lenders will run a credit check on the directors. Review your personal credit file before applying so there are no surprises.
8. Minimum trading history. Banks typically require two to three years of filed accounts. Alternative lenders are often more flexible, sometimes lending to businesses that have been trading for as little as six months.
"The best loan is not necessarily the cheapest one — it is the one whose terms you can confidently meet across the full duration of the agreement, even if trading conditions tighten."
9. Time to funding. If you need capital urgently — to cover a VAT bill, seize a stock opportunity, or bridge a gap in receivables — the speed of decision-making matters as much as the rate. Online specialist lenders often provide decisions within hours and funds within 24 to 48 hours. High street banks frequently take several weeks.
10. Lender credibility and transparency. Verify that any lender is authorised and regulated by the Financial Conduct Authority (FCA). Check Companies House records, read independent reviews, and confirm there are no hidden conditions buried in the small print.
For a broader view of how business debt fits into your overall financial strategy, our guide on managing cash flow for small businesses is worth reading alongside this checklist. If you are weighing up growth options, see also our piece on equity versus debt financing for UK startups.
Running through all ten points takes less than an hour but could save you thousands of pounds and, in the case of the personal guarantee question, protect your home and personal savings. Compare at least three lenders, read every clause, and do not be afraid to negotiate — particularly on arrangement fees and early repayment charges. Lenders want your business, and a well-prepared borrower is in a stronger position than they often realise.
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