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A borrower’s due-diligence checklist before taking finance
Most of what is written about due diligence in business lending is written from the lender’s side: how a lender checks a borrower, what underwriting looks at, which boxes get ticked before money goes out. A companion piece on this site covers the fast version of the reverse — how to confirm a lender is who it says it is. This is the longer, borrower-side checklist: the questions a UK company’s director or finance lead should be able to answer about a prospective lender before signing, not after the first repayment goes wrong.
It is structured as four groups, because that is roughly the order in which problems show up: who you are dealing with, what you are actually signing, how the money behaves over the term, and how the relationship ends. None of this is legal advice. It is the shape of a sensible internal review.
1. Who you are dealing with
Identity first. Before the commercial terms matter at all, you want to know the legal entity on the other side of the contract is real, traceable, and the same entity that will appear on the agreement.
- Find the registered company. A UK lender should give you a company name and number you can look up on Companies House. Confirm it is active, not dissolved or in liquidation, and that the name on the website matches the name that will be on the loan agreement. A trading name that does not resolve to a registered entity is a reason to slow down.
- Check who owns and runs it. The officers and persons-with-significant-control filings tell you who is behind the business. Recent incorporation is not in itself a problem — plenty of legitimate lenders are young — but it is a fact to weigh alongside everything else.
- Match the brand to the entity. Group structures are normal. Where a brand and an operating company differ, the lender should be able to explain the relationship plainly. This site exists partly to do exactly that for the Creditcorp family — the companies page sets out which entity does what, and the operating lender is Credicorp Limited.
- Confirm the regulatory position, and why. Whether a lender is FCA-authorised depends on what it lends and to whom. Lending to incorporated businesses can sit outside the consumer-credit regime by design — see our lending-and-regulation page. The point is not “authorised good, unauthorised bad”; it is that the lender should be able to state its position and the reason for it.
2. What you are actually signing
The headline number on a finance offer is rarely the whole price, and the agreement — not the marketing page — is what binds you. Read the document you will sign, in full, before you sign it.
- Who is the borrower? For a business loan to an incorporated company, the borrower should be the company. If the paperwork quietly makes a director a co-borrower, that is a materially different deal — you are no longer borrowing behind the limited-liability shield.
- Is there a personal guarantee? A personal guarantee turns a company debt into a personal one. Many lenders require one; some do not. Know which you are being asked to sign and what it would expose. We set out the reasoning in why Credicorp does not take a personal guarantee.
- What is the total cost, expressed in money? Ask for the all-in cost of the facility as a cash figure for a representative scenario, not only a rate. Fees, charges and any caps should be visible before signing, not discovered on the first statement.
- What protections actually apply? Outside the consumer-credit regime, some statutory protections do not attach to a business borrower. Our longer-form explainer walks through which do and do not — useful for setting realistic expectations rather than assuming consumer-style cover.
3. How the money behaves over the term
A loan is not a single event; it is a relationship that runs for the length of the term. Two facilities with the same headline price can behave very differently month to month. Diligence here is about understanding the mechanics before you are inside them.
- How does cost accrue? Fixed for the term, or per interval? On a revolving facility, charges may accrue per drawing or per period. Ask the lender to show you a worked example over the actual term you expect to use, not a best-case snapshot.
- What happens if you repay early? Some facilities reward early repayment; some carry an early-repayment charge. Either can be reasonable — but you should know which applies before you plan around it.
- What does a missed or late payment trigger? Know the default interest, charges and the timeline before you ever need them. A lender that explains its arrears process up front, including any hardship or flexibility options, is giving you information you can use.
- How will you be contacted, and can you change it? Communication cadence and channels are part of the product. Check what you are opting into and what control you keep over it.
4. How the relationship ends
The last group is the one borrowers think about least and regret most: what the exit looks like, in both the good and the bad case.
- Settlement on completion. When the company has repaid, what closes the account, and what confirmation do you get? A clean settlement statement is worth asking about at the start.
- Recovery on default. If the company cannot pay, what is the lender’s recovery route? Against company assets only, or — where a personal guarantee exists — against an individual too? This is where group one (who you are dealing with) and group two (what you signed) meet.
- Complaints and escalation. Know how to raise a concern and where it goes if you are not satisfied. The route may differ from the consumer Financial Ombudsman path; our glossary defines the relevant terms.
- Data, after the loan. Ask what happens to your company’s data and any open-banking access once the facility ends. A lender should be able to answer plainly.
Run it on us
The best test of a checklist is to point it at the lender you are reading it on. Credicorp Limited is a registered UK company (16093826) you can verify on Companies House; it lends to incorporated UK businesses, not to individuals or sole traders; the company is the borrower and there is no personal guarantee; the regulatory position and the reason for it are set out in plain English; and the operator publishes a list of alternatives it recommends you check first. You do not have to take any of that on trust — that is the whole point of running the checklist.
When you are ready to look at the actual products and pricing, those live on the operating lender’s site: what Credicorp offers and how it lends. Company, legal and trade-mark detail stays here on the group site.