Yes. A limited company with an overdrawn director's loan account (DLA) can still apply to Credicorp. A DLA balance is a normal feature of how many owner-managed companies are run, and on its own it does not close the door. What we assess is the company's ability to afford new repayments from its trading, not the internal bookkeeping position between the company and its directors.
What an overdrawn DLA actually is
A director's loan account records money that moves between a director and the company outside of salary, dividends or expenses. The account is "overdrawn" when the director owes the company — for example, drawings taken during the year ahead of profits being declared as dividends. It is an accounting and tax matter for the company and its director, with its own consequences such as a section 455 charge and possible benefit-in-kind treatment. Those points are covered in our learn article on a director's loan to your own company, which is the place to start if you want the tax detail. This page is only about whether an overdrawn DLA affects the company's eligibility to borrow from us.
Why it does not bar the application
Because we lend to the company and take no personal guarantee, the borrower is the company itself and the obligation to repay sits with the company, not with any director personally. An overdrawn DLA is a balance between the company and an individual; it is not external debt owed to a third party. That is a different thing from arrears or borrowing owed to another lender, which we weigh separately in how existing debt affects the decision. The no-guarantee point is set out in why we do not take a personal guarantee.
What we look at instead
We assess the company as a whole and focus on affordability — whether new repayments fit comfortably alongside what the business is already paying. A DLA position is one piece of context, not the test in itself.
- How the company is trading now, from Open Banking data or recent statements
- Whether there is genuine headroom in the company's cash flow for another commitment
- The size and direction of the DLA, and whether it is being managed or cleared sensibly
- Whether the new finance is for a clear commercial purpose for the company
A large, growing overdrawn DLA can signal that cash is leaving the business faster than it is earned, and we take that into account. A modest balance your accountant expects to clear through dividends is unremarkable. Either way, it is the company's trading and affordability that drive the outcome, as described in how we decide whether to lend.
Business purpose still applies
The borrowing has to be for the company's own genuine commercial need, as set out in what counts as a business purpose when I apply. Using a Credicorp facility to repay or clear an overdrawn director's loan account is not a business purpose — that is money for an individual, not for the company's trading. Funding working capital, stock, equipment or a growth cost is exactly the kind of need we can support. If clearing a DLA is your aim, that is a matter to handle through the company's own profits and your accountant's advice, not through borrowing from us.
Be straight with us about the position
If your company carries an overdrawn DLA, there is no need to hide it. Open Banking and the financial information we ask for tend to show how cash actually moves through the business anyway, so being open simply makes the assessment cleaner and faster. If your accountant manages the account, they can usually explain it in a sentence or two.
Credicorp is an exempt business lender to UK limited companies and LLPs only, not to sole traders or individuals, and we are a lender rather than a broker. The borrower is the company, with no personal guarantees from directors. Because this is business lending outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS. The rate, term and repayments in any offer are specific to your business and shown to you before you commit. If you are unsure whether your company's position fits, ask us before you apply and we will tell you where you stand.
See also: Can a newly formed company apply?, Can a charity or charitable company apply?, Can a CIC or community interest company apply?.