Glossary

Lending has its own vocabulary, and it should never be a barrier to understanding what you are agreeing to. This is a plain-English A–Z of the terms you are most likely to meet with us. Each entry has its own link, so you can point someone straight to a single definition.

If a term you have met is not here, search the help centre or ask us — we are happy to explain anything in plain words.

See also: What is a CVA (Company Voluntary Arrangement)?, What is a SIC code?, What are accounts receivable?.

Open this answer →

Accounts receivable is the total your customers owe your business for goods or services you have already supplied but have not yet been paid for. It appears as an asset on your balance sheet because it represents cash you expect to receive.

Why it matters

Receivables sit at the heart of business cash flow. A company can be profitable on paper yet short of cash if a large amount is tied up in unpaid invoices. The gap between doing the work and getting paid is one of the most common reasons businesses look at finance.

• Long payment terms increase the receivables tied up at any time.
• Late-paying customers can stretch cash flow even further.
• A healthy receivables position shows demand and a working sales process.

How lenders look at receivables

When we assess a company's affordability, the pattern of receivables and how reliably they convert to cash helps us understand the business. Strong, predictable receivables can support a stronger picture of how a facility might fit your trading.

Credicorp lends only to UK limited companies and LLPs for business purposes. A Credicorp Flex or Credicorp Slice facility can sometimes help bridge the wait between invoicing and being paid, but we always look at affordability first.

See also: What are management accounts?, What is accrued interest?, Which business bank accounts can I connect?.

Open this answer →

Arrears describes the situation where a company has fallen behind on the repayments it agreed to make. If a scheduled repayment is missed or only partly met, the unpaid portion becomes arrears, and the account is said to be in arrears.

What happens if you fall behind

Being in arrears can have consequences set out in your agreement, which may include charges where they apply and an impact on the company's standing with us. The most important thing is that arrears are easier to resolve the sooner they are addressed.

• Contact us as soon as you think a repayment may be missed.
• Tell us about any change in the company's circumstances.
• The earlier we talk, the more options there usually are.

If your company is struggling

Cash flow can be unpredictable, and difficulty is not a failing. We would always rather hear from you early than after several missed repayments. Where a business is in genuine difficulty, we look for a workable way forward.

Credicorp lends only to UK limited companies and LLPs for business purposes, and we do not take personal guarantees from directors. If your Credicorp Flex or Credicorp Slice account is heading into arrears, reach out to our team straight away.

See also: Getting your company back on track after arrears, What does it mean to be in arrears?, How arrears affect your company's future borrowing with us.

Open this answer →

Management accounts are internal financial reports prepared during the year to help owners and directors understand how the business is performing and make decisions. They are produced for the business itself, not for filing.

How they differ from statutory accounts

Statutory accounts are the formal year-end accounts filed with Companies House and HMRC. Management accounts are usually more frequent (often monthly or quarterly), more detailed and more focused on running the business.

Why they are useful

Up-to-date management accounts give a current view of trading rather than a picture that may be many months old. They help spot trends early.

• Management accounts are internal and frequent.
• Statutory accounts are formal and filed.
• Both help tell the story of the business.

When you apply to Credicorp, recent management accounts can give us a more current view of your limited company or LLP than year-end figures alone.

See also: What is a ledger?, What is a year-end summary document for? and What is a key person in a business?.

Open this answer →

Affordability is the question of whether your company can comfortably keep up the repayments on a facility, given its income, costs and existing commitments. It is not just about whether you can be approved, but whether the borrowing genuinely suits the business.

What we look at

An affordability view brings together how the company trades and what it already pays out. The aim is a facility that fits, rather than one that stretches the business too thin.

• The pattern and reliability of your income.
• Existing commitments and outgoings.
• How a new repayment would sit alongside everything else.

Why responsible lenders care

Lending that a business cannot sustain helps no one. A facility that is affordable supports growth; one that is not can create pressure that harms the company. Assessing affordability protects both the borrower and the lender.

Credicorp lends only to UK limited companies and LLPs for business purposes. We do not take personal guarantees from directors, and the loan is to the company. The rate and terms shown in your offer reflect our assessment of how a facility fits your business. If your circumstances are difficult, tell us early so we can talk options.

See also: What is a credit limit?, What is restructuring a loan?, What is a promissory note?.

Open this answer →

Default is the point at which a borrower has broken the terms of a loan agreement in a significant way, most commonly by failing to keep up the agreed repayments. It is a more serious stage than simply being in arrears, and the agreement sets out what it means and what may follow.

What can trigger it

• Persistently missing repayments without resolving the position.
• Breaching a key term of the agreement.
• Other events specifically defined in your agreement as a default.

Why it is worth avoiding

A default can have consequences for the company, which may include an impact on its credit profile and the steps a lender is entitled to take under the agreement. The good news is that default is usually the end of a path that started much earlier, which means there is normally time to act before it is reached.

If you are heading for difficulty

Talk to us as soon as you can. Where a business is in genuine difficulty, we look for a workable way forward rather than rushing to formal steps.

Credicorp lends only to UK limited companies and LLPs for business purposes, and we do not take personal guarantees from directors. If your Credicorp Flex or Credicorp Slice account is under pressure, contact our team early.

See also: Glossary: default (business lending), What is a promissory note? and Can I pay my loan off early?.

Open this answer →

Going concern is an accounting principle that assumes a business will continue to operate for the foreseeable future and has no intention or need to stop trading or wind down. Most company accounts are prepared on this basis.

Why the assumption matters

If accounts are prepared as a going concern, assets are valued on the basis that the company will keep using them. If that assumption no longer holds, accountants may need to value things differently and flag the risk.

What it signals to a lender

A clean going-concern statement in your accounts suggests your accountant believes the business is viable. A qualified or uncertain statement is a warning sign that a lender will want to understand.

• It reflects a forward-looking view of viability.
• It is a judgement, not a guarantee.
• Directors are responsible for the assessment behind it.

Credicorp assesses limited companies and LLPs on a rounded view of trading. If you are unsure how your accounts read, your accountant can explain the going-concern note to you.

See also: What is a holding company?, What is a judgment debt? and What is a negative pledge?.

Open this answer →

A facility is described as being in arrears when one or more repayments that were due have not been paid on time. In short, the account has fallen behind the agreed repayment schedule.

How arrears arise

Arrears can happen for many reasons, from a missed payment date to a temporary cash-flow gap. The amount in arrears is the total of the payments that should have been made but have not been.

• It refers to overdue repayments, not the whole balance.
• Interest and the rest of the schedule generally continue alongside.
• Letting arrears build can affect the standing of the facility.

What to do

If your company is in arrears or expects to be, the most helpful step is to contact us as early as possible. Talking things through early usually gives more options than waiting, and we would always rather help find a workable way forward.

Credicorp lends only to UK limited companies and LLPs for business purposes and is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Any support available is discussed case by case and set out within the terms of your agreement.

See also: What happens if I miss a payment?, Asking for extra time or plain language on calls and What does 'arrears' mean and will it affect my credit file?.

Open this answer →

Your outstanding balance is the amount your company still owes on a facility at a particular point in time. It is the figure you would need to clear to bring the loan to zero on that date.

What it usually includes

The outstanding balance is not just the money you originally borrowed. It reflects what remains after repayments made so far, plus any interest or charges that have built up but not yet been paid.

• The remaining principal, which is the part of the borrowed amount not yet repaid.
• Interest accrued up to the date you check the balance.
• Any fees or charges that have been applied under your agreement.

Where to find it

Your outstanding balance is shown in your Credicorp account and on your statements. Because interest accrues over time, the exact figure to settle in full can change day to day, so ask for a settlement figure if you intend to repay everything at once.

Credicorp lends only to UK limited companies and LLPs for business purposes. We never state a figure here that could be mistaken for your own balance, so always rely on the live total in your account rather than any general example.

See also: What is the principal on a loan?, Does interest keep building while my company is in arrears? and How are my payments allocated to what I owe?.

Open this answer →

Pari passu is a Latin phrase meaning on equal footing. In finance and lending, it describes two or more obligations or creditors that rank equally, so none has priority over the others.

Where the term appears

You may see pari passu in loan agreements or company finance documents. It signals that certain debts or claims are treated equally, for example if a company has several lenders that share the same ranking.

• It means equal ranking among the parties it covers.
• No party in a pari passu group is paid ahead of the others.
• It is most relevant where a company has more than one creditor.

Why it can matter

Ranking affects the order in which creditors are dealt with if a company runs into difficulty. Knowing whether obligations rank equally or in a set order helps a business understand its overall position across different facilities.

Credicorp lends only to UK limited companies and LLPs for business purposes. Whether any ranking term applies to a Credicorp facility is set out in your agreement, so check the wording or ask our team. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply.

See also: What is yield on a loan?, What is amortisation?, Glossary: amortisation.

Open this answer →

A loan is described as unsecured when it is not backed by a specific asset pledged as security. Instead of relying on collateral, the lender relies on the company's standing and its legal obligation to repay.

Unsecured versus secured

A secured loan gives the lender a claim over a named asset, such as property or equipment, if the loan is not repaid. An unsecured loan has no such pledge, so the assessment focuses more on the company's circumstances and ability to repay.

• No specific asset is pledged against the borrowing.
• The lender assesses the company's overall position.
• Terms can differ from secured borrowing because the risk profile is different.

What this means for your company

Whether a particular facility is secured or unsecured is set out in your agreement. An unsecured facility does not mean there are no consequences for non-payment; the company remains legally obliged to repay what it owes.

Credicorp lends only to UK limited companies and LLPs for business purposes and does not take personal guarantees from directors. Whether a Credicorp facility is secured or unsecured is defined in your own paperwork. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply.

See also: What is collateral?, Secured vs unsecured business loans: what's the difference? and What is asset finance?.

Open this answer →

A missed payment is a scheduled repayment that is not made by its due date. Even a single missed payment can have consequences, so it is worth understanding what it means and acting quickly.

What it can lead to

Depending on your agreement, a missed payment may attract a charge, be recorded against the company, and, if it continues, push the account into arrears. The detail is set out in your facility terms.

The most important step

The single best thing you can do is talk to your lender as early as possible, ideally before the payment is missed. Lenders generally have far more options when they know in advance.

• A missed payment is a payment not made on time.
• Consequences depend on your specific agreement.
• Early contact opens up more options.

If you expect to miss a Credicorp payment, contact us straight away. We would much rather work through it with you than find out after the event.

See also: What does it mean to be in arrears?, What does 'arrears' mean and will it affect my credit file? and What happens if my company misses a payment?.

Open this answer →

A balance sheet is one of the core financial statements a company produces. It shows, at a single point in time, what the business owns (its assets), what it owes (its liabilities) and the difference between the two, which belongs to the owners (equity).

The three parts

• Assets — things of value the company holds, such as cash, stock, equipment and money owed by customers.
• Liabilities — what the company owes, such as supplier balances, tax due and borrowing.
• Equity — what remains for the owners once liabilities are subtracted from assets.

Why it matters when borrowing

A balance sheet tells a lender a lot about the health of a business. It shows whether the company has more assets than liabilities, how much is tied up in stock or unpaid invoices, and how existing borrowing sits alongside everything else. A strong balance sheet can support a clearer affordability picture.

Credicorp lends only to UK limited companies and LLPs for business purposes. When you apply, your financial statements help us understand the company so we can offer a facility that fits. If you are unsure how to read your own balance sheet, your accountant can talk it through with you.

See also: What does outstanding balance mean?, What is insolvency?, What is a repayment schedule?.

Open this answer →

A business credit score is a rating that reflects how reliably your company meets its financial commitments. It is separate from any personal credit history and is built from information about the company itself, drawn from credit reference agencies and public records.

What feeds into it

Scores are calculated by credit reference agencies using a range of company information. While the exact methods differ between agencies, common factors include the following.

• How promptly the company pays suppliers and existing commitments.
• Filed accounts and public records held at Companies House.
• The age and trading history of the business.
• Any county court judgments or signs of distress.

Why it matters

Lenders, suppliers and partners may look at a business credit score to gauge risk before extending credit or terms. A stronger score can widen the options available to a company and support better conversations about finance.

Credicorp lends only to UK limited companies and LLPs for business purposes, and your company's credit profile is one part of how we assess an application. It is not the whole picture, though. We also look at how the business trades and whether a facility is affordable. Keeping accounts up to date and paying commitments on time both help build a healthy profile.

See also: Your business credit score: how it works and how to improve it, What is credit utilisation?, What credit score do I need for a business loan?.

Open this answer →

A business loan agreement is the contract between a lender and a company that sets out the full terms of the borrowing. It is the document that governs the relationship, so it is worth reading carefully before you accept anything.

What it typically covers

• The amount, rate and term that apply to your facility.
• How and when repayments are made.
• What happens if you repay early or fall behind.
• Any conditions or terms attached to the facility.

Why it matters

Once accepted, the agreement is binding on the company, so it should reflect your understanding of the deal. If a term surprises you, that is a reason to ask before signing, not after. A clear agreement protects both sides by removing doubt about what was agreed.

Because Credicorp is an exempt business lender, the agreement is a business contract. This type of lending sits outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS protection do not apply.

Credicorp lends only to UK limited companies and LLPs for business purposes. We do not take personal guarantees from directors; the agreement is with the company. If anything in your agreement is unclear, ask our team before you accept.

See also: Can I get a copy of my Business Loan Agreement?, What is accrued interest?, How to read your offer document before you accept.

Open this answer →

A covenant is a term in a loan agreement that sets out something the borrower agrees to do, or to refrain from doing, while the facility is in place. Covenants are part of how a lender and borrower set clear expectations from the start.

Types of covenant

• Positive covenants — things the borrower agrees to do, such as providing information when asked.
• Negative covenants — things the borrower agrees not to do without consent.
• Reporting covenants — agreeing to share certain information about the business over time.

Why covenants exist

Covenants help both sides. They give the lender comfort that the agreed basis of the lending continues to hold, and they give the borrower clarity about what is expected. Keeping to the covenants helps the relationship run smoothly.

If circumstances change and a covenant becomes hard to meet, the best step is to talk to your lender early rather than wait.

Credicorp lends only to UK limited companies and LLPs for business purposes. Any terms that apply to your Credicorp Flex or Credicorp Slice facility are set out in your agreement before you accept, so you can see exactly what you are committing to.

See also: Keeping your company details current with us during the term, What is a promissory note? and Asking for extra time or plain language on calls.

Open this answer →

A credit facility is an agreement between a lender and a business that gives the business access to funding under agreed terms. The word facility simply means the arrangement itself, rather than a single transaction.

Two broad shapes

• A term facility — a set amount is provided, then repaid over an agreed period.
• A revolving facility — the business can draw funds, repay them and draw again up to an agreed limit, a bit like a flexible line.

Why the structure matters

The right shape depends on what the business needs. A term facility suits a known, one-off cost. A revolving or flexible facility suits needs that come and go, such as managing cash flow across busy and quiet periods. The structure affects how and when you repay and how interest accrues.

Credicorp lends only to UK limited companies and LLPs for business purposes. Our Credicorp Flex and Credicorp Slice products are different shapes of facility designed for different needs. The amount, rate and terms that apply are set out in your offer, and we assess affordability before lending. We do not take personal guarantees from directors; the facility is to the company.

See also: What is a revolving credit facility?, What is a credit limit?, How the running-credit facility differs from a one-time loan.

Open this answer →

A credit limit is the most a business can borrow or draw under a particular facility. It acts as a ceiling: you can use funds up to that point, but not beyond it. The limit is set by the lender as part of assessing the company.

How a limit is set

A credit limit reflects what the lender judges to be appropriate and affordable for the business. It is not a target to reach but a boundary within which the company can operate. Common factors that shape a limit include the following.

• How the company trades and its income pattern.
• Existing commitments and overall affordability.
• The company's credit profile and history.

Using a limit sensibly

Having a limit available does not mean it should all be used. The healthiest approach is to draw what the business genuinely needs and can comfortably repay. On a flexible facility, repaying what you have drawn can free up room to draw again later.

Credicorp lends only to UK limited companies and LLPs for business purposes. Any limit on your Credicorp Flex or Credicorp Slice facility is shown in your account and your agreement. If your needs change, you can talk to us, though any change is subject to a fresh affordability view.

See also: What is a revolving credit facility?, Short-term loan vs revolving credit facility: a decision guide and How do I draw down from my Credicorp Flex facility?.

Open this answer →

A Company Voluntary Arrangement (CVA) is a formal, legally binding agreement between an insolvent or struggling limited company and its creditors to repay some or all of what is owed over an agreed period. The key feature is that the company carries on trading while the plan runs, rather than closing down. It is a company tool, not a personal one, so it sits with the business as a legal entity rather than with any director individually.

How a CVA works

A licensed insolvency practitioner draws up a proposal setting out how much the company can realistically pay and over what term, then puts it to the creditors. If creditors holding the required majority of the debt vote in favour, the arrangement binds them all, including those who voted against. The practitioner then supervises the plan, and the company makes its agreed contributions, usually monthly, until the term ends.

Why a company would use one

A CVA gives a fundamentally viable business breathing room to recover without being wound up. Trade continues, contracts and staff are often preserved, and creditors typically recover more than they would in a liquidation. It is one of several formal routes a company in difficulty can take, alongside administration, refinancing and informal time-to-pay deals. The wider menu of choices is set out in understanding business insolvency options.

How a CVA differs from related terms

A CVA is easy to confuse with similar-sounding arrangements, so the distinctions matter:

• An IVA is the personal equivalent, for an individual rather than a company.
• A company in insolvency may use a CVA as a rescue route, but insolvency itself is the underlying financial state, not the plan.
• Restructuring is the broader idea of reshaping a company's finances or operations; a CVA is one formal mechanism for doing that.
• A liquidation closes the company down, whereas a CVA is specifically designed to keep it trading.

What a CVA means for borrowing

A live CVA is a serious signal to any lender, but with Credicorp it is not an automatic refusal. We look at whether the company is meeting the plan as agreed, how far through the term it is, and whether new finance would genuinely help rather than stretch the business past the point the arrangement was meant to fix. Many CVAs also restrict taking on new credit, and some require the supervisor's consent first, so it is worth checking your own terms before you apply. The full picture is in can a company in a CVA apply.

Protection while a plan runs

If your company is in difficulty, the statutory Breathing Space scheme will not usually cover a corporate loan, because that scheme is built for personal debt. That does not leave you without support, though, and whether Breathing Space applies to a business loan explains the protection a company borrower does have. As ever, speak to a licensed insolvency practitioner early, and tell us about the position so we can find the right path.

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. For more plain-English definitions, browse the Credicorp glossary.

See also: What is a SIC code?, A plain-English glossary of business-lending terms, What are accounts receivable?.

Open this answer →

A data processor is an organisation that handles personal data on behalf of another organisation, the controller, following its instructions. The term comes from UK data-protection law and shapes how information is handled in lending.

Controller versus processor

The controller decides why and how personal data is used. A processor acts on the controller's instructions, often providing a specific service such as identity verification, payment handling or document storage.

• The controller sets the purpose; the processor carries out the task.
• Processors are bound by agreements to protect the data they handle.
• Both have duties under UK data-protection rules.

Why this matters in business lending

When you deal with a lender, some information may be handled by trusted service providers acting as processors, for example to verify details or process payments. Understanding the roles helps you see who is responsible for what.

Credicorp deals with UK limited companies and LLPs, and the personal data involved is usually that of directors or contacts. How your information is used, and who may process it on our behalf, is explained in our privacy information. If you have a data question, our team can point you to the right detail.

See also: Who is the data controller for my information?, Glossary: what is a data controller?, What is a debenture?.

Open this answer →

A debenture is a legal document used in business lending that gives a lender a form of security over a company's assets. It is registered against the company and sets out the lender's rights if the borrowing is not repaid. It is a feature of some secured business finance.

Fixed and floating charges

A debenture often contains one or both of two kinds of charge.

• A fixed charge attaches to specific assets, such as a particular piece of property or equipment.
• A floating charge covers a changing pool of assets, such as stock, that the company uses in the normal course of trading.

Why it matters

A debenture is a significant commitment because it places security over company assets. If a lender proposes one, it is worth understanding exactly what it covers and what would happen if the loan were not repaid. Your accountant or solicitor can explain the implications for your business.

Credicorp lends only to UK limited companies and LLPs for business purposes. We do not take personal guarantees from directors; any security that applies to a facility is set out clearly before you accept. If anything in an agreement is unclear, ask us before you sign.

See also: Glossary: debenture, What is a tariff of charges?, Secured vs unsecured business lending: what's the difference?.

Open this answer →

A drawdown is the act of taking money from a facility that has been made available to your business. Once a facility is in place, drawing down is how the funds actually reach the company's account so they can be put to use.

One drawdown or many

How drawdowns work depends on the type of facility.

• On a term facility, you may take the full amount in a single drawdown at the start.
• On a flexible or revolving facility, you may make several drawdowns over time, up to your agreed limit.
• On flexible facilities, repaying earlier drawdowns can free up room to draw again.

Why it matters

Understanding drawdowns helps you manage cost and cash flow, because interest typically accrues on what you have actually drawn rather than the whole limit. Drawing only what the business needs, when it needs it, can keep borrowing efficient.

Credicorp lends only to UK limited companies and LLPs for business purposes. The way drawdowns work on your Credicorp Flex or Credicorp Slice facility is set out in your agreement, and you can manage them in your account. The rate and terms that apply are shown in your offer.

See also: What is a revolving credit facility?, How the running-credit facility differs from a one-time loan and Can my business have more than one loan with you at once?.

Open this answer →

A fixed interest rate is a rate that stays the same for an agreed period, regardless of what happens to wider interest rates in the market. For a borrower, this means the cost of that part of the borrowing is known in advance and does not move up or down during the fixed period.

The main benefit: predictability

The biggest advantage of a fixed rate is certainty. Because the rate does not change, the repayments tied to it are predictable, which makes budgeting and cash-flow planning easier for a business.

• Repayments stay steady through the fixed period.
• You are protected if market rates rise.
• It can make planning more straightforward.

How it compares to variable

The alternative is a variable rate, which can move over time. A fixed rate trades the chance of benefiting from falling rates for the certainty of knowing where you stand. Neither is automatically better; it depends on the business and how much predictability matters to you.

Credicorp lends only to UK limited companies and LLPs for business purposes. Whether your Credicorp Flex or Credicorp Slice facility carries a fixed or variable rate, and the exact rate that applies, is set out in your offer. If you are unsure which suits your business, ask our team.

See also: What is a variable rate?, Can I pay off a Credicorp Flex drawing early? and Can I shorten or extend my loan term?.

Open this answer →

A grace period is a short, agreed window after a payment falls due during which the payment can still be made without it being treated as missed or attracting a late charge. Not every agreement includes one, and the length varies by lender.

What a grace period is not

A grace period is not the same as a payment holiday or a permanent change to your schedule. It is simply a small buffer around the due date, where one exists.

Check your own agreement

Whether a grace period applies, and how long it is, depends on the terms of your specific facility. Always rely on your signed agreement rather than assumptions.

• It does not change the total amount owed.
• It may or may not apply to your facility.
• It is best treated as a safety margin, not a routine extension.

If you think you may miss a Credicorp payment, contact us early. We would rather talk through your options than have a payment quietly slip past its due date.

See also: What is a late payment charge?, What is due diligence?, What happens if I miss a payment?.

Open this answer →

A guarantor is a person or company that agrees to step in and repay a debt if the main borrower fails to. In business lending, lenders sometimes ask a director or a parent company to act as guarantor so they have someone else to pursue if the borrowing company cannot pay.

How a guarantee works

A guarantor signs a separate legal document alongside the loan agreement. If the borrower defaults, the lender can ask the guarantor to cover the outstanding balance, often up to an agreed limit.

How Credicorp is different

Credicorp lends only to UK limited companies and LLPs, and the loan is made to the company itself. We do not take personal guarantees from directors. That means your personal assets are not pledged against a Credicorp Flex or Slice facility.

• The borrower is the company, not any individual.
• No director personal guarantee is required.
• Always read any guarantee terms in full before signing one with any lender.

Because we sit outside the FCA consumer-credit regime, Credicorp business borrowing is not covered by the Financial Ombudsman Service or FSCS.

See also: A debt collection agency has contacted me - is it genuine?, What is a hard credit search? and What is a novation?.

Open this answer →

A hard credit search is a thorough check a lender runs when assessing an application. Unlike a soft search, a hard search leaves a visible footprint on the credit file that other lenders can see.

Hard versus soft

A soft search is often used for eligibility checks and quotes and does not affect how others view the file. A hard search is usually run at the point of a full application decision.

Company and director information

In business lending, a lender may look at the limited companys own credit profile as well as related background information. Credicorp lends to the company, so our focus is on the businesss standing.

• Hard searches are visible to other lenders.
• Soft searches are not.
• Multiple hard searches in a short time can look like financial pressure.

If you want to understand what searches a Credicorp application involves before you proceed, ask us and we will explain the process clearly.

See also: Business credit reference agencies explained, Will applying for a Credicorp loan affect my credit file?, What is a guarantor in business lending?.

Open this answer →

A holding company is a company whose main role is to own shares in other companies, known as its subsidiaries, rather than to trade in its own right. The trading usually happens in the subsidiaries below it.

Why businesses use them

Groups use holding structures to separate different activities, manage risk and organise ownership cleanly. The holding company sits at the top and the operating companies do the day-to-day work.

Why a lender looks at structure

When a company applies for finance, the lender wants to understand which entity is borrowing and how it fits within any group. The trading position of the operating company often matters most.

• A holding company owns, a trading company trades.
• Group structure affects who is responsible for a loan.
• It is sensible to be clear about which entity is applying.

Credicorp lends to UK limited companies and LLPs. If your business is part of a group, let us know the structure so we can assess the right entity.

See also: Can I borrow from another company in the group?, What is a judgment debt? and How much trading history do you look at?.

Open this answer →

A judgment debt is an amount a court has formally ordered a person or company to pay, usually after a creditor has taken legal action. For companies, the most common form is a County Court Judgment, or CCJ.

Why lenders look at them

A judgment debt against a company is recorded and visible to others. It signals that the company did not settle a debt and a creditor went to court, which can affect how lenders view the business.

What happens next

If a judgment is satisfied (paid), that can be recorded too. Unsatisfied judgments tend to carry more weight in a lenders assessment.

• A CCJ is a court order to pay.
• It appears on the companys public record.
• Settling it and recording that can help over time.

Credicorp assesses each limited company and LLP on a rounded view. If your business has a judgment on record, being open about the background helps us understand the full picture.

See also: Does a CCJ against my company affect eligibility?, What is a holding company? and What does 'arrears' mean and will it affect my credit file?.

Open this answer →

A key person is an individual whose skills, relationships or knowledge are so important that the business would struggle without them. This might be a founder, a lead technician, or someone who holds vital client relationships.

Key-person risk

The concern, often called key-person risk, is what would happen to the company if that person were suddenly unavailable. A business that depends heavily on one individual can be more fragile than its figures suggest.

Reducing the risk

Spreading knowledge across a team, documenting processes and planning for cover all reduce key-person risk and make a business more resilient.

• A key person is hard to replace quickly.
• Over-reliance on one person is a real vulnerability.
• Good documentation and succession planning help.

When Credicorp assesses a limited company or LLP, we consider the resilience of the business as a whole, not just its current results.

See also: What is a judgment debt?, Can I ask a person to review an automated decision? and Can I pay a Flex drawing from a different card or account?.

Open this answer →

A late payment charge is a fee a lender may apply when a scheduled payment is not made by its due date. The purpose is to reflect the cost and risk of a missed payment.

Where to find the detail

Whether a charge applies, and on what terms, is set out in your specific agreement. Always rely on your signed documents rather than general expectations.

How to avoid them

The simplest protection is to make payments on or before the due date and to keep us informed early if you anticipate a problem.

• It applies when a payment is late, per your terms.
• The detail is in your agreement, not assumptions.
• Talking to us early is better than missing quietly.

If you think a Credicorp Flex or Slice payment may be late, contact us before the due date. We would much rather discuss your options than apply a charge.

See also: How do late-payment charges work?, What happens if I miss a payment?, What is a grace period?.

Open this answer →

A ledger is the organised record where a business stores its financial transactions. Historically a physical book, today it is almost always a digital record inside accounting software. Ledgers are the foundation your accounts are built from.

Common types

Businesses often keep a sales ledger (what customers owe), a purchase ledger (what the business owes suppliers) and a general ledger that brings everything together.

Why they matter

Well-kept ledgers make it far easier to understand cash flow, prepare accounts and answer questions from lenders or HMRC. Messy records make every financial task harder.

• Ledgers record transactions in an organised way.
• Sales, purchase and general ledgers serve different roles.
• Good records support better decisions.

When Credicorp reviews a limited company or LLP, clean and current records help us see the business clearly and assess an application fairly.

See also: What are management accounts?, Is my statement an official document I can rely on? and What is a year-end summary document for?.

Open this answer →

A loan statement is a periodic summary of what has happened on your facility. Think of it like a bill from a utility or telecoms provider: a clear record of activity over a period, so you can see exactly where things stand.

What a statement typically shows

A statement pulls together the movements on your account during the period it covers, so you can reconcile it against your own records.

• Repayments received during the period.
• Interest and any charges applied.
• The opening and closing balance for the period.

Why it is useful

Statements help you keep your bookkeeping accurate, check that payments have been applied as expected, and plan ahead with a clear view of the remaining balance. Keeping statements also gives you a tidy paper trail for your accounts.

Credicorp lends only to UK limited companies and LLPs for business purposes. Your statements are available in your account and reflect the actual activity on your facility, so always rely on your own statement rather than any general description. If you need a copy or have a query about an entry, our team can help.

See also: What is an overpayment?, What is a repayment schedule?, What is an early repayment charge?.

Open this answer →

The maturity date is the point at which a loan or finance facility reaches the end of its term and is due to be fully repaid, or formally reviewed. It marks the natural end of the agreement.

Why it matters

Knowing the maturity date helps you plan ahead. It tells you when the arrangement concludes and by when any remaining balance is expected to be cleared, according to your agreed schedule.

What happens around it

As maturity approaches, it is sensible to check your balance and think about your next steps well in advance rather than at the last moment.

• It is the agreed end point of the facility.
• It supports forward planning.
• Your agreement sets out the exact date.

For your Credicorp Flex or Slice facility, the relevant dates are set out in your agreement and statements. If anything is unclear, ask us and we will walk you through your schedule.

See also: Preparing for the end of your facility, What is a non-status loan? and What is insolvency?.

Open this answer →

A merchant cash advance is a form of business funding repaid as a percentage of a companys card sales. Instead of fixed instalments, repayments rise and fall with the businesss daily takings.

Who tends to use it

It is most associated with businesses that take a lot of card payments, such as retail and hospitality, where card turnover is steady and predictable.

Things to weigh up

Because repayments flex with sales, slow periods cost less and busy periods cost more. As with any finance, understand the full cost and terms before committing.

• Repayments are linked to card turnover.
• It suits card-heavy businesses.
• The total cost depends on the agreed terms.

Credicorp Flex and Slice are different products with their own structures. We can help you understand which approach fits how your limited company or LLP actually trades.

See also: Merchant cash advance vs term loan, How retention payments affect construction cash flow and What is a maturity date?.

Open this answer →

A negative pledge is a promise a borrower gives not to grant certain security over its assets to other lenders without the existing lenders consent. It protects the lenders position by stopping the borrower from quietly putting another creditor ahead of them.

Why lenders use it

If a borrower could freely pledge assets to others, an unsecured lender might find itself further back in the queue. A negative pledge helps preserve the balance the lender relied on when agreeing the facility.

What it means for you

If your agreement contains a negative pledge, check what it covers before taking on other secured finance, so you stay within your commitments.

• It limits giving security to others.
• It protects the existing lenders position.
• Read its scope before arranging other finance.

If a term like this appears in your Credicorp agreement and you are unsure how it applies, ask us and we will explain it in plain English.

See also: What is a holding company?, What does going concern mean? and What is a judgment debt?.

Open this answer →

A non-status loan is a term sometimes used for finance offered with limited reference to a standard credit history, often aimed at borrowers who may not fit a lenders usual criteria. The label is loose and can mean different things to different providers.

Reading the term with care

Because the phrase is not precise, the most important thing is to look past the label and understand the actual terms: what is being charged, what is required, and what happens if things go wrong.

What to check

Always read the full agreement, understand the total cost and obligations, and be cautious of any offer that seems vague about its terms.

• The label is loose, so read the detail.
• Focus on real terms, not marketing words.
• Be cautious where terms are unclear.

Credicorp assesses each limited company and LLP on a rounded, transparent basis. If anything about an offer is unclear, ask us to explain it plainly before you proceed.

See also: What is a maturity date?, Business lending in Birmingham and Business lending in Manchester: a quick guide.

Open this answer →

Novation is the legal process of replacing one party to a contract with a new party, so the new party takes over both the rights and the obligations. Crucially, it needs the agreement of everyone involved.

Novation versus assignment

Assignment usually transfers only the benefit of a contract. Novation transfers the whole thing, including the obligations, and effectively creates a fresh agreement with the new party in place of the old.

Where it comes up

It can arise during business sales or restructures, where contracts need to move from one entity to another cleanly.

• It transfers rights and obligations together.
• It needs all parties to agree.
• It differs from a simple assignment.

If your limited company or LLP is restructuring and a Credicorp facility might be affected, talk to us early so we can discuss the right approach together.

See also: What is a guarantor in business lending?, Can I borrow from another company in the group? and Glossary: default.

Open this answer →

A payment holiday is a temporary, agreed arrangement to pause or reduce a company's loan repayments for a set period. It is not a cancellation of the debt; the amount owed remains, and interest usually continues to accrue.

How it tends to work

Because repayments are paused rather than written off, the loan is effectively repaid over a longer overall period, or repayments may be slightly higher once the pause ends. The exact effect depends on your agreement.

• A payment holiday must be agreed in advance; it is never something to simply stop paying without contact.
• Interest typically continues to build during the pause.
• The arrangement and any conditions are confirmed in writing.

When to ask

If your company is facing a short-term cash-flow squeeze, it is far better to contact us early than to miss repayments. We can discuss whether a payment holiday or another arrangement is suitable for your situation.

Credicorp lends only to UK limited companies and LLPs for business purposes and is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Any support available is set out in your agreement and discussed case by case with our team.

See also: Can my company request a payment holiday?, What happens when payments resume after a pause? and What is a fixed interest rate?.

Open this answer →

A personal guarantee is a promise by an individual, usually a company director, to repay a business debt from their own money if the company cannot. It effectively puts personal assets behind a company loan.

Credicorp's position

Credicorp does not take personal guarantees from directors or members. We lend to the UK limited company or LLP as a separate legal entity, and the obligation to repay sits with the business itself.

• No director is asked to stand personally behind the borrowing.
• Your home and personal savings are not pledged against a Credicorp facility.
• The company is the borrower, and the company is responsible for repayment.

Why this matters

Many business lenders require a personal guarantee, which can blur the line between company and personal finances. By not taking one, Credicorp keeps the borrowing where it belongs, with the business, which respects the limited-liability structure that companies and LLPs are built on.

Credicorp is an exempt business lender operating outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply. If another agreement you hold mentions a personal guarantee, read it carefully, as the terms can vary between lenders.

See also: What is an obligor?, What is a guarantor in business lending?, No personal guarantee: what it means for directors.

Open this answer →

A promissory note is a written, signed promise by one party to pay a stated sum of money to another, either on demand or by a set date. At its simplest, it is a formal IOU.

What it contains

A promissory note typically records the amount, the parties, and when and how repayment is due. In modern business lending, these elements are usually built into a fuller facility agreement rather than a separate note.

• It is a clear, written promise to repay.
• It identifies the amount and the repayment terms.
• The detail for your borrowing usually sits in the main agreement.

How this relates to your facility

With Credicorp, the obligation to repay and the full terms are set out in your facility agreement, which is signed on behalf of your company. That document is the authoritative record of what is owed and on what terms.

Credicorp lends only to UK limited companies and LLPs for business purposes and does not take personal guarantees from directors. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Always treat your signed agreement as the definitive statement of your obligations.

See also: What is security on a loan?, What is refinancing?, What does default mean?.

Open this answer →

A repayment schedule is a list of every repayment due on a facility, with the date of each payment and how the outstanding balance reduces over time. It turns the agreement into a clear timeline you can plan around.

What it shows

A typical schedule sets out, for each instalment, the date due, the amount, how much goes towards interest, how much reduces the principal, and the balance remaining afterwards.

• Payment dates across your agreed term.
• The split between interest and principal for each payment.
• The running balance, falling to zero by the end of the term.

Why it helps your business

A repayment schedule lets you line up loan payments against your expected income, so there are no surprises. It also helps you see the effect of repaying early, where your agreement allows, since clearing the balance sooner reduces the interest you accrue.

Credicorp lends only to UK limited companies and LLPs for business purposes. Your schedule reflects the amount, rate and term in your own offer, so always work from the schedule in your account rather than any general example. Our team can send a copy if you need one.

See also: What is an overpayment?, What is an early repayment charge?, What happens if I miss a payment?.

Open this answer →

A revolving credit facility is a form of business borrowing where a company can draw money up to an agreed limit, repay it, and then draw again as needed. The available credit replenishes as you repay, a bit like a flexible reusable limit.

How it differs from a term loan

With a term loan, you borrow a fixed amount once and repay it over a set period. A revolving facility is more flexible, because the limit can be used repeatedly, and interest is usually charged on the amount drawn rather than the whole limit.

• Funds can be drawn and repaid multiple times within the limit.
• Interest typically applies only to the balance actually in use.
• It suits ongoing or unpredictable working-capital needs.

How Credicorp products compare

Credicorp offers Credicorp Flex and Credicorp Slice. The flexible features of each are set out in your offer, so check the product terms to understand how drawing and repayment work for your facility rather than assuming a generic revolving structure.

Credicorp lends only to UK limited companies and LLPs for business purposes and is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Our team can explain how a particular product works for your company.

See also: What is a credit limit?, How the running-credit facility differs from a one-time loan, What is an overdraft facility?.

Open this answer →

A settlement figure is the precise amount your company would need to pay to clear a facility completely on a specific date. Because interest keeps accruing, the figure is tied to the date it is calculated for.

What it includes

A settlement figure is more than the principal still outstanding. It brings together everything required to bring the loan to zero as at the settlement date.

• The remaining principal not yet repaid.
• Interest accrued up to the chosen settlement date.
• Any early repayment charge or fees that apply under your agreement.

How to use it

If you intend to repay everything at once, always ask for a settlement figure rather than relying on your current balance, because the balance shown today may not include interest right up to the payment date. Settlement figures are usually valid only until a stated date, after which they need refreshing.

Credicorp lends only to UK limited companies and LLPs for business purposes. We never publish a settlement amount here, since it is specific to your facility and the date you choose. Request a current figure from our team or your account before making a full repayment.

See also: What does outstanding balance mean?, What is a repayment schedule?, What is an overpayment?.

Open this answer →

A SIC code (Standard Industrial Classification code) is a five-digit number that describes the main activity a business carries out. Every UK limited company and LLP records at least one SIC code at Companies House, and it is one of the simplest signals a lender uses to understand what your company actually does.

Where your SIC code comes from

You choose a SIC code when you incorporate, and you can update it each year on your confirmation statement. The codes come from a fixed national list maintained for Companies House, so the choice is a structured pick rather than free text. A company can hold more than one code if it has several lines of business, up to four in total.

For example, a software company might use a code in the computer programming range, while a builder would use one in the construction range. The aim is to pick the code, or codes, that genuinely describe what you do day to day, not an aspiration or a one-off side activity.

Why it matters when you apply

When you apply to Credicorp, your SIC code is part of the picture our decision draws from your Companies House record. It gives a quick, standardised read on your sector before anyone looks at the detail of how the business trades. A code that matches your real activity helps that read land correctly.

• It tells a lender, at a glance, what industry you operate in.
• It lets sector context feed into how an application is assessed.
• A mismatch between your code and your actual trading can slow things down or prompt questions.

It is worth checking that the code on your record still reflects what your company does, especially if the business has changed direction since it was set up. An out-of-date or vague code will not necessarily stop an application, but an accurate one removes a small point of friction and avoids confusion about your line of work.

What a SIC code is not

A SIC code is descriptive, not a score or a judgement. It does not rate your creditworthiness, and on its own it neither qualifies nor disqualifies a business. It simply classifies activity. The substance of a lending decision rests on how your company trades, its credit profile and whether a facility is affordable, with the code adding context around the sector you sit in.

Credicorp lends only to UK limited companies and LLPs for business purposes. We are an exempt business lender operating outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply.

To see how this fits the wider assessment, read what information goes into a lending decision and which credit reference agencies we use. You may also find it useful to understand what a business credit score is, and if you have recently set up, whether a brand-new company can apply.

See also: What is a CVA (Company Voluntary Arrangement)?, A plain-English glossary of business-lending terms, What are accounts receivable?.

Open this answer →

A sole trader is a person who runs a business in their own name, without forming a separate company. In law, the individual and the business are the same, so the person is personally responsible for the business's debts.

How it differs from a company

A limited company or LLP is a separate legal entity from the people who own or run it. A sole trader has no such separation, which is the key distinction that affects who can borrow from Credicorp.

• A sole trader and their business are one and the same in law.
• A limited company or LLP is a distinct legal entity.
• That entity, not an individual, is the borrower on a company facility.

Why Credicorp cannot lend to sole traders

Credicorp lends only to UK limited companies and LLPs for business purposes. Because a sole trader is an individual rather than a company or LLP, they fall outside who we can lend to. We are not a consumer-credit lender and do not lend to individuals.

Credicorp is an exempt business lender operating outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply. If your business is not yet a limited company or LLP, you would need that structure in place before applying.

See also: What is an LLP?, What is an obligor?, Why we lend to companies, not sole traders.

Open this answer →

A standing order is an instruction your business gives its own bank to pay a fixed amount to a named recipient on set dates. You control it from your side, and the amount stays the same unless you change it.

Standing order versus direct debit

The two are easy to confuse. With a standing order, the payer sets up and controls the payment. With a direct debit, the recipient requests the payment from your account under an agreed mandate, which can allow varying amounts.

• A standing order is set up and amended by the payer.
• It pays a fixed amount on a fixed schedule.
• A direct debit lets the recipient collect, sometimes varying, amounts.

Using it for loan repayments

Some businesses prefer a standing order because they keep direct control of the payment. The drawback is that if your repayment amount ever changes, you must update the order yourself, or a payment could be wrong.

Credicorp lends only to UK limited companies and LLPs for business purposes. The repayment method for your facility is set out in your agreement, so check there or ask our team before setting up any payment, to make sure it matches what is due.

See also: What is a settlement figure?, What is hire purchase?, What is a credit limit?.

Open this answer →

A tariff of charges is a document that lists the fees a lender may apply to a facility, and the circumstances in which each applies. It gathers potential costs into one reference, so a business can see them in advance.

What it helps you understand

Interest is only part of the cost of borrowing. A tariff of charges sets out other fees that might come into play, so there are no surprises later if a particular situation arises.

• It explains which charges may apply and when.
• It sits alongside the interest terms in your agreement.
• It lets you plan for costs beyond your regular repayments.

How to use it

Read the tariff together with your agreement so you understand the full picture before committing. If anything is unclear, it is always worth asking the lender to explain when a particular charge would or would not apply.

Credicorp lends only to UK limited companies and LLPs for business purposes. We do not state any fee amounts here; the charges relevant to your facility are set out in your own documentation. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Our team can talk you through any charge you are unsure about.

See also: What is a credit limit?, What is an early repayment charge?, What fees could apply to my Credicorp facility?.

Open this answer →

A term loan is a straightforward form of business borrowing: a company receives a set amount once and repays it, with interest, in instalments over an agreed period known as the term.

How a term loan works

Once the funds are drawn, repayments follow a schedule until the balance reaches zero at the end of the term. The predictability of fixed instalments makes a term loan easy to plan around.

• You borrow a defined amount at the start.
• Repayments are spread across the agreed term.
• Each repayment covers interest and reduces the principal.

When it suits a business

Term loans suit planned, one-off needs, such as buying equipment, funding a project or covering a known cost, where you want certainty over repayments. They contrast with revolving facilities, which let you draw and redraw funds repeatedly.

Credicorp offers Credicorp Flex and Credicorp Slice to UK limited companies and LLPs for business purposes. The amount, rate and term for your facility are set out in your own offer rather than any general example. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Our team can explain which product fits a particular need.

See also: What is a revolving credit facility?, Can I shorten or extend my loan term? and How much can my business borrow, and for how long?.

Open this answer →

A variable rate is an interest rate that can change during the life of a loan, rather than staying the same throughout. It often moves in line with an underlying reference rate set by the wider market.

Variable versus fixed

A fixed rate stays the same for the agreed period, so repayments are predictable. A variable rate can rise or fall, which means repayments or the total cost can change over time. Each suits different priorities.

• A fixed rate gives certainty over repayments.
• A variable rate can move up or down over the term.
• Which applies to your facility is stated in your offer.

What to consider

If you value certainty for budgeting, a fixed rate may feel more comfortable. If you can absorb some movement, a variable rate may suit. The right choice depends on your company's cash flow and appetite for change.

Credicorp lends only to UK limited companies and LLPs for business purposes. We do not quote any rate here; the rate type and the rate itself for your facility are set out in your own offer. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply.

See also: What is a fixed interest rate?, Can I have several Flex drawings running at the same time? and Can I shorten or extend my loan term?.

Open this answer →

A write-off is an accounting decision by a lender to remove a debt from the figures it expects to recover. It reflects the lender's own books rather than a gift to the borrower.

Write-off versus debt forgiveness

People sometimes assume a write-off cancels the obligation to pay. In practice, a lender can write a debt off in its accounts while the borrower may still legally owe it. Forgiveness, where the debt is genuinely released, is a separate decision.

• A write-off is primarily an internal accounting treatment.
• It does not, by itself, release the borrower from the debt.
• Any genuine release of an obligation would be confirmed in writing.

What to do if you are struggling

If your company is finding repayments difficult, the right step is to contact us early rather than hoping a debt will be written off. There may be arrangements that help, and acting early gives the most options.

Credicorp lends only to UK limited companies and LLPs for business purposes and is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Anything affecting whether your company still owes a balance would be set out clearly by our team in writing.

See also: What is an exempt business lender?, What is security on a loan?, What does unsecured mean?.

Open this answer →

Accrued interest is interest that has built up on borrowing over a period of time but has not yet been paid. As soon as you draw funds, interest typically begins to accrue on the outstanding balance, day by day, until it is charged or paid.

How it builds up

Interest accrues on what you actually owe at any given time. The longer a balance is outstanding, and the larger it is, the more interest accrues. This is why repaying sooner, where your agreement allows, can reduce the total interest you accrue.

• Accrued interest reflects time and balance, not a one-off event.
• It usually appears on your statement so you can see how it builds.
• Reducing the balance reduces what accrues going forward.

Why it is useful to understand

Knowing how interest accrues helps you read your statement and plan repayments. If you are considering an early or extra repayment, asking for a settlement position tells you exactly how much has accrued at that point.

Credicorp lends only to UK limited companies and LLPs for business purposes. The way interest accrues on your Credicorp Flex or Credicorp Slice facility is set out in your agreement, and the figures specific to your account are shown there and on your statement. Ask our team if anything is unclear.

See also: Understanding the breakdown between capital and interest in your balance, What is equity in a business?, What is amortisation?.

Open this answer →

Amortisation describes how a business loan is paid off in steady instalments across its agreed term, so the balance reduces to zero by the end. Each repayment is split between the interest due for that period and a portion of the original amount you borrowed (the principal).

How it works in practice

In the early part of a loan, a larger share of each repayment tends to go towards interest, because the outstanding balance is at its highest. As the balance falls, more of each repayment goes towards clearing the principal. This is normal and is set out in your repayment schedule.

• Your offer shows the term and the repayment pattern agreed for your company.
• An amortisation schedule lists each repayment date and how the balance reduces.
• Paying down faster, where your agreement allows, reduces the interest you accrue.

Why it matters for your company

Understanding amortisation helps you plan cash flow with confidence, because you can see exactly when the loan will be cleared. It also makes it easier to compare the true cost of borrowing rather than focusing on a single instalment.

Credicorp lends only to UK limited companies and LLPs for business purposes. If you would like a copy of your amortisation schedule, you can view it in your account or ask our team.

See also: Glossary: amortisation, What is a term loan?, What is an overpayment?.

Open this answer →

An early repayment charge, often shortened to ERC, is a cost that can apply when a borrower repays some or all of a facility before the end of the agreed term. Not every facility carries one, and where it does, the conditions are set out in the agreement.

Why such a charge can exist

When a facility is agreed, both sides plan around a term. Repaying early changes that, and an early repayment charge is one way the cost of that change can be reflected. Whether it applies, and in what circumstances, depends entirely on the terms of your particular agreement.

• Some facilities allow early repayment without any such charge.
• Others may apply a charge only in certain conditions.
• Your agreement is the place to check what applies to you.

Check before you repay

If you are thinking about repaying early, ask for a settlement position first. That way you can see the full picture, including any charge that applies, before deciding. The figures specific to your facility are shown in your offer and account, never a number we would quote in general.

Credicorp lends only to UK limited companies and LLPs for business purposes. The terms for early repayment on your Credicorp Flex or Credicorp Slice facility are set out in your agreement. Ask our team if anything is unclear.

See also: What is an early repayment charge?, What is early repayment? and The early-settlement charge, explained.

Open this answer →

An early repayment charge (sometimes called an ERC) is an amount that may be payable if a business settles a loan before the end of its agreed term. It reflects part of the interest the lender would otherwise have earned over the remaining period.

When it might apply

Not every facility carries an early repayment charge, and where one exists it is usually defined by the agreement. Always check your own terms before settling early, as the position varies between products and lenders.

• Whether a charge applies, and how it is worked out, is stated in your agreement.
• Some facilities allow early settlement with no charge at all.
• Ask for a settlement figure so you can see the exact total to clear the loan.

Why charges like this exist

Lenders price a facility around the expected term. An early repayment charge is one way of recognising the shortened period, while still letting a business settle ahead of schedule if that suits its plans.

Credicorp lends only to UK limited companies and LLPs for business purposes and is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. We do not quote charge amounts here; request a current settlement figure from our team before repaying a Credicorp facility early.

See also: What is an early repayment charge (ERC)?, Are there fees for paying off my facility early? and The early-settlement charge, explained.

Open this answer →

An exempt business lender is a lender that provides finance for genuine business purposes in a way that falls outside the FCA consumer-credit regime. That regime is designed mainly to protect individual consumers. Lending to a company for its business does not work the same way.

What being exempt means in practice

Because this lending sits outside the consumer-credit framework, certain consumer protections do not apply. It is important to understand this before borrowing.

• The Financial Ombudsman Service does not cover this type of business lending.
• FSCS protection does not apply.
• The agreement is a business contract between the lender and the company.

Why it can suit companies

Business lending is built around the realities of how companies operate, with structures and timescales that suit business needs rather than consumer rules. A responsible exempt lender still aims to lend fairly, assess affordability and be clear about cost.

Credicorp is an exempt business lender. We lend only to UK limited companies and LLPs for business purposes, never to individuals or sole traders, and we do not take personal guarantees from directors. The loan is to the company. The rate and terms that apply to your facility are set out in your offer.

See also: What is Article 60B, and why does it matter to you?, What is a business loan agreement?, What does it mean that Credicorp is an exempt business lender?.

Open this answer →

An Individual Voluntary Arrangement (IVA) is a formal, legally binding agreement between an individual and their creditors to repay some or all of what is owed over an agreed period. It is a personal insolvency tool, not a company one.

The company equivalent

For companies, the comparable arrangement is a Company Voluntary Arrangement, or CVA. A CVA lets a company agree a structured repayment plan with its creditors while continuing to trade.

Why the distinction matters

Because Credicorp lends only to limited companies and LLPs for business purposes, an IVA relates to an individuals personal finances rather than to a company facility with us.

• An IVA is personal; a CVA is for companies.
• Both are formal arrangements with creditors.
• Both are significant steps usually taken with professional advice.

If your company is facing financial difficulty, speak to a licensed insolvency practitioner, and talk to us early so we can understand the situation.

See also: What is a CVA (Company Voluntary Arrangement)?, Can a company in a CVA or with a repayment plan apply? and Affordability before you apply: weighing it up yourself.

Open this answer →

An LLP is a limited liability partnership, a UK business structure registered at Companies House. It combines the flexibility of a traditional partnership with a key feature of a limited company: the members generally are not personally liable for the LLP's debts beyond their agreed contribution.

How it differs from other structures

• Unlike an ordinary partnership, members have limited liability.
• Unlike a sole trader, the LLP is a separate legal entity from its members.
• Like a limited company, it is registered and files information at Companies House.

Why it matters for borrowing with us

Credicorp lends only to UK limited companies and LLPs for genuine business purposes. We never lend to individuals or sole traders. An LLP qualifies because it is a registered business entity, and the borrowing is to the LLP itself rather than to its members personally.

As an exempt business lender, our lending sits outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS protection do not apply. We do not take personal guarantees from members; the facility is to the LLP.

If your LLP is exploring finance, the amount, rate and terms that apply to a Credicorp Flex or Credicorp Slice facility are set out in your offer, and we assess affordability first.

See also: Can an LLP apply the same way as a limited company?, Can an LLP apply for Credicorp Flex or Slice?, What is joint and several liability?.

Open this answer →

An obligor is the party that is legally obliged to repay a loan and meet the other terms of the agreement. In everyday language, the obligor is simply the borrower.

Who the obligor is at Credicorp

Credicorp lends only to UK limited companies and LLPs for business purposes. That means the obligor is always the company or LLP itself, as a separate legal entity, and not any individual director, member or shareholder.

• The agreement is signed on behalf of the company, and the company is responsible for repayments.
• We do not take personal guarantees, so directors are not personal obligors on the debt.
• The obligor's obligations are set out in full in your facility agreement.

Why the distinction matters

Because your company is the obligor, the loan sits with the business rather than with you personally. This keeps the borrowing aligned with how a limited company or LLP is structured in law.

Credicorp is an exempt business lender operating outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply. If you are unsure who the obligor is on a particular facility, check the parties named on the first page of your agreement or ask our team.

See also: What is a personal guarantee (and why Credicorp does not take one)?, What is a guarantor in business lending?, Who can make a complaint to Credicorp?.

Open this answer →

An overdraft facility is an arrangement with a bank that lets a business account go into a negative balance up to an agreed limit. Interest is usually charged only on the amount actually used, and the limit can often be drawn and repaid repeatedly.

How it differs from a Credicorp facility

An overdraft is typically attached to a current account and provided by a bank. Credicorp offers business loan facilities, Credicorp Flex and Credicorp Slice, which are separate agreements with their own terms rather than an extension of your bank account.

• An overdraft sits on your bank account; a Credicorp facility is a standalone business loan.
• Overdraft limits can sometimes be reduced or withdrawn by the bank at short notice.
• Your Credicorp offer sets out the amount, term and rate agreed for your company.

Choosing what suits your business

Overdrafts can be useful for short, unpredictable cash-flow gaps. A structured loan can suit a planned cost or investment where you want a clear repayment schedule. Many companies use both for different purposes.

Credicorp lends only to UK limited companies and LLPs for business purposes and is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. If you want to understand which Credicorp product fits a particular need, our team can talk it through.

See also: How does Credicorp Flex work?, What is a revolving credit facility? and Credicorp Flex versus Credicorp Slice: which suits your borrowing?.

Open this answer →

An overpayment is any payment a business makes towards a facility that is more than the amount due under the schedule. It is a way of paying down the balance faster than the agreed plan.

What an overpayment can do

Because interest accrues on the outstanding balance, reducing that balance sooner can reduce the interest your company accrues over the rest of the term. Whether and how overpayments are allowed is set by your agreement.

• It reduces the outstanding balance ahead of schedule.
• It can lower the interest accrued over the remaining term.
• Any rules around overpayments are in your agreement.

Things to check first

Before overpaying, confirm how the lender will apply the extra amount, for example whether it shortens the term or reduces future payments. Check too whether any early-settlement amount applies if you intend to clear the facility entirely.

Credicorp lends only to UK limited companies and LLPs for business purposes. We do not state amounts here; how overpayments work on your facility is set out in your own terms. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Ask our team before making a large overpayment.

See also: What is a repayment schedule?, What is a credit limit?, What is amortisation?.

Open this answer →

APR stands for Annual Percentage Rate. It is a standardised way of expressing the yearly cost of borrowing as a single percentage, bringing together the interest and certain costs of a facility into one figure that is easier to compare.

What APR includes

APR is designed to reflect more than the headline interest rate alone. It takes account of how and when interest is charged and certain costs that form part of the borrowing, presented over a yearly basis. Because of this, two facilities with the same interest rate can show different APRs if their structures differ.

• It is a comparison tool, not a fee in itself.
• The exact rate that applies to your company is the one shown in your offer.
• It does not predict charges that depend on your own choices, such as late payment.

A note for business borrowers

APR conventions were built mainly around consumer credit. Credicorp lends only to UK limited companies and LLPs for business purposes, which sits outside the FCA consumer-credit regime. We still aim to be clear about cost, so your offer sets out the rate and terms that apply to your facility.

If anything about the cost of your Credicorp Flex or Credicorp Slice facility is unclear, ask our team before you accept.

See also: A plain-English glossary of business-lending terms, What is a tariff of charges?, What is yield on a loan?.

Open this answer →

You will see "Article 60B" mentioned across our site and documents. It is worth understanding, because it is the single rule that explains why borrowing from us is business lending rather than consumer credit — and what that means for your protections.

What Article 60B says

Article 60B of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 — the "RAO" — defines a regulated credit agreement. Crucially, a regulated credit agreement requires the borrower to be an individual, a small partnership, or an unincorporated association. A limited company is none of those.

What that means for your rights

It means the specific statutory protections of the Consumer Credit Act 1974 do not automatically apply, and the FOS/FSCS routes are not available. It does not mean there are no protections — we voluntarily apply several consumer-style safeguards because we think they are the right way to behave:

• a clear complaints procedure with defined timescales — see the escalation ladder;
• a 14-day withdrawal period on a new agreement;
• fair-treatment and vulnerability practices, and supportive handling of payment difficulty;
• a hard 100% total-cost cap, and no personal guarantee.

Why we are open about it

A reputable business lender should be clear about the perimeter it sits outside, not bury it. Knowing your lending is outside the consumer-credit regime helps you ask the right questions and weigh the protections alongside the price. For who can borrow on this basis, see what kind of lender Credicorp is.

This article is a plain-English explanation, not legal advice; the governing terms are in your agreement. Our lending to UK companies for business purposes 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: What is a CVA (Company Voluntary Arrangement)?, What is a SIC code?, A plain-English glossary of business-lending terms.

Open this answer →

Asset finance is a way of funding the things a business needs to operate, such as equipment, machinery or vehicles, by spreading the cost over time rather than paying for everything upfront. The funding is linked to a specific asset.

Why businesses use it

Buying essential equipment outright can tie up a large amount of cash in one go. Asset finance lets a company get the asset working for the business now while spreading the cost across a period that suits its cash flow.

• Preserves working capital for day-to-day needs.
• Matches the cost of an asset to the period it is used.
• Helps businesses access equipment they might otherwise delay.

Things to consider

As with any finance, the key questions are whether the asset will genuinely earn its keep and whether the repayments fit the company's cash flow. It works best when the asset supports the business over its useful life.

Credicorp lends only to UK limited companies and LLPs for business purposes. While our Credicorp Flex and Credicorp Slice facilities are general business finance rather than asset-specific products, companies sometimes use them to fund equipment needs. We assess affordability first, and the terms that apply are set out in your offer.

See also: Asset finance vs a business loan: how to compare them, What does unsecured mean?, Funding an urgent equipment repair or replacement.

Open this answer →

Bridging finance is short-term borrowing designed to cover a temporary gap. As the name suggests, it bridges the space between an immediate need for funds and a point in the near future when money is expected to come in, such as a customer payment, a sale or longer-term funding.

When businesses use it

Bridging is about timing rather than long-term funding. A company might use it to seize an opportunity, smooth a seasonal dip or keep operations moving while waiting for expected cash.

• Covering supplier costs ahead of a confirmed customer payment.
• Funding a short-term opportunity that cannot wait.
• Smoothing a known, temporary cash-flow gap.

Things to weigh up

Because bridging is short term, it works best when you have a clear and realistic plan for how it will be repaid. The key question is always whether the expected funds will actually arrive in time. Short-term borrowing without a credible exit can create more pressure than it relieves.

Credicorp lends only to UK limited companies and LLPs for business purposes. Our Credicorp Flex and Credicorp Slice facilities can suit short-term needs depending on your circumstances. The rate and term that apply are shown in your offer, and we assess affordability before lending.

See also: What is net working capital?, What is cash flow?, What is asset finance?.

Open this answer →

Capital is the money and assets a business uses to operate and grow. It is the financial fuel behind everything from buying stock to investing in equipment. In a lending context, you will often hear capital used in a few related ways.

Common meanings

• Working capital — the funds available for day-to-day running of the business, such as paying wages and suppliers.
• Growth or investment capital — money put towards expanding the business, such as new premises or equipment.
• The capital of a loan — the original amount borrowed, also called the principal, separate from interest.

Capital and borrowing

Businesses raise capital in different ways: from profits they retain, from owners investing, or from borrowing. Each has trade-offs. Borrowing can provide capital quickly without giving up ownership, but it carries the commitment to repay.

Credicorp lends only to UK limited companies and LLPs for business purposes. A Credicorp Flex or Credicorp Slice facility is one route to raising capital for the business. We assess affordability first, and the amount, rate and term that apply are set out in your offer. We do not take personal guarantees from directors; the loan is to the company.

See also: What is working capital?, Understanding the breakdown between capital and interest in your balance, What is net working capital?.

Open this answer →

Cash flow is the movement of money into and out of a business over a period of time. Money coming in is positive cash flow; money going out is negative. The balance between the two tells you whether the company has enough cash to meet its commitments when they fall due.

Why it matters more than profit

A business can be profitable and still run into trouble if its cash flow is poor. Profit is what is left after costs over time, but cash flow is about timing. If money goes out before it comes in, even a healthy company can struggle to pay wages or suppliers on the day.

• Slow-paying customers can squeeze cash flow.
• Seasonal businesses often face predictable peaks and troughs.
• Large one-off costs can create a temporary gap.

How finance can help

Short-term finance is often used to smooth cash flow rather than to fund long-term growth, for example to cover the gap between paying for stock and being paid by customers. The key is having a clear plan for how the borrowing will be repaid.

Credicorp lends only to UK limited companies and LLPs for business purposes. We assess whether a Credicorp Flex or Credicorp Slice facility is affordable before lending, so that finance supports your cash flow rather than straining it further.

See also: What is working capital?, What is liquidity?, What is bridging finance?.

Open this answer →

Collateral is an asset that a borrower offers to support a loan. It gives the lender a form of security: if the borrowing is not repaid, the lender may have a claim over that asset. Collateral is the asset behind what is often called secured lending.

Common examples

• Property owned by the business.
• Equipment, vehicles or machinery.
• Stock or other valuable assets the company holds.

Secured versus unsecured

Lending backed by collateral is described as secured. Lending without it is unsecured, and the lender relies more heavily on the strength and affordability of the business itself. Each approach has trade-offs in terms of what is required and how the facility is structured.

Our approach

Credicorp lends only to UK limited companies and LLPs for business purposes. Importantly, we do not take personal guarantees from directors; the loan is to the company. Whether any security applies to a facility is set out clearly before you accept, so you always know what you are agreeing to. If you are unsure what an offer involves, ask our team to walk you through it.

See also: What does unsecured mean?, What is security on a loan? and Asset finance vs a business loan: how to compare them.

Open this answer →

Credit utilisation is the share of an available facility that a business is actually using at a given time. If a company has a flexible facility and is drawing on much of its available limit, its utilisation is high; if it is using little, utilisation is low.

Why it is worth watching

Utilisation is a useful signal of how a business is managing its finances. Consistently running close to a limit can suggest the facility is being relied on heavily, while a comfortable margin leaves room to handle the unexpected.

• It is a measure of usage, not a charge.
• A sensible margin gives the business breathing room.
• Repaying drawings on a flexible facility lowers utilisation and can free up room.

A practical view

There is no single right level; it depends on the business and the season. What matters is that utilisation reflects a deliberate plan rather than drifting towards a limit because cash is tight. If you find the business is consistently at the edge of a facility, that is a good moment to review the wider picture.

Credicorp lends only to UK limited companies and LLPs for business purposes. You can see how much of your Credicorp Flex or Credicorp Slice facility you are using in your account. If your needs are changing, talk to us, and any change is subject to a fresh affordability view.

See also: What is a credit limit?, What is a business credit score?, What is a credit facility?.

Open this answer →

Debt consolidation means combining several existing borrowings into a single new facility, so that a business has one repayment to manage instead of many. The aim is usually to simplify finances and, in some cases, to make the overall position more manageable.

Potential benefits

• One repayment to track rather than several.
• A clearer view of what the business owes overall.
• Potentially a structure that fits cash flow better.

The honest cautions

Consolidation is not automatically a saving. Combining borrowings into a longer term can mean paying interest for longer overall, even if each repayment feels smaller. It only makes sense if the total cost and the fit with your cash flow genuinely improve. It is worth doing the maths carefully, ideally with your accountant.

• Compare the total cost before and after, not just the monthly figure.
• Watch out for replacing short-term debt with a much longer commitment.
• Make sure the new facility solves the underlying problem.

Credicorp lends only to UK limited companies and LLPs for business purposes. If you are considering using a Credicorp Flex or Credicorp Slice facility to simplify existing business borrowing, we assess affordability first, and the rate and terms that apply are set out in your offer.

See also: Glossary: forbearance, What is joint and several liability? and Can my company pay ahead to build a buffer?.

Open this answer →

Due diligence is the careful review carried out before a financial decision is made. In lending it works both ways: a lender does due diligence on a business before offering finance, and a sensible business does due diligence on a lender and an offer before accepting it.

What a lender checks

• That the company is who it says it is, including verifying its details.
• How the business trades and whether a facility is affordable.
• The company's credit profile and any signs of risk.

What you should check

Before accepting any finance, it pays to do your own due diligence. Read the agreement in full, understand the rate and terms shown in your offer, and make sure the repayments fit the company's cash flow. Ask questions about anything that is unclear.

• Is the total cost of borrowing clear?
• Do you understand what happens if you repay early or fall behind?
• Does the facility genuinely suit the need?

Credicorp lends only to UK limited companies and LLPs for business purposes. We aim to make our agreements clear so your own due diligence is straightforward. If anything is unclear, ask our team before you accept.

See also: What is a grace period?, What is underwriting?, What is a guarantor in business lending?.

Open this answer →

Early repayment means paying back some or all of what you have borrowed before the end of the agreed term. Businesses choose to do this when cash flow allows, often to reduce the overall cost of borrowing or to clear a commitment sooner.

The two forms

• Partial early repayment — paying off a portion of the balance, reducing what remains.
• Full early settlement — clearing the entire balance and closing the facility.

What to check first

Because interest typically accrues on the outstanding balance over time, repaying early can reduce the total interest you accrue. Before doing so, it is worth checking your agreement to understand exactly how an early repayment is applied and whether any conditions attach to it. The figures specific to your facility are shown in your offer and account.

If you are thinking about repaying early, you can ask us for a settlement position so you know exactly where you stand before deciding.

Credicorp lends only to UK limited companies and LLPs for business purposes. The terms for early repayment on your Credicorp Flex or Credicorp Slice facility are set out in your agreement. If anything is unclear, ask our team before you act.

See also: What is an early repayment charge (ERC)?, What is an early repayment charge? and The early-settlement charge, explained.

Open this answer →

Equity is the owners' stake in a business. In simple terms, it is what would be left for the owners if the company sold all its assets and settled all its debts. On a balance sheet it is the difference between total assets and total liabilities.

Equity as a funding choice

When a business needs money, equity is one alternative to borrowing. Raising equity means bringing in investment in exchange for a share of ownership, rather than taking on debt. Each route has trade-offs.

• Equity funding brings in money without a repayment commitment, but it dilutes ownership.
• Debt funding keeps ownership intact, but carries the commitment to repay.

Why it matters when borrowing

A lender may look at a company's equity position as part of understanding its financial health. A business with reasonable equity behind it can present a stronger overall picture. Equity and debt are not opposites; many companies use a sensible mix of both.

Credicorp lends only to UK limited companies and LLPs for business purposes. Borrowing with us lets a company raise funds without giving up ownership. We assess affordability first, and the amount, rate and terms that apply are set out in your offer. We do not take personal guarantees from directors.

See also: Understanding the main business insolvency and rescue options, What is accrued interest? and What is capital?.

Open this answer →

Gearing describes the balance between money a business has borrowed and the capital its owners have put in. A highly geared company relies heavily on debt, while a low-geared company is funded mostly by its own equity.

Why gearing matters

Borrowing can help a business grow faster than it could on its own funds, but it also creates fixed repayment commitments. High gearing can be efficient in good times and risky if trading slows, because the repayments still fall due.

There is no single right level

What counts as healthy gearing varies by sector. A capital-heavy business may carry more debt comfortably than a lightly-resourced service firm.

• Gearing is about proportion, not just total debt.
• It interacts with how predictable your income is.
• Lenders read it alongside profit and cash flow.

When you consider a Credicorp Flex or Slice facility, think about how the new commitment fits your overall gearing and your ability to meet repayments comfortably.

See also: What is net working capital?, A director's loan to your own company: tax and legal points and Forecasting what your borrowing will cost over the term.

Open this answer →

Gross profit is the money your business has left from its sales once you subtract the direct costs of producing those goods or services. Those direct costs are usually called cost of goods sold or cost of sales.

Why it matters

Gross profit shows whether your core product or service makes money before overheads like rent, salaries and marketing are taken into account. A healthy gross profit gives you room to cover those running costs and still come out ahead.

Gross profit versus net profit

Gross profit only deducts direct costs. Net profit goes further and deducts every other expense, including overheads, interest and tax. Both numbers tell you something useful about the business.

• Strong gross profit, weak net profit can point to high overheads.
• Weak gross profit can point to pricing or supplier cost problems.

When you apply for a Credicorp Flex or Slice facility, we look at the wider picture of your companys trading, not a single figure in isolation.

See also: What is net profit?, Direct lender vs broker: which should you use? and Funding an urgent equipment repair or replacement.

Open this answer →

Hire purchase is a way of paying for an asset, such as machinery or a vehicle, in regular instalments over time. The business uses the asset straight away but only becomes the legal owner once the final payment is made.

How it compares

With a lease, you typically never own the asset. With a loan, you borrow money and buy the asset outright yourself. Hire purchase sits in between: you build towards ownership while spreading the cost.

Things to weigh up

Because the finance is tied to a specific asset, the asset usually acts as security until you have paid in full. Read the agreement carefully to understand what happens if payments are missed.

• Ownership transfers at the end of the term.
• The asset itself is normally the security.
• It is one of several ways to fund equipment.

Credicorp Flex and Slice are flexible business facilities rather than asset-specific hire purchase. We can help you understand which approach suits a particular purchase.

See also: What is a guarantor in business lending?, What is insolvency?, What is gearing?.

Open this answer →

Insolvency is the state of being unable to pay debts as they fall due, or having liabilities that exceed assets. There are two common tests: the cash-flow test (can you pay on time?) and the balance-sheet test (do you owe more than you own?).

What it can lead to

Insolvency does not always mean a business stops. Depending on the situation, options can include restructuring, a formal arrangement with creditors, administration or liquidation. Some routes aim to rescue the business.

Acting early

Directors have legal duties when a company is, or is close to, insolvent. Taking advice early generally widens the options available.

• Cash-flow and balance-sheet tests both matter.
• Insolvency is a state, not automatically an ending.
• Professional advice is important and time-sensitive.

If your company is under financial pressure, contact Credicorp early. We would rather understand the position and discuss it than be the last to know.

See also: Understanding the main business insolvency and rescue options, What is a maturity date? and Funding payroll between customer payments.

Open this answer →

Joint and several liability is a legal concept where two or more parties are each fully responsible for a debt, not just a portion of it. A creditor can pursue any one of them for the entire amount, leaving that party to recover from the others.

Why it matters

It can come up where several entities borrow together. It is powerful for a lender because it gives more than one route to recover the full balance.

Reading any agreement carefully

If you ever sign something described as joint and several, understand that you could be asked for the whole amount, regardless of any informal split between the parties.

• Each party can be liable for the full debt.
• Internal splits do not bind the lender.
• It is common in shared borrowing arrangements.

Credicorp lends to a single limited company or LLP as the borrower, and does not take personal guarantees from directors. If any term is unclear in your agreement, ask us before you sign.

See also: How do multiple applications affect each other?, What is a guarantor in business lending? and What is a judgment debt?.

Open this answer →

Liquidation is the formal process of winding up a company, selling its assets, paying what it can to creditors and ultimately closing it down. Once liquidation completes, the company ceases to exist.

Different routes

Liquidation can be voluntary, started by the companys directors and members, or compulsory, ordered by a court. A licensed insolvency practitioner usually oversees the process.

Order of payment

There is a legal order in which creditors are paid from whatever is realised. Not every creditor is guaranteed to recover the full amount owed.

• Liquidation ends a companys existence.
• It can be voluntary or court-ordered.
• Creditors are paid in a set legal order.

If your company is heading towards serious difficulty, seek advice from a licensed insolvency practitioner early, and let Credicorp know so we understand the situation.

See also: Using Flex to manage supplier and stock costs, What if my company can only pay part of this month's amount? and What is a judgment debt?.

Open this answer →

Liquidity describes how easily a business can access cash to meet its short-term obligations. Cash in the bank is the most liquid asset; assets like equipment or stock are less liquid because they take time to sell.

Liquidity versus profitability

A profitable business can still run into trouble if its money is tied up and it cannot pay bills on time. That is why liquidity is sometimes described as more urgent than profit in the short term.

Managing it

Keeping a cash buffer, invoicing promptly and matching the timing of income and outgoings all help a business stay liquid.

• Liquidity is about access to cash, not total wealth.
• Profit and liquidity are not the same thing.
• Timing of money in and out is central.

A flexible facility such as Credicorp Flex can help smooth short-term gaps, but it should support a sound liquidity plan rather than replace one.

See also: What is liquidation?, Funding for law firms and legal practices and What if my company can only pay part of this month's amount?.

Open this answer →

Origination is the term lenders use for the process of creating a new loan, from the first application right through to the point where the funds are made available. It covers everything that turns an enquiry into a live facility.

What origination usually involves

Origination brings together the steps a lender takes before money is advanced. The detail varies by lender and product, but the shape is broadly similar across business lending.

• Taking the application and the information needed to assess it.
• Carrying out the assessment, or underwriting, of the request.
• Issuing an offer and, once accepted, setting up the facility.

How it works at Credicorp

For Credicorp, origination applies to applications from UK limited companies and LLPs borrowing for business purposes. Once an application is assessed and an offer accepted, the facility is set up and funds can be made available according to the agreed terms.

Credicorp is an exempt business lender operating outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply. If you want to understand where your application is in the process, our team can update you.

See also: What is underwriting?, What is a drawdown?, How fast can I get a business loan?.

Open this answer →

Net profit is what a business has left once every cost has been deducted from its income, including direct costs, overheads, interest and tax. It is often called the bottom line because it sits at the foot of the profit and loss account.

Why it matters

Net profit shows whether the business as a whole makes money after everything is paid for. It is a fuller measure than gross profit, which only deducts direct costs.

Reading it carefully

One year of net profit tells only part of the story. Trends over time, and the cash position behind the profit, matter just as much.

• Net profit deducts every cost.
• It is more complete than gross profit.
• Trends matter more than a single year.

When Credicorp assesses a limited company or LLP, we look at net profit alongside cash flow and the wider trading picture, not as a figure in isolation.

See also: What is gross profit?, Comparing finance on speed vs cost: the honest trade-off and Daily interest vs APR: which is the honest comparison?.

Open this answer →

Net working capital is the difference between a businesss current assets (things like cash, stock and money owed to it) and its current liabilities (short-term debts and bills). It is a snapshot of the resources available to run day-to-day operations.

What it tells you

Positive net working capital suggests the business has enough short-term resources to cover its near-term obligations. Tight or negative working capital can signal pressure on day-to-day cash.

Managing it

Collecting invoices promptly, managing stock sensibly and timing payments all help keep working capital healthy.

• It compares short-term assets and liabilities.
• It reflects day-to-day financial breathing room.
• Good habits keep it healthy.

A facility like Credicorp Flex can help bridge short-term working-capital gaps for a limited company or LLP, supporting a sound plan rather than masking a structural problem.

See also: What is working capital?, The difference between a payment holiday and a reduced-payment plan and Can business finance help bridge a short-term cashflow gap?.

Open this answer →

Refinancing means taking out a new facility to repay an existing one, usually to change the structure of the borrowing. A business might refinance to adjust the term, consolidate several debts, or align repayments with current cash flow.

Common reasons businesses refinance

Refinancing is not automatically better or worse than keeping an existing facility; it depends on the terms of both. The aim is usually to make repayments fit the company's circumstances more comfortably.

• Spreading repayments over a different term to ease monthly cash flow.
• Bringing more than one facility into a single, simpler arrangement.
• Replacing borrowing whose terms no longer suit the business.

What to weigh up

Before refinancing, compare the total cost of the new arrangement against the existing one, not just the size of each payment. A longer term can lower instalments but may increase the total interest accrued. Check whether any early-settlement amount applies to the facility being repaid.

Credicorp lends only to UK limited companies and LLPs for business purposes and is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. If you are considering refinancing a Credicorp facility, ask our team for a settlement figure and the terms of any new offer before deciding.

See also: What is restructuring a loan?, What is an early repayment charge (ERC)?, What is a promissory note?.

Open this answer →

Restructuring means changing the terms of an existing loan so it fits a company's circumstances more comfortably. Unlike refinancing, which replaces a facility with a new one, restructuring adjusts the agreement already in place.

What can change

Restructuring can take different forms depending on the situation and what the lender is able to offer. The aim is usually to make repayments more manageable while still clearing the debt.

• Adjusting the repayment pattern or the length of the remaining term.
• Temporarily easing repayments during a difficult period.
• Changing how the balance is paid down going forward.

How it is arranged

Restructuring is always agreed between borrower and lender, never something that happens by simply paying differently. Any change is confirmed in writing, and it is worth understanding the effect on the total cost before agreeing.

Credicorp lends only to UK limited companies and LLPs for business purposes and is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. If your company's circumstances have changed, contact our team early to discuss whether a restructure of your facility is possible.

See also: What is refinancing?, What is a tariff of charges?, Can my repayments be restructured?.

Open this answer →

Security is an asset that a business pledges against a loan, giving the lender a way to recover what it is owed if the loan is not repaid. A loan backed by an asset is described as secured; one without is unsecured.

Common forms of security

Security can take several forms depending on the lender and the type of borrowing. The detail always sits in the agreement, so the only reliable guide for your facility is your own paperwork.

• A charge over a specific business asset, such as equipment or property.
• A debenture covering a company's assets more broadly.
• An assignment of certain receivables, in some forms of finance.

Secured versus unsecured borrowing

Secured borrowing can sometimes carry different terms because the lender has an asset to fall back on. Unsecured borrowing relies on the company's standing and obligation to repay. Neither is automatically better; it depends on your circumstances and the agreement.

Credicorp lends only to UK limited companies and LLPs for business purposes and does not take personal guarantees from directors. Whether and how any security applies to a Credicorp facility is set out in your agreement, so check the terms or ask our team if you are unsure.

See also: How lenders assess a business loan application, Is there a penalty for repaying early? and What does unsecured mean?.

Open this answer →

The principal is the original sum your company borrows under a facility, before any interest or charges are added. It is the core amount that you agree to repay over your term.

How principal and interest relate

Interest is calculated on the principal that is still outstanding. As you make repayments, part of each payment reduces the principal, and the rest covers interest for the period. As the principal falls, the interest accruing on it tends to fall too.

• Your offer states the principal amount agreed for your company.
• Each repayment chips away at the principal and pays the interest due.
• Reducing the principal faster, where your agreement allows, lowers the interest you accrue.

Why the term matters

People sometimes confuse the principal with the total amount repayable. The total includes interest and any charges across the term, whereas the principal is just the borrowed sum. Keeping the two separate makes it easier to understand the true cost of borrowing.

Credicorp lends only to UK limited companies and LLPs for business purposes. We do not quote amounts here, so always check the principal stated in your own offer or agreement rather than relying on any general description.

See also: What does outstanding balance mean?, Can I pay my loan off early? and Does interest keep building while my company is in arrears?.

Open this answer →

Underwriting is the assessment a lender carries out on a loan application to decide whether to lend, how much, and on what terms. It is the stage where the lender weighs up the application against its lending criteria.

What underwriting considers

Underwriting for business lending generally looks at the company itself rather than any individual. The exact factors vary by lender and product, but the aim is to understand whether the borrowing is suitable and likely to be repaid.

• The company's trading position and financial information.
• How the borrowing fits the business's needs and plans.
• The lender's own criteria for the product applied for.

How decisioning works at Credicorp

Credicorp assesses applications from UK limited companies and LLPs for business purposes. The outcome and the terms offered reflect your company's circumstances. If an application is not approved, or is approved on particular terms, that decision follows the assessment of the information provided.

Credicorp is an exempt business lender operating outside the FCA consumer-credit regime, so the Financial Ombudsman Service and FSCS do not apply. If you have questions about how a decision was reached, our team can talk you through what was considered.

See also: How lenders assess a business loan application, What is security on a loan?, How do you decide whether to lend to my business?.

Open this answer →

Working capital is the money a business has available to fund its everyday operations. In broad terms, it is the difference between a company's current assets, such as cash and money owed by customers, and its current liabilities, such as supplier bills due soon.

Why it matters

Healthy working capital means a business can pay wages, suppliers and running costs comfortably while waiting for income to arrive. Tight working capital can make day-to-day trading stressful even when the business is otherwise profitable.

• It covers short-term costs like stock, wages and supplier payments.
• It smooths the gap between paying out and being paid.
• It is a sign of how comfortably a business can meet its near-term obligations.

How borrowing can help

Some businesses use a facility to support working capital during a busy season or while waiting on customer payments. The right approach depends on the pattern of your cash flow and the cost of borrowing.

Credicorp offers Credicorp Flex and Credicorp Slice to UK limited companies and LLPs for business purposes. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply. Our team can discuss whether a facility suits your working-capital needs.

See also: What is net working capital?, Funding everyday working capital for your company and Funding for restaurants and cafés.

Open this answer →

Yield is a term used to describe the return a lender earns from lending money over a period. It is essentially the lender's-eye view of what a loan generates relative to the amount lent.

Yield from the lender's side

For a lender, yield combines the interest and any charges earned across a facility, set against the funds advanced. It is a way of expressing how a loan performs as part of a lending portfolio.

• It reflects the income a facility produces over time.
• It is a lender's measure, not usually how a borrower thinks about a loan.
• It is influenced by the rate, term and how the loan is repaid.

What a borrower should focus on instead

As a borrower, the more practical figures are the rate shown in your offer and the total amount repayable over your term. These tell you what the borrowing costs your company, which is what matters for planning.

Credicorp lends only to UK limited companies and LLPs for business purposes. We do not quote rates or returns here; the figures specific to your facility are in your own offer. Credicorp is an exempt business lender, so the Financial Ombudsman Service and FSCS do not apply.

See also: Funding a marketing campaign that pays back over time, What does it mean to be in arrears? and A director's loan to your own company: tax and legal points.

Open this answer →