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Should your company borrow at all?
Sometimes the right answer is no — and a lender worth dealing with will say so. This page is a plain, non-promotional decision aid: the questions to ask before you borrow, the times not to, and the cheaper options to check first. It is written for the company, not the person who signs.
Borrowing is a tool, not a verdict on the business. Used for the right reason it can be a sound, ordinary commercial decision; used for the wrong one it postpones a problem and adds a cost. The difference is worth a few honest minutes before you commit.
Creditcorp is the growing name for the Credicorp group, and Credicorp Limited is the lender behind it. It would, of course, rather you borrowed than not — so take this page in that spirit, but take it seriously too. We have written it to help you reach the right decision for your company, which sometimes means not borrowing. This is a guide, not an application; if you do decide to proceed, applying happens on the lender’s own site, credicorp.co.uk.
Throughout, the borrower would be the company — a UK private limited company (Ltd), LLP or PLC — not the director who signs. No personal guarantee, no charge over a home, no personal credit check on a director. These are not personal loans, payday loans or sole-trader finance.
Five questions to ask before you borrow
If the answer to each is a confident yes, borrowing is probably a reasonable decision. If any is a no, pause.
1. Is the need genuinely temporary?
Short-term credit is built to span a gap with a known end — an order to fund, an invoice to wait on, a season nearly here. If instead you are covering an ongoing shortfall, borrowing only moves the problem a few weeks on. Be honest about which one this is.
2. Can you see where repayment comes from?
Point to it specifically: this customer, this invoice, these takings. If you cannot yet say where the money to repay will come from, the term is too short for the need, and a short product is the wrong fit.
3. Does the benefit beat the cost?
Set the cost of the credit, in pounds over the weeks you need it, against what the money earns or saves — a margin won, a discount taken, a penalty avoided. If the gain does not comfortably exceed the cost, the numbers are telling you something.
4. Have you checked the cheaper options first?
Money you are already owed or already have is the cheapest finance there is. Overdue invoices chased, a supplier asked for a little more time, a non-urgent cost deferred — see the alternatives below before you reach for credit.
5. Can the company carry the repayments comfortably?
Not just scrape them — carry them, with room to spare if a payment lands late. The repayments are the company’s, so the test is the company’s cash flow, not your personal finances.
When not to borrow
There are situations where short-term credit is simply the wrong answer, however easy it is to obtain. Borrowing in any of these cases tends to make matters worse, not better:
- To fund an ongoing loss. If the company spends more than it earns month after month, a loan does not fix that — it adds a cost on top. The underlying trading position needs addressing first.
- To repay other borrowing you cannot otherwise meet. Rolling one short-term debt into another rarely ends well; it usually means the original term was wrong for the need.
- For a long-term asset. Premises, plant or a major fit-out should be funded over their working life, not a few weeks. See short-term vs long-term finance.
- On hope rather than a plan. If the repayment depends on work you have not yet won or money you cannot yet see, the need is not ready to be financed short-term.
- When the cost outweighs the benefit. If borrowing costs more than the opportunity is worth, the right answer is to let the opportunity pass.
If your company is in genuine financial difficulty, short-term borrowing is not the place to start. Speak to your accountant, and consider free, impartial guidance such as the government-backed business support services before taking on any new credit.
Cheaper alternatives to check first
Often the cheapest money is the money you are already owed, or a cost you can reshape. Work through these before you borrow.
Chase what you are owed
Overdue invoices are interest-free finance sitting in someone else’s account. A firm reminder, a phone call or a tighter collections routine can release cash a loan would otherwise cover — at no cost at all.
Ask your supplier for time
A good supplier would usually rather give you a fortnight than lose the order. Agreeing slightly longer terms, or splitting a bill, can close a gap without any borrowing — and Credicorp Slice exists for the times a supplier needs paying today but you would still rather spread the cost.
Take an early-settlement discount
If a supplier offers a discount for paying early and you have the cash, taking it can be worth more than the interest you would save by holding on. Run the comparison before you decide.
Reshape the timing
Deferring a non-urgent purchase, bringing a sale forward, or simply sequencing outgoings around when money lands can remove the gap altogether. The cheapest gap to fund is the one you avoid creating.
If you do borrow, the company borrows — not you
Part of borrowing responsibly is keeping the decision where it belongs: with the company. On every Credicorp product the agreement is between Credicorp Limited and your company, not you as a director:
- No personal guarantee — a decision that goes wrong does not put your home or savings on the line.
- No charge over your home — nothing of yours personally is pledged as security.
- No personal credit check on a director — the lender assesses the company, not your own file.
- Bodies corporate only — UK Ltd, LLP or PLC, never a sole trader or an individual.
This is exempt business lending under Article 60B of the FSMA Regulated Activities Order 2001, not consumer credit. The plain-English position is on our lending and regulation page, with the fuller detail on creditcorpgroup.co.uk.
Common questions
The questions directors ask most when weighing whether to borrow. For anything specific to your company, the lender’s team are on credicorp.co.uk.
When should a company not borrow?
A company should think twice when the borrowing would fund an ongoing loss rather than a temporary gap, when there is no clear source of repayment in sight, or when the cost of the credit outweighs the benefit it unlocks. Borrowing buys time and timing; it does not fix a business that is spending more than it earns. In those cases, the honest move is to address the underlying position first.
What should I check before borrowing for my company?
Five things: that the need is genuinely temporary and not a recurring loss; that you can point to where the money to repay will come from; that the benefit comfortably beats the cost; that you have checked cheaper or free alternatives first, such as chasing overdue invoices or agreeing terms with a supplier; and that the company — not you personally — can carry the repayments comfortably.
What are the cheaper alternatives to a short-term loan?
Often the cheapest finance is money you are already owed or already have. Chasing overdue invoices, asking a supplier for a little more time, taking an early-settlement discount, trimming a non-urgent cost, or simply timing a purchase differently can all close a gap at little or no cost. Borrowing makes most sense once those have been considered and the gap still needs spanning.
Does it cost anything to find out if borrowing suits me?
Reading and thinking it through costs nothing, and this site is here to help with that — these guides, the jargon buster and the working-capital gap tool are all free to use. If you do decide to apply, the lender assesses the company, not the director personally, and sets out the terms before you commit. Nothing is owed for considering it.
Is this consumer credit or a regulated loan?
Neither in the consumer sense. Credicorp lends only to bodies corporate, and under Article 60B of the FSMA Regulated Activities Order 2001 lending to a body corporate is not a regulated credit agreement. It is exempt business lending — not consumer credit, not a sole-trader or personal loan. The full position is on our lending and regulation page and on creditcorpgroup.co.uk.
More general questions are answered on the Creditcorp FAQ, and the how-it-works overview walks through the whole journey from first look to funds in the bank.
Where to go next
- The cash-flow gap, explained — whether your gap is the temporary kind a bridge is meant for.
- Short-term vs long-term finance — matching the term of borrowing to the life of the need.
- Business finance jargon buster — plain-English definitions of the terms used across this site.
- Working-capital gap tool — size the gap before you decide.
- The three products — if, after all this, a short-term product is the right fit.
- creditcorpgroup.co.uk — the deeper group, company and regulation detail.
If you decide to proceed, applying, drawing down and managing your account all happen on the lender’s site, credicorp.co.uk.
Make the right call for your company
Read on, size the gap, or — if it genuinely fits — see the three products and apply on the lender’s site, credicorp.co.uk.