Understanding a business loan agreement before you sign

Rate, fees and total cost

Find the interest rate, whether it is fixed or variable, and every fee — arrangement, drawdown, any early settlement charge. Together these are the true cost. Confirm the total repayable in pounds matches your expectation. See total cost of credit.

Security and guarantees

Check what, if anything, secures the loan — a charge over company assets — and crucially whether a personal guarantee is required. This clause determines what is at risk if things go wrong. A no-PG, unsecured loan keeps your personal assets out of it.

Covenants and conditions

Some agreements include covenants — ongoing conditions like maintaining a minimum net worth or cover ratio. Breaching one can trigger default even if payments are met. Know what you are committing to keep, not just to pay.

What counts as default

Read the default clause: what events let the lender demand the full balance. Usually missed payments, but sometimes a covenant breach. Understanding it tells you exactly what to avoid. See how to read a loan agreement.

Confirm the cost, then sign

Use the calculator to check the agreement's numbers match what you expect to pay.

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.