# Limited company, LLP or sole trader: lending eligibility compared

*Source: https://credicorp.co.uk/support/limited-company-llp-sole-trader-eligibility/*

Whether we can lend to your business depends heavily on how it is legally structured. We can lend to limited companies and limited liability partnerships (LLPs); we cannot lend to sole traders as structured. That is not about the size or health of your business — it is about what kind of legal entity is doing the borrowing. This article explains the difference and why it matters, so you know where you stand before you apply.

## The three structures in brief

A **limited company** is a separate legal person, distinct from its owners and directors. A **limited liability partnership (LLP)** is also a body corporate — a separate legal person — owned by its members. A **sole trader** is different in kind: there is no separate entity at all. The business and the individual are legally the same person, so the trader owns the assets, keeps the profits and bears the liabilities personally. That single distinction — separate legal person or not — is what drives our eligibility rules.

## Why we can lend to companies and LLPs

We lend to UK limited companies and LLPs because both are bodies corporate: there is a separate legal entity to enter the loan and to owe the money. We lend to that entity, for business purposes, and we assess the company or LLP itself — its turnover, bank-account history and business credit file. We explain what a body corporate is in [what is a body corporate](/support/what-is-a-body-corporate/). Because we lend to the entity rather than to an individual, the borrowing sits outside FCA consumer-credit regulation: a company or LLP is not an individual or relevant recipient of credit under Article 60B FSMA RAO 2001. That framing is central to how, and to whom, we can lend.

## Why we cannot lend to sole traders as structured

A sole trader has no separate legal entity, so a loan to “the business” would in fact be a loan to the individual. Lending to an individual is a different kind of activity that falls within the consumer-credit regime, which our product is not built for and which we are not set up to provide. So it is not that we doubt sole traders or their businesses — it is that the structure puts the borrowing in a different legal category from the one we operate in. This is a feature of how the law treats the structures, not a judgement about you.

## What this means in practice

If you trade through a limited company or an LLP, you are in principle eligible to apply, subject to our checks on the company’s affordability and a credit check on the entity plus an identity check on the director or member. You can see what we currently offer, with the real amounts, terms and costs, on [our business loans page](/business-loans/). If you trade as a sole trader, we will not be able to lend to you as you are, however well your business is doing.

## If you are a sole trader and want access

One route some sole traders consider is incorporating — forming a limited company — which creates a separate entity we could lend to. But that is a significant business decision with tax, legal and administrative consequences, and it does not make you eligible automatically: a brand-new company has little trading history to assess. Weigh it properly rather than doing it just to borrow. We set out the trade-offs in [should I switch from sole trader to limited company before applying for finance](/support/sole-trader-to-limited-company-before-finance/). Whatever you decide, decide on the full picture, not on a single loan.

---

Credicorp Limited — UK lender to limited companies (Company No. 16093826). credicorp.co.uk