# What is a business loan?

*Source: https://credicorp.co.uk/support/what-is-a-business-loan/*

A business loan is money borrowed by a business, and repaid with interest, to be used for business purposes. That sounds simple, but the detail matters: a business loan is legally and practically different from a personal or consumer loan, and the difference changes who is responsible for the debt, what protections apply, and how the borrowing is assessed. This article explains what a business loan is, who can take one out, and how our own lending works.

## Business loan vs personal loan

A personal (or consumer) loan is taken out by an individual for their own use — a car, a holiday, consolidating personal debts. A business loan is taken out for the needs of a business: buying stock, covering a gap before an invoice is paid, repairing equipment, or smoothing seasonal cash flow.

The purpose is not just a label. When the borrowing is genuinely for business, and the borrower is a company rather than an individual, the loan usually sits outside the consumer-credit rules that protect personal borrowers. That has real consequences, so it is worth understanding before you apply. We cover the test for what counts as a business purpose in [what counts as a “wholly or predominantly business” purpose](/support/wholly-or-predominantly-business-purpose/).

## Who can borrow, and who is liable

Business loans can be offered to sole traders, partnerships, limited companies and limited liability partnerships (LLPs). Who can borrow depends on the lender. Some lenders advance money to the individual behind a sole-trader business; others lend only to incorporated businesses.

We lend to the **company** — a limited company or LLP — not to you personally. The borrower on the agreement is the business as a separate legal person, known as a [body corporate](/support/what-is-a-body-corporate/). That distinction is the foundation of how our product is structured: the debt belongs to the company, and we do not take a personal guarantee from the director. In short, the company borrows, the company repays, and the company is the party named on the Business Loan Agreement.

## What you typically agree to

Whatever the lender, a business loan agreement will set out a handful of core things: how much is borrowed, the term (how long you have to repay), how interest is charged, the total amount payable, and the repayment schedule. Before you sign anything, you should be able to see the full cost of credit in writing.

With us, those figures appear on your **Key Information Sheet (KIS)** — a plain-English summary — and again in the **Business Loan Agreement** itself. You see the amount borrowed, the term, the total amount payable, the total cost of credit, a simple annualised rate, and the full repayment schedule before you commit. We deliberately do not quote a consumer APR; we explain why in our article on [what APR means on your loan](/support/what-does-apr-mean-on-my-loan/).

## Our business loan, specifically

Our live product is a short-term Business Bridging Loan of **£50 to £500 over 14 to 84 days**, repaid weekly or fortnightly. It is designed to bridge a short, defined cash-flow gap — not to fund long-term spending. Short-term borrowing of this kind is, in cost terms, expensive relative to a bank facility, so it suits a genuine short gap rather than an ongoing shortfall. For the amounts, terms and costs we currently offer, see [our business loans page](/business-loans/).

If you are weighing up whether this is the right tool at all, we would rather you read [when not to take a short-term business loan](/support/when-not-to-take-a-short-term-business-loan/) first. A business loan is useful when it solves a clear, short problem and the company can comfortably afford the repayments. It is the wrong choice when it simply postpones a deeper shortfall.

## The short version

A business loan is borrowing by a business, for the business, repaid with interest. Ours is made to your company as a body corporate, with no personal guarantee, and every figure is shown to you up front on your KIS. Understand the purpose, the cost and who is liable, and you will know whether a business loan is the right fit.

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