REFERENCE · LENDER CRITERIA
What lenders actually want. The unwritten checklist.
The underwriting criteria that don't appear on lender websites. Trading history, sector, accounts age, PG appetite, and how the high-street, challenger, and specialist lender categories actually differ.
The four levers
Most decisions come down to four things.
- Trading history. Most mainstream lenders want at least 12 months of trading; many want 24. Specialists go down to 3-6 months at higher rates. Under 3 months. Only secured products are realistic.
- Filed accounts. One set of filed accounts opens most doors. Two sets opens nearly all of them. Pre-revenue or first-year companies see specialist-only pricing.
- Sector view. Each lender holds a sector matrix internally. Construction, hospitality, and retail attract more cautious appetite from high-street lenders; specialists like them. Professional services and SaaS attract competitive pricing across the board.
- Director credit. Most unsecured commercial finance carries a personal guarantee. The director's personal credit file is checked. CCJs unsatisfied within the last 6 years are deal-killers for most; satisfied CCJs are explainable.
Three lender categories
High street, challenger, specialist , different criteria, different pricing.
| Lender type | Trading min | Typical rate (per month, flat) | Decision speed | Best for |
|---|---|---|---|---|
| High street | 2 yrs+ | 0.6–0.9% | 2–3 weeks | Established profitable companies, clean credit |
| Challenger | 12 months | 0.9–1.5% | 3–7 days | Growth companies, slightly thinner accounts |
| Specialist (tax-bill) | 6–12 months | 1.0–1.7% | Fast turnaround | Urgent tax bills, sector-specific cases, light on filed accounts |
Indicative based on deals placed in the last 12 months. Actual pricing depends on size, term, sector, and director profile.
Things that move the rate
Four factors that tighten or loosen pricing.
1. Term. Shorter terms generally price tighter on a monthly basis but cost more on an APR basis. A 3-month loan at 1.0% per month equals roughly 12% APR. A 12-month loan at 1.3% per month equals roughly 16% APR. Pick the term that matches the cashflow recovery, not the lowest headline rate.
2. Size. Smaller deals (sub-£25k) carry minimum-fee structures that push effective pricing up. £50k–£250k is the sweet spot for most specialist lenders. £500k+ moves you into challenger territory and significantly tighter pricing.
3. Sector cycle. Lender appetite for hospitality tightens after Christmas, for construction after a public spending review, for retail in summer. The same deal profile gets different responses six months apart based on where the lender's exposure sits.
4. The story. A clean one-page cover note explaining the cashflow event behind the funding need is worth 0.1-0.2% per month in pricing on edge cases. Underwriters want to feel they understand the deal. Vague answers push them to specialist pricing or decline.
Personal guarantees
Most unsecured commercial finance carries a director PG.
For loans up to about £250k from challenger and specialist lenders, a personal guarantee from the controlling director(s) is standard. Above that, second-charge debentures over property or other assets often come into play. PGs can be limited (a fixed cap, or a percentage of the borrowing) or unlimited; the limit is part of what brokers negotiate.
High street unsecured lending up to ~£100k is sometimes available without a PG for very strong covenants. Five-year-plus trading, two clean filed accounts, low gearing. Below that bar, expect a PG.
PG protection insurance (PGI) is available from specialist providers and reimburses the personal cost of a called PG up to an agreed limit. Adds 4-8% per year to the all-in cost of the facility but is appropriate for directors with significant personal assets at risk.
Hard nos
Five things that kill most deals.
- Active winding-up petition or HMRC enforcement underway. , Lenders won't take on a position they can't recover from.
- Director(s) bankrupt or with active IVA. , PG would be unenforceable; without it, the deal is unsecured fully.
- Phoenixed company. Same directors, similar trade, after a recent insolvency. , Specialist lenders will look at this, but mainstream and challengers won't.
- Unsatisfied recent CCJs (less than 12 months) above £5k. , Satisfaction or a payment plan with proof shifts this from no to maybe.
- No bank account in the company name, all trading through director's personal account. , Underwriters can't verify revenue or expense patterns.
Common questions
- How many lenders should a broker run a deal past?
- Two or three is enough for most cases. Running it past every lender on a 30-name panel triggers multiple credit searches, which then show on subsequent applications and damage further pricing. A good broker triangulates which two or three lenders are the right fit and approaches them in parallel.
- Does an indicative quote use a hard credit search?
- Generally no. Indicative quotes use a soft search that doesn't affect your file. The hard search comes when you accept terms and proceed to full underwriting. Brokers should be explicit about which is which.
- What's the difference between a fee structure and an interest rate?
- Most specialist tax-bill loans are quoted as a flat monthly rate plus a one-off arrangement fee (typically 1-2% of the advance). The flat rate is on the original advance, not the declining balance, so the effective rate is roughly 1.85x the flat rate. Always check the total cost over the term, not the headline.
- Are tax-bill loans regulated?
- Commercial lending to limited companies and LLPs sits outside FCA scope. Lending to sole traders for business purposes is regulated above £25k and exempt below. Brokers operating in the commercial space don't require FCA authorisation; brokers who also place consumer credit do.
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