Do lenders check personal credit for a business loan?

When you apply for finance with BEF, we check the personal credit history of the relevant business owner or director as part of our assessment.

A personal credit check helps us understand how financial commitments have been managed in the past. But it is only one part of the assessment. We also need to understand your business, why you need the finance and whether the proposed borrowing is affordable.

If you have a poor credit history, that doesn't automatically mean we cannot review your application. We will ask questions about any credit issues so we can understand what happened, whether the issue has been resolved and what has changed since then.

There are some circumstances where we cannot lend. Active CCJs, bankruptcy and IVAs are a hard stop for BEF lending. Satisfied CCJs and other historic credit issues can be reviewed as part of an application.

When assessing a business loan application, we need to understand the financial circumstances of the people behind the business as well as the business itself.

Your personal credit history provides information about how you have managed financial commitments in the past. It can therefore help us understand your overall financial position. But a personal credit check isn't the whole lending decision.

We'll also consider factors such as:

• How long your business has been trading
• Its financial performance
• Cash flow
• Existing borrowing
• What you need the finance for
• Your financial forecasts
• Whether the proposed repayments are affordable
• Any security relevant to the finance

Looking at these factors together helps us understand whether the finance you're requesting is appropriate and affordable.

Yes. Every BEF loan application requires a personal credit check.

This applies whether you're applying as a sole trader, partnership or limited company, and whether you're applying for a Start Up Loan or another form of business finance.

The way we assess the information can depend on your circumstances and business structure, but the personal credit check is part of every BEF loan application.

Does BEF check personal credit for limited companies? 

Yes. A limited company is a separate legal entity from its directors, but that doesn't mean the directors' personal credit history is irrelevant when applying for finance. At BEF, a personal credit check is required as part of every loan application.

We'll consider the information from the credit check alongside the company's financial position and the wider circumstances of the application. This is particularly relevant when a company has limited trading history or financial information available.

Yes. A personal credit check is required for every BEF loan application, including applications from sole traders.

Because a sole trader and their business aren't separate legal entities in the same way as a limited company, personal financial circumstances can be particularly relevant when assessing an application.

It can, but there isn't a single credit score that guarantees approval or rejection.

Your credit history is one part of our assessment. We also need to understand whether the business can afford the proposed borrowing and what the finance will be used for.

For example, we may consider:

• Trading history
• Financial performance
• Cash flow
• Existing borrowing
• Business plans
• Financial forecasts
• Affordability
• The purpose of the borrowing
• Any relevant security

This means a good credit score doesn't automatically mean you'll receive a business loan. Equally, a poor credit history needs to be understood in context.

What if I have poor personal credit?

If you have poor personal credit, we'll want to understand the circumstances behind it.

We may ask:

• What caused the issue?
• When did it happen?
• Has it been resolved?
• When was it resolved?
• Have there been any further credit issues?
• What has changed since the issue occurred?
• How is the business performing now?
• Can the business afford the proposed borrowing?

This allows us to understand the circumstances rather than simply looking at a credit score in isolation.

However, there are circumstances where we cannot lend. Active CCJs, bankruptcy and IVAs are a hard stop for BEF lending.

If a CCJ has been satisfied, we can review the application, but we'll ask questions about what caused it, when it was satisfied and whether there have been any further credit issues.

If you're specifically looking for information about accessing finance with poor credit, read our guide to business loans with bad credit.

At BEF, it depends on whether the CCJ is active or satisfied. An active CCJ is a hard stop for lending.

A satisfied CCJ can be reviewed as part of an application. We'll want to understand:

• What caused the CCJ
• When it occurred
• When it was satisfied
• What has changed since then
• Whether there have been any further credit issues
• How the business is performing
• Whether the proposed borrowing is affordable

A satisfied CCJ therefore isn't treated in the same way as an active CCJ. Being open about any CCJs and providing accurate information helps us understand your circumstances.

At BEF, bankruptcy and IVAs are a hard stop for lending. We cannot lend where an applicant is currently bankrupt or has an active IVA. If either applies to you, BEF finance won't be suitable while that circumstance remains in place.

No. A good credit history can provide useful information about how financial commitments have been managed, but it doesn't tell us everything we need to know about your business.

We also need to understand whether the business can afford the proposed borrowing.

For example, we'll consider its:

Trading history

How long has the business been operating and what does its financial performance look like?

Cash flow

Does the business generate enough cash to meet its existing commitments and the proposed loan repayments?

Existing borrowing

What other finance does the business already have, and how would the new borrowing fit alongside it?

Business plan and forecasts

Does the business have a clear plan and realistic expectations about its future performance?

Affordability

Can the business reasonably afford the proposed repayments?

Your personal credit history is therefore one part of a wider lending assessment.

Do BEF check personal credit for Start Up Loans?

Yes. Start Up Loan applications require a personal credit check, just like every other BEF loan application. Start Up Loans are unsecured personal loans for business purposes, so the applicant's personal financial circumstances form part of the assessment.

If you're considering a Start Up Loan and are concerned about your credit history, read our guide to Can I get a Start Up Loan with bad credit?.

Understanding your personal credit position before applying can help you prepare for the application.

Check your credit history

Make sure you understand the information a lender may see when assessing your application. If you identify inaccurate information, investigate how it can be corrected.

Understand any poor credit issues

If you've experienced financial difficulties, be prepared to explain what happened, whether the issue has been resolved and what has changed since then.

Get your business finances up to date

Make sure your accounts, management information and cash flow forecasts accurately reflect your current position.

Work out how much you need

Think carefully about how much finance the business needs and what it can reasonably afford to repay.

Be clear about why you need the money

Explain what the finance will be used for and what you expect it to achieve.

Personal credit is one part of our wider lending assessment.

We'll consider the information from the personal credit check alongside the circumstances of the business and the proposed borrowing. If there are poor credit issues, we'll ask questions to understand what happened and whether the circumstances have changed.

We'll also consider factors such as:

• Trading history
• Financial performance
• Cash flow
• Existing borrowing
• The purpose of the finance
• Financial forecasts
• Affordability

There are clear circumstances where we cannot lend. Active CCJs, bankruptcy and IVAs are a hard stop for BEF lending. Where a CCJ has been satisfied, we can review the application and ask questions about the circumstances behind it.

Not sure which BEF finance option could be suitable for your business?

Our Find your finance tool asks a few questions about your business and funding needs, then helps you identify the finance options that could be most relevant.

Do lenders check personal credit for a business loan?

Yes. Every BEF loan application requires a personal credit check. Your personal credit history forms part of our wider assessment of the business and proposed borrowing.

Does a business loan affect my personal credit?

This depends on the type of finance and the arrangements for the specific loan. Check the terms of the finance you're considering to understand any personal obligations and how the borrowing is reported.

Can I get a business loan with bad personal credit?

It may be possible, depending on the nature of the credit issue and whether it has been resolved. At BEF, active CCJs, bankruptcy and IVAs are a hard stop. Other poor credit issues can be reviewed as part of the wider application.

Can I get a business loan with a satisfied CCJ?

At BEF, a satisfied CCJ can be reviewed. We'll ask questions about what caused it, when it occurred, when it was satisfied and whether there have been any further credit issues.

Can I get a business loan while bankrupt?

No. Bankruptcy is a hard stop for lending at BEF.

Can I get a business loan with an IVA?

No. An IVA is a hard stop for lending at BEF.

Do Start Up Loans check personal credit?

Yes. Start Up Loan applications require a personal credit check, as do all BEF loan applications.

Does a good credit score guarantee a business loan?

No. Personal credit is one part of the assessment. We also consider the business's financial position, trading history, cash flow, existing borrowing, purpose of the finance and affordability.

Is personal credit more important for a new business?

It can be particularly relevant because a new business has less trading history and financial information available for assessment. Personal credit can therefore provide additional information about the applicant's financial history.

What if my bank rejects my business loan application because of my credit?

A rejection from one lender doesn't necessarily mean another lender will make the same decision. Different lenders have different criteria. Before applying elsewhere, understand why your application was rejected and whether there is anything you can address.

Your personal credit history can be an important part of a business loan application, but it isn't the whole story.

Every BEF loan application requires a personal credit check. If there are poor credit issues, we'll ask questions to understand the circumstances and consider them alongside the wider application.

Active CCJs, bankruptcy and IVAs are a hard stop for BEF lending. Satisfied CCJs and other historic credit issues can be reviewed.

If you're unsure which BEF finance option could be right for your business.