Before you borrow from any alternative business lender in the UK, check eight things: the company is real and active on Companies House, its regulatory status, whether the first credit check is soft or hard, the total cost in pounds, any personal guarantee, the security it wants, upfront fees, and what happens if you repay early. A genuine lender will answer all of these in writing without pressure.
Non-bank lenders have become a normal part of small business finance. They can be quicker than a bank, more flexible about a thin credit history, and more willing to look at the story behind the numbers. But the market is varied, and some firms that look like lenders are brokers, platforms or, occasionally, scams. A few simple checks protect you either way.
This guide sets out the checks to run before choosing an alternative business lender in the UK, using official sources and, where an example helps, what one UK lender publishes about how it works.
The eight checks at a glance
| Check | Where to look | Good sign | Warning sign |
|---|---|---|---|
| 1. Is the company real? | Companies House | Active company, address matching the website | No company number, or details that do not match |
| 2. Regulatory status | FCA register and the lender's own disclosures | Clear statement of what is and is not regulated | Vague or misleading claims |
| 3. Credit search | Ask before applying | Soft search at enquiry stage | Hard search before you have seen terms |
| 4. Total cost | The written offer | Total repayable in pounds, all fees listed | Only a monthly figure or a factor rate |
| 5. Personal guarantee | The offer and guarantee document | Amount and terms explained upfront | Guarantee mentioned only at signing |
| 6. Security | The offer | Clear charge on named assets | Unclear claims over "all assets" |
| 7. Upfront fees | Before any payment | Fees only on completion, set out in writing | A fee demanded before the loan is approved |
| 8. Early repayment | The loan agreement | Settlement terms stated | No answer, or large unexplained charges |
1. Check the company on Companies House
Every UK limited company appears on the free Companies House register. Search the name or company number and check that it is active, that the registered office matches the website and that the directors make sense. A lender that does not show its company number on its website is worth questioning.
As an example, EAL Holdings shows its company number, 13799741, and a registered office in Harrow on its website. The Companies House record lists EAL Holdings Limited as active, incorporated on 14 December 2021, at the same Harrow address. That kind of match is what you are looking for.
If a lender is registered outside the UK, that is not automatically a problem, but ask which country's law will govern the agreement and where you could take a complaint.
2. Understand its regulatory status
Regulation of business lending is narrower than many owners expect. GOV.UK explains that you do not need FCA authorisation to offer credit only to other businesses, unless the customer is a sole trader, a partnership with fewer than four partners or an unincorporated association. So a loan to a limited company may not come with the same protections as personal credit.
That does not make unregulated lenders unsafe, but it does mean the contract matters more. Search the firm on the FCA register, read what its website says about its own status, and do not assume you can go to the Financial Ombudsman Service if something goes wrong. Ask the lender directly.
3. Ask whether the first check is a soft or hard search
A soft search lets a lender look at your file without leaving a mark other lenders can see. A hard search is recorded, and several in a short time can make you look desperate for credit. Ask before you apply. Many alternative lenders now use a soft search at enquiry stage. The lender in our example says enquiring does not leave a footprint on your credit file and that a hard search only takes place if you choose to proceed.
4. Get the total cost in pounds
Rates for business finance are quoted in different ways: annual interest, monthly interest, or a fixed factor applied to the amount borrowed. They are hard to compare. The only reliable comparison is the total amount you will repay, including arrangement, broker and exit fees, over the full term. Ask every lender for that figure in writing, and compare it with your cash flow forecast.
5. Read the personal guarantee carefully
Most unsecured business loans need a director's personal guarantee. The British Business Bank describes a personal guarantee as a legally binding agreement that makes the director personally liable if the business defaults or becomes insolvent. It notes that some lenders ask for the full loan amount while others ask for as little as 20%, and that personal assets such as your home, car and savings can be used to settle the debt. It recommends independent advice before you sign, and says some lenders require it.
Ask how much of the loan the guarantee covers, whether it ends if you repay on time, and whether more than one director must sign. A good lender explains this before you commit.
6. Know what security is being taken
Secured loans are backed by assets, often property. Ask exactly which assets the lender will take a charge over and whether it is a first or second charge. Lenders that focus on property-secured lending look mainly at the asset's value and your exit plan. The same lender, for instance, lists property-secured finance from £100k to £500k at up to 75% loan to value over 1 to 24 months, with first and second charges considered on residential, commercial and semi-commercial property.
7. Be wary of upfront fees
The FCA warns that being asked to pay an upfront fee for a loan can be a sign of a scam, and suggests checking the FCA register if this happens. Genuine fees exist, but they should be set out clearly in writing. Be very cautious about paying anything before you have a formal offer, and never pay by voucher or money transfer.
8. Ask about repaying early
If trading goes well, you may want to clear the loan early or refinance. Some agreements charge for this, and with some products early repayment may save little or nothing in interest. Ask for the settlement terms before you sign.
Where to look for an alternative lender
- Directly. Many specialist lenders accept enquiries straight from business owners.
- Through the Bank Referral Scheme. If one of the participating banks turns you down, it must offer to refer you to a designated finance platform, according to the British Business Bank. The scheme covers businesses with turnover under £25m and a UK address.
- Through a commercial finance broker. A broker can compare several lenders, but ask how they are paid.
- Through government-backed schemes. The Growth Guarantee Scheme works through accredited lenders, some of which are non-bank lenders. The British Business Bank publishes the list.
Matching the lender to the business
Alternative lenders often specialise. Some focus on young businesses and small, fast loans. Others want established companies with a longer trading record. The lender in our earlier example says it lends only to UK-registered companies, lists SME loans from £100k to £500k over 12 to 60 months, and asks for three or more years of trading for its SME loans. A quick look at a lender's eligibility rules before applying saves time on both sides.
Frequently asked questions
Are alternative business lenders safe?
Many are well-established and reputable, but the market is varied. Run the eight checks above, especially Companies House, regulatory status and upfront fees, before you share documents or pay anything.
Are non-bank lenders more expensive than banks?
Often, but not always. It depends on the product, your business and the security. Compare the total cost in pounds over the full term.
Can I get an alternative business loan with adverse credit?
Some lenders consider it. They usually weigh trading performance and cash flow alongside your credit history. Expect the terms to reflect the extra risk.
What documents will a lender usually ask for?
Commonly several months of business bank statements, recent filed or management accounts, and ID for the directors. Secured lending also needs details of the property and your exit plan.
Sources
- Companies House: Find and update company information
- GOV.UK: Offering credit to consumers, the law
- FCA: Financial Services Register
- FCA: Loan fee fraud
- British Business Bank: A guide to personal guarantees
- British Business Bank: What is the Bank Referral Scheme?
General information only, not financial or legal advice. Business finance is credit and must be repaid; secured finance may put property at risk. Lender details were taken from the lender's own website and Companies House in October 2026. Take independent advice before you borrow.