What is a decision in principle?
A decision in principle, also called an agreement in principle, indicative terms or a credit-backed decision depending on the lender, is a lender’s written indication that, on the information given so far, it would lend a stated amount on stated terms. It comes before the valuation, before the full underwriting and before the legal work, and it is subject to all three. It is not an offer and it is not a commitment.
Its value is practical. It tells a buyer at an auction, a company negotiating a purchase, or a seller deciding between offers that a named lender is prepared to look at the case at a particular size. We have access to a range of UK commercial finance lenders through our principal, White Rose Finance Group Limited. Each lender decides whether to issue one, on what information, and how long it stands.
What a lender bases it on
The enquiry and the papers that come with it: the amount and the purpose, the company’s filed accounts and bank statements, the directors’ details, and for property lending the address, the price or value, the use and the proposed loan-to-value. Many lenders run a credit search on the company and the directors at this stage; some run a soft search that is not recorded, some a full search that is. The lender states which in its terms, and the credit line below applies.
Enquiring does not affect your credit score. If you apply to a lender, it runs its own credit search, which may be recorded on your file.
What it is not
It is not a valuation: the amount is conditional on the lender’s surveyor supporting the value, and on property lending the loan is recalculated on the valuation if it comes in below the price. It is not full underwriting: the lender has not yet read every document, and a county court judgment, an unexplained payment on a statement or a late filing can change the decision. It is not legal clearance: the title, the lease and the existing charges have not been checked. And it has a shelf life, stated by the lender, after which it lapses.
How it becomes an offer
The full application goes in with the documents. The lender underwrites, instructs the valuation where there is one, and raises its questions. When the underwriting is complete and the valuation supports the loan, the lender issues a formal offer: the amount, the term, the rate, the fees, the conditions and the security required. The offer is the commitment, subject only to its own conditions and the legal work, and it is the document a buyer exchanges contracts on, not the decision in principle.
Where it matters most
Auction purchases, where a bidder needs to know before the hammer falls that a lender will advance against the lot, and where the auction contract then fixes a completion date, commonly 28 days. Acquisitions, where a seller wants to see that the buyer’s funding is real before granting exclusivity. Bridging exits, where a bridging lender wants an agreement in principle from the refinancing lender before it advances the bridge. And commercial mortgages, where the decision in principle is the step at which the valuation fee is paid.
We work with UK limited companies and LLPs only, for business and commercial purposes. We arrange finance only once a business has traded for 3 months, for amounts from £10,000.
Frequently asked questions
Is a decision in principle legally binding?
No, on either side. The lender can decline at full underwriting and the borrower is free to go elsewhere. The formal offer is the binding step, subject to its conditions.
Does getting one affect my credit score?
It depends on the search the lender runs at this stage, which the lender states. Enquiring through CapExpand does not affect your credit score; if you apply to a lender, it runs its own credit search, which may be recorded on your file.
How long does a decision in principle last?
Each lender states its own period, after which it lapses and is refreshed on current information.
Can I get decisions in principle from several lenders?
You can, but each full search that is recorded shows on the file. The check against published criteria that comes first is designed to put the case to lenders whose criteria it meets rather than to every lender at once.
Is CapExpand regulated?
CapExpand Ltd (FRN 1060885) is a credit broker and an Appointed Representative of White Rose Finance Group Limited (FRN 630772), which is directly authorised and regulated by the Financial Conduct Authority. We are a broker, not a lender. We work with UK limited companies and LLPs only, for business and commercial purposes. If you have a complaint, our complaints page explains how it is handled.
How is CapExpand paid?
We will receive commission from lenders. On some cases we also charge a fee, which we set out in writing and agree with you before you proceed.
More funding questions answered
- What is hire purchase?A business pays for an asset in instalments and owns it after the last payment and the option fee: who owns what and when, VAT and capital allowances.
- What is working capital?Current assets less current liabilities: the working capital cycle in days, how to read the figure from the accounts, and where finance fits.
- What is a term loan?A fixed sum repaid with interest in instalments over an agreed period: the parts of a term loan, amortisation, covenants and events of default.
- What is an arrangement fee?The one-off charge a lender makes for setting up a facility, deducted, paid or added to the loan, and the other fees that sit beside it.
- What is an early repayment charge?The sum a lender charges if a loan is repaid before a date in the agreement, how it is calculated, and how it differs from an exit fee and a minimum interest period.
- What is a director’s loan?Money passing between a company and a director outside salary, dividends and expenses, in either direction: what the Companies Act requires and how a lender reads the balance.
Before the hammer falls
The amount, the purpose and the property or the target are enough for us to check the case against lenders’ published criteria and set out what each offers, side by side, before anything is sent anywhere.
Sources
Checked 26 October 2026. Each lender decides whether to issue a decision in principle, on what information, with what search and for how long; nothing on this page is a promise about any one lender.
CapExpand Ltd (FRN 1060885) is a credit broker and an Appointed Representative of White Rose Finance Group Limited (FRN 630772), which is directly authorised and regulated by the Financial Conduct Authority. We are a broker, not a lender. We work with UK limited companies and LLPs only, for business and commercial purposes. We do not provide financial advice.