2 min read
Why companies seek a mid-term top-up
A business that took a £150,000 facility twelve months ago may now need an additional £75,000 for a new contract, equipment, or to cover a seasonal cash shortfall. Rather than approaching a new lender and starting the onboarding process from scratch, many companies first ask their existing lender whether additional funds are available under the current relationship.
Blend-and-extend: how it works
The most common top-up structure is a blend-and-extend: the lender combines the outstanding balance with the new drawdown amount, sets a blended interest rate, and resets the repayment term. The company makes a single monthly payment from the new start date. This is administratively simple but means the company is effectively restarting the clock — and paying interest on the original balance for longer.
Compare the total cost of the blended facility against the cost of a standalone second loan. The blended rate may look lower, but an extended term can produce a higher total interest bill.
Taking a second facility alongside an existing one
Some lenders — and most second-charge or alternative lenders — will sit alongside an existing facility without requiring a refinance. The security ranking matters: a first-charge debenture holder has priority on enforcement, so a second lender will either take a second charge, rely on unsecured covenants, or require a deed of priority from the first lender.
The advantage is that your existing repayment schedule is undisturbed. The disadvantage is managing two repayment dates and potentially two relationships.
What lenders assess at the top-up stage
Expect a fresh credit search, updated management accounts, and a review of your repayment conduct on the existing loan. A company that has consistently paid on time and whose revenue has grown is in the strongest position. Lenders will also reassess the adequacy of security — if your debenture was granted over a thinner balance sheet, updated fixed assets or receivables may allow additional headroom.
Frequently asked questions
Do I need to reapply formally to top up my existing loan?
Yes. A top-up is treated as a new credit decision even with an existing lender. You will need to submit updated financials and consent to a fresh credit search on the company.
Will my interest rate change if I top up?
In a blend-and-extend structure, the rate is typically reset on the combined balance. Whether it is higher or lower than your current rate depends on current market conditions and your updated credit profile. Get a full cost comparison before agreeing.
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.